BSc Tourism Management

Year 3

Service Management

Report: Customer Relationship Management in Travel and Tourism organisations

Date:

Table of Contents

Page

Executive Summary                                                                               3

1. Introduction 4
2. Scope of Customer Relationship Management & Its Role in

Service Management                                                                           4-7

2.1 Customer Relationship Management & Profits Earning Ability     7

2.2 Customer Relationship Management & Market Trends               8

2.3 Customer Relationship Management & Digital Tourism              9-10

3. Strategies to Improve Customer Relationship Management from the

Perspective of Service Management                                                     11

3.2 Service Design                                                                        11

3.2 Service Delivery                                                                      12

3.3 Service Recovery                                                                    12

4. Conclusion 13

References                                                                                         14-16

Appendices                                                                                         17-38

Appendix 1                                                                                          18-20

Appendix 2                                                                                          21

Appendix 3                                                                                          22

Appendix 4                                                                                          23

Appendix 5                                                                                          24

Appendix 6                                                                                          25-26

Appendix 7                                                                                          27-29

Appendix 8                                                                                          30-31

Appendix 9                                                                                          32-33

Appendix 10                                                                                        34-37

Appendix 11                                                                                        38

Executive Summary

This study examines the issues related to customer relationship management in travel and tourism organisations. The main purpose of this report is to see how issues arise in various reliable sources and see how these issues start to grow as time passes. The analysis in this study indicates that many factors have an impact on the customer relationship management in travel and tourism firms like Thomas Cook and TUI Travel. For travel and tourism companies to satisfy customers they would have to understand the current demands and changes in the market and these can be learned through the close relationship with customers. At the same time, many external environment marketing factors do have an impact on consumer demand and this will in turn affect their preferences and specific requirement for leisure products and services. Therefore, by keeping a good relationship with targeted customers, travel and tourism firms will not only be able to develop new products and services to meet the specific needs of the target market, but also help them to sustain the competitiveness in the industry.

1. Introduction

This study aims to examine issues relating to Service Management in the travel and tourism industry. It aims to focus on customer relationship management. The main purpose of this report is to understand the growth and development of the selected issue and how it affects companies in the industry. The report will also look at some customer relationship management strategies adopted by managers to design, deliver and improve services that would improve the relationship between the organisation and the customer. Many articles and secondary resources from different reliable sources, such as newspapers, journal articles and websites may not directly discuss the customer relationship management in travel firms. In other words, the analysis in this study is to relate the issue to customer relationship management and its implication on the management of the travel and tourism companies. Thus, this study will start from looking at the scope of customer relationship management and its significance on service quality.

2. Scope of Customer Relationship Management &

its role in Service Management

Customer relationship management has been defined by various authors. However, many of them hold similar meanings. Customer relationship management is known in short as ‘CRM’ which refers to ‘a strategy used by firms to manage and foster the interactions with customers and sales prospects in order to learn more about them and retain them’ (Hansemark & Albinsson, 2004, p. 40). Customer relationship is the first step for service companies to create customer satisfaction and at the same time, it can also help companies to prevent customer complaints (Van Looy et al., 2003, p. 123).

Customer relationship management can be done in different ways. However, to develop a relationship with customers and suppliers, the effectiveness and success rely on the use of technology to organise, automate and synchronise business process, sales related activities, marketing, technical support and customer service (Heskett, 2002, p. 356). The key goal of customer relationship management is to find, grab the attention and obtain new customers, to look after and keep the existing customers, while reducing the cost of marketing and customer services (Buttle, 2008).

