Tour companies tout strengths in wake of Thomas Cook failure

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A traveler at Brussels Airport stands by an empty service counter of Neckermann, part of Thomas Cook.
A traveler at Brussels Airport stands by an empty service counter of Neckermann, part of Thomas Cook. Photo Credit: Francisco Seco/AP

While the collapse of British giant Thomas Cook shook the travel world, companies targeting the American market said last week that they were not concerned about negative fallout from global headlines detailing the horror stories of stranded travelers.

Steve Born, chief marketing officer for the Globus family of brands, attributed that lack of concern to a more sophisticated view of travel.

"Travelers are sharp to separate isolated business issues from the big picture," Born said. "Americans have never shown more resolve and enthusiasm for international travel. We can assure travelers that the Globus family of brands has never been stronger, enjoying a record post-9/11 year, and we are ready and able to meet travel demand today and in the future."

Likewise, Trafalgar CEO Gavin Tollman said his company decided long ago "to focus on the emotional decision that is at the heart of the travel purchase. That's why we're not worried about perception in the marketplace."

While acknowledging that it's "sad when an established brand no longer exists," Tollman said, "The fact is Thomas Cook is not the first travel company to close, and it's unlikely to be the last."

Moreover, he said, the company "made mistakes."

"Their business model was flawed," Tollman said. "They invested too heavily in infrastructure, and they could not be nimble because they had to cover debt service. To do that, they had to generate sales by decreasing price, which became a race to the bottom. The caveat for all agents is to focus on suppliers who have long-term, sustainable business models."

John Tarkowski, president of Apple Vacations, said that financial insolvency can hit any segment of the industry, be it hotels, airlines or ground operators.

"Our size and breadth of product makes a strong argument for working with a company like Apple Vacations versus booking your clients' vacation components separately," Tarkowski said. "Should an airline or hotel cease operations, we are situated in better position to assist with a potential rebooking of your client."

He added that one takeaway for agents is that travel insurance is becoming more important than ever, and the failure of Thomas Cook should serve "as a wake-up call for clients who don't see travel insurance as a necessity." 

"Travel advisors should utilize this development to drive home the point that the unexpected can take many forms and that it's always prudent to protect their vacation investment."

Geoffrey Kent, founder and co-chairman of Abercrombie & Kent, said the Thomas Cook failure emphasizes the importance of booking through an established tour operator that is a member of the USTOA and its Travelers Assistance Program.

Under that program, each member is required to post $1 million security in the form of a bond, letter of credit or U.S. treasury bill.

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