Customer loyalty scheme is the most common form of customer relationship management in the world of business-to-customer marketing, while the electronic data interchange is the most popular system used to improve the relationship and communication between business buyer and seller. However, in this study, it will focus mainly on customer relationship management from business-to-customer perspective. Customer loyalty scheme is about ‘customer commitment to do a business with certain companies’ (McMullan & Gilmore, 2008, p. 356). In the context of business-to-customer business, loyalty is a result of effective and successful customer relationship management. It is more complex than customer retention. This is because once a business successfully develops some kind of relationship with customers; they will prevent and remain loyal even when the company is in the wrong (Rowley, 2005, p. 574). To reach this level, it is not easy and it cannot be done overnight even with the use and support of appropriate technologies. Customer relationship does not happen with the use of a few phone calls, monthly direct mails and easy-to-use websites.

However, firms in travel and tourism industry do have different strategies to foster a relationship with their customers. To develop a good relationship with customers in the travel and tourism industry, companies cannot rely only on technology, but to improve the service quality (Lovelock et al., 2007). To deliver a good service to customers, travel and tourism companies, managers in this type of organisation should motivate workers to feel motivated from within to deliver a good service (Goleman, 1999, p. 164). Thus, this means that managers in service firms should minimise the stress level in the workplace for workers by giving them a degree of service interactivity (Van Looy et al., 2003, p. 123 & p. 251).

Another crucial element to consider in customer relationship management is that of Emotional Intelligence. There are several cases on this in different literatures where this theme repeats itself, which are the product of several scientific and extensive research studies. One example is that of Goleman (1999), he believes that in order to be able to manage customers and this holds true in virtually any type of relationship, it all starts within. In this case, in all those who are responsible at each side when building or maintaining a relationship. He has developed a framework which includes five emotional and social competencies: Self-awareness, Self-regulation, Motivation, Empathy and Social Skills (Goleman, 1999, p. 26) (See Appendix 10 & 11). These competencies also determine how one manages himself/herself. In his study, he focuses on different areas in detail. Such as that of empathy, he goes on that highly empathic people may lack some abilities to handle their own distress; others may be quite aware of the subtlest shift in their own moods, yet be inept socially (Goleman, 1999, p. 7). To his understanding he summarizes that in order to be empathic one needs to sense what “others feel without their saying” (Goleman, 1999, p. 135). In contrast, being emotionally tone deaf leads to social awkwardness, whether from misconstruing feelings or through a mechanical, out-of-tune bluntness or indifference that destroys rapport (Goleman, 1999, p. 135). Also, psychobiology plays an important role here too; neuroscience makes crystal clear why emotional intelligence matters so much (Goleman, 1999, p. 6). In Goleman’s work, which has been evidenced by many scientific studies, he also mentions the source of the gut feeling and what happens when stress builds up and as a result the inability for us to clearly think and work efficiently (Goleman, 1999, p. 51). As mentioned in the previous paragraph, stress should be at a minimum, and in order to build or maintain a relationship, motivational levels from workers within an organization should be kept at a high priority in order to deliver the best possible product or service (Goleman, 1999, p. 112). Goleman (1999) also states that “flow moves people to do their best work, no matter what they do” (p. 105) “Flow is the ultimate motivator… When we work in flow, the motivation is built in” (p. 106). Human Resources are therefore crucial when selecting workers for any type of business, including those in the travel and tourism industry. All these areas are crucial in understanding relationships, building or maintaining one, being it from the very first moment when a salesperson or marketer makes contact with a customer.

When influencing workers to work with their best effort towards the assigned tasks, managers should attempt to do this based on the concept of SERVQUAL (Parasuraman et al., 1988) which is one of the main concepts to develop customer satisfaction. SERVQUAL refers to ‘a framework developed to measure service quality: reliability, responsiveness, competence, access, courtesy, communication, credibility, security, understanding or knowing customer and tangibles’ (Palmer, 2007, p. 14). SERVQUAL should be taken into consideration and once managers develop a SERVQUAL framework, they need to ensure that employees understand the guideline. This is because frontline workers are the people who have greatest direct contact with customers and thus, they would know what to do to create customer satisfaction. To understand this more effectively, the following section aims to examine issues in the market to understand its implications on service quality.

2.1 Customer Relationship Management & Profits Earning Ability

The use of technology together with different marketing communication tactics are used to develop a relationship with customers. The determination to use any marketing communication strategy depends on current market conditions and the target market (Uncles et al., 2003, p. 296). This is also true for companies in travel and tourism segment. Thomas Cook which is one of the leading travel agents in the UK reports that it manages to become one of the official sponsors for the London Olympic Games 2012 (BBC, 2009). The main decision for Thomas Cook to place a bid to become a new sponsor for the London Olympics 2012 is because it wants to create a differentiation point. This is because there are many players in the market and thus, it needs to create a differentiation point and give customers unique offers. The top management of Thomas Cook believes that by becoming an official sponsor for the Olympics 2012, this will enable it to develop a more attractive and appealing travel package deals and offers to customers. The company plans to launch unique offers which target local and foreign customers who want to come to visit the UK for the London Olympics 2012 in 2011. The government believes that by using Thomas Cook as one of their official sponsors, more than 250,000 tickets to see the game will be sold (BBC, 2009).

However, while the London Olympic 2012 packages are not available for sale just yet, Thomas Cook still has to face the current difficult economic conditions. Thomas Cook revealed in November 2009 that it has been facing a decline in sales because of the economic crisis or the credit crunch which has an impact on spending power of customers (Times Online, 2009). However, the management and marketing teams of Thomas Cook believe that even during the economic crisis, customers do have a demand for international travel and tourism holidays, but the travel and leisure offers should be affordable to all buyers with different buying powers. With current economic conditions and consumer finances, Thomas Cook has made a decision to develop a medium-haul international travel packages to sunny countries with affordable currencies like Egypt and Turkey. This strategy enables Thomas Cook to increase sales by six percent (Times Online, 2009).

Thomas Cook believes that this tactic should enable it to sustain growth and profit during the credit crunch. However, this strategy is not as effectively as the company believes. This is because Thomas Cook reports in December 2009 (Times Online, 2009) that it always believes that 2009 and 2010 will be a tough time for the company. It also suggests that promotional offers and discounts on travel and tourism products and services can only benefit the company if they are given on interval scale. This is because promotional and discounted offers can affect the company in two ways. First of all, if the company gives promotional offers on a regular basis, this will affect its profit margin. Secondly, the demand of travel and tourism products and services declined during the low season (Tadajewski & Brownlie, 2008, p. 47). Thus, even if the company gives promotional offers to customers, customers may not buy them; this is because they do not have demand.

2.2 Customer Relationship Management & Market Trends

As previously discussed and explained, customer relationship management, a close relationship with customers can help firms to understand new demands and changes in the market (Mulhern & Duffy, 2004, p. 64). Information and discussion in previous sections indicate that many changes and trends take place in travel and tourism. Companies that have a good customer relationship management system will be able to develop new products and services to meet the specific or new demands in the industry. This is also true for the travel and tourism industry.

TUI Travel, which is one of the leading players in travel and tourism industry, implements its offers in accordance to new demand in the market. TUI Travel is a merger travel firm between Thomson and First Choice. Despite the sluggish demand in the market, the company manages to develop different types of travel and tourism offers to meet the new demand of customers. As TUI Travel has been seeing a change in customer demand for travel and leisure products and services since 2008, the company decides to implement its offers by cutting the amount of winter holidays by 15 percent and developing more of the long-haul packages for destinations with tropical climate (Times Online, 2009). At the same time, to increase the sales for the summer 2010, TUI Travel plans to use the value of money packages to long-haul destinations. However, TUI Travel understands that it can meet its expected profit margin by charging a lower fuel price. It believes that this should stimulate a further demand. TUI Travel and other leading tour operators aim to slash their long-haul holiday prices in 2010 in order to sustain sales and trigger the need to purchase (Times Online, 2010).

On the other hand, the government plans to use similar strategy to promote Wales as the top-five must-visit destinations in the UK. This is to meet the new demand in the market. This is because the economic crisis has an impact on disposal income of customers and thus, many of them are unable to afford a long-haul international holiday (BBC, 2010). This could be an opportunity for small travel and tourism firms to develop some attractive deals for this specific demand.

2.3 Customer Relationship Management & Digital Tourism

Customer relationship management relies on the use of technologies and appropriate software to analyse customer data. This is also applied to companies in the travel and tourism industry. In recent years, it is revealed that customers now start to use the internet as the main source of information. Customers start to use the internet to pursue for attractive travel and tourism bargains and deals online. The internet and web-technology does not only help companies in travel and tourism industry to cut costs on marketing activities, but it also enables small and medium sized travel agents as well as individuals to enter the market (BBC, 2009). Many popular online travel agents and tourism websites are operated and managed by small and medium sized travel and tourism companies.

The internet and web-technology are not only in the interest of small firms, but also larger companies. There are many companies in the travel and tourism segment that focus mainly on marketing and promoting tourism, and, leisure products and services online (Lovelock et al., 2007). Examples of these players include Lastminute and Ebookers. It is revealed that many small firms find it hard to utilise the internet and technology into their business practice to compete against larger travel and tourism firms (BBC, 2010). However, many of them now generate a profit of around £400,000 through online sales (BBC, 2010). It is also revealed that a total of £17.4 million is invested towards the digital technology for travel and tourism businesses in Wales (BBC, 2010). The bottom line of using the internet and web-technology in travel and tourism firms is that it enables companies to develop an effective customer database and learn more by them. This will in turn help them to develop leisure products and services that will meet the specific demand in the market. Companies that fail to react to this change will find it hard to sustain the competitiveness in the market. It is also revealed that most large travel agents like Thomas Cook and First Choice also recognise the significance of the internet and technology and they also develop official websites where one can compare and contrast different travel and tourism deals. The main reason that they start to recognise the benefit of web-technology is because it enables them to reach a greater number of customers, while making it more convenient for the company to collect necessary information about customers and new demands in the market (BBC, 2010). This will in turn help them to develop a strong relationship with customers.

3. Strategies to Improve

Customer Relationship Management from the Perspective of Service Management

Based on the analysis in previous sections, it can be seen that there are several strategies that travel and tourism companies use to design, deliver and improve their offers to meet the specific demands and requirement of customers. For instance, some companies decide to develop long-haul holidays that would stimulate demand during the credit crunch, while some firms use value of money to attract and grab attention of customers who are price-sensitive. This shows that these strategies are based on the theoretical concept of service marketing. However, to ensure that travel and tourism firms can effectively improve their offerings, they should understand the needs and demands of the target market through the use of customer relationship programmes (Van Looy et al., 2003, p. 65). Given this condition, there are a few strategies that travel and tourism companies can use to improve service design, service delivery and service recovery which relate to customer relationship management.

3.1 Service Design

During the economic crisis, the demand for travel and tourism products starts to decline. Therefore there is a need to develop leisure products and services that will grab the attention of customers, travel and tourism companies should target a single group of buyers based on their differences (market segmentation). This will enable the company to learn more about them and develop new offers that will be appealing to them. Also, to effectively develop new offers, managers should understand that frontline workers are the people who have a direct contact with customers and thus, they should be motivated to do their best to learn about them in order to gain an understanding (Goleman, 1999, p. 165).

3.2 Service Delivery

It can be assumed that during difficult economic conditions, many travel and tourism companies might decide to reduce the standard of its core products and services. For example, it may add fuel price to final price of the international long-haul destination package. Thus, to ensure that the company gives customer satisfaction, the core products and services should be available and they should be provided to customers at time (Dean & Rainnie, 2009, p. 328). One of the most important things is that they should be charged at a standard rate. Another point to mention is that of the manager/s; they would have to find out factors that can be used to facilitate their workers in order to provide and bring up the best in them, in their jobs. Moreover, workers should have this competence as well, and as a result, both of these will add even further to customer satisfaction. (Goleman, 1999, p. 106).

3.3 Service Recovery

The analysis in this study does not examine how travel and tourism firms resolve service failure. However, if the core products and services become unavailable and the company fails to deliver satisfaction, an apology from frontline staff should be given to customers and they should try to resolve problems of customers on spot or as soon as possible. In some cases, compensation or complimentary gifts should be given to customers in order to prevent dissatisfaction (Boshoff et al., 2000).

4. Conclusion

It can be concluded that different market and customer related factors have an impact on the customer relationship management of companies in the travel and tourism industry and this will in turn affect its service quality. The analysis in this study shows that the current difficult economic conditions have an impact on service quality of the travel and tourism companies. Through a close relationship with customers, this enables travel and tourism organizations to adjust their service design and delivery strategies in accordance to the market condition.

Customer Relationship Management is a major theme that also holds responsibility and interlinks with other areas, as previously mentioned; complaint management and human resources management. Not to forget is the interrelation of both customer relationship management and emotional intelligence, and how one influences the other. That said it should be noted that it is important for any travel and tourism organization to implement a good CRM system, one that educates the workers, in terms of self-mastery, motivation, empathy, efficiency, performance, technology and social skills and as a result of this strengthens the relationship between them and the customers.

References

BBC (2009) Travel website ‘one of the best’. [Online] Available at: http://news.bbc.co.uk/1/hi/wales/8377487.stm (Accessed: 09 December 2009)

BBC (2009) Thomas Cook becomes 2012 sponsor. [Online] Available at: http://news.bbc.co.uk/1/hi/england/london/8316103.stm (Accessed: 09 December 2010)

BBC (2010) Digital tourism investment backed. [Online] Available at: http://news.bbc.co.uk/1/hi/wales/8494631.stm (Accessed: 06 February 2010)

BBC (2010) ‘Top five’ aim for north Wales tourism plan. [Online] Available at: http://news.bbc.co.uk/1/hi/wales/north_west/8472918.stm (Accessed: 28 January 2010)

Boshoff, C. R. and Allen, J. (2000) “The Influence of Selected Antecedents on Frontline Staff’s Perceptions of Service Recovery Performance”, International Journal of Service Industry Management. 11(1), pp.69-90.

Buttle, F. (2008) Customer Relationship Management 2nd ed. Butterworth – Heinemann

Dean, A. and Rainnie, A. (2009) ‘Frontline employees’ views on organizational factors that affect the delivery of service quality in call centers’, Journal Service Marketing, 23(5), pp. 326-33.

Goleman, D. (1999) Working with Emotional Intelligence. London: Bloomsbury

Hansemark, O. and Albinsson, M. (2004) ‘Customer satisfaction and retention: the experiences of individual employees’, Managing Service Quality, 14(1), pp. 40-57.

Heskett, J. (2002) ‘Beyond customer loyalty’, Managing Service Quality, 12(6), pp. 355-357.

Hurley, R. F. (1998a) “Service disposition and personality: a review and a classification scheme for understanding where service disposition has an effect on customers”, in Swartz, T.A., Bowen, D.E., Brown, S.W. (Eds), Advances in Services Marketing and Management: Research and Practice, JAI Press, Greenwich, CT

Hurley, R.F (1998b) “Customer service behaviour in retail settings: a study of the effect of service provider personality”, Journal of the Academy of Marketing Science, Vol. 26 No.2, pp.115-27.

Lovelock, C. and Writz, J. (2007) Services Marketing: People, Technology, Strategy 6^th edition. Pearson Education

Mudie, P. and Cottam, A. (1999) The Management and Marketing of Services 2nd Edition. Oxford: Butterworth Heinnemann

Mulhern, T. and Duffy, D. (2004) ‘Building loyalty at Things Remembered’, Journal of Consumer Marketing, 21(1), pp. 62-66.

Palmer, A. (2007) Principles of Services Marketing. Berkshire: McGraw-Hill

Parasuraman, A., Zeithaml, A., and Berry, L.L. (1988) “SERVQUAL: a multiple-item scale for measuring consumer perceptions of service quality”, Journal of Retailing, Vol. 64, pp.12-40.

Peppers, D. and Rogers, M. (2004) Managing Customer Relationships: A strategic framework. New York: John Wiley & Sons

Prahalad, C. K., Ramaswamy, P. B., Katzenbach, J. R., Lederer, C., and Sam, H. (2002) Harvard Business Review on Customer Relationship Management. Boston: Harvard Business Press

Rowley, J. (2005) ‘The four Cs of customer loyalty’, Marketing Intelligence & Planning, 23(6), pp. 574-581.

Rowley, J. (2009) ‘Superpoly: monopoly in the twenty-first century’, Management Research News, 32(8), pp. 751-761.

Tadajewski, M. and Brownlie, D. (2008) Critical Marketing: Issues in Contemporary Marketing. New York: John Wiley & Sons

Times Online (2009) Next year will be no holiday, wary Thomas Cook warns its investors. [Online] Available at: http://business.timesonline.co.uk/tol/

business/industry_sectors/leisure/article6938242.ece (Accessed: 28 January 2010)

Times Online (2009) Sun-seekers boost Thomas Cook outlook. [Online] Available at: http://business.timesonline.co.uk/tol/business/industry_sectors/

leisure/article6937386.ece (Accessed: 28 January 2010)

Times Online (2009) Tui Travel on track despite sluggish demand. [Online] Available at: http://business.timesonline.co.uk/tol/business/industry_sectors/

article6938622.ece (Accessed: 28 January 2010)

Times Online (2010) Tour operators slash long-haul holiday price. [Online] Available at: http://www.timesonline.co.uk/tol/travel/news/article6976466.ece (Accessed: 28 January 2010)

Uncles, M., Dowling, G. and Hammond, K. (2003) ‘Customer loyalty and customer loyalty programs’, Journal of Customer Marketing, 20(4), pp. 294-316.

Van Looy, B., Van Dierdonck, R. and Paul Gemmel, P. (2003) Services Management: An Integrated Approach. Essex: Pearson Education

Appendices 

Appendix 1

A log was created for the evidence that was collected. (8 Cases)

Appendix 2 – Case 1

Source: http://news.bbc.co.uk/1/hi/england/london/8316103.stm

Appendix 3 – Case 2

A website set up by a couple in Denbighshire has been named as one of the top five travel websites by a national newspaper. The Daily Telegraph puts audioguide2go.com in the same category as multi-million pound publisher Lonely Planet.

George Herd reports.

Source: http://news.bbc.co.uk/1/hi/wales/8377487.stm

Appendix 4 – Case 3

From Times Online

November 30, 2009

Sun-seekers boost Thomas Cook outlook

Elizabeth Judge

Thomas Cook, Europe’s second biggest tour operator, today reported better-than-expected results for the full year despite the impact of the recession on consumers’ finances.

The group said that despite the downturn and mass job losses, bookings for next summer remained on track with consumers determined to go abroad. Bookings for this winter season are also holding-up.

It said “medium-haul” destinations like Turkey and Egypt were particularly strong for the summer.

Underlying pre-tax profits for the year to September hit £308.2 million. While broadly in line with last year, this bucked City predictions of a 3 per cent fall.

Revenues at the company, which carries around six million UK holidaymakers each year, grew 6 per cent to £9.3 billion.

Manny Fontenla-Novoa, chief executive of Thomas Cook, said the figures were “particularly pleasing as it comes despite the worldwide recession and the financial impact of the swine flu outbreak.

“Looking ahead our winter 09/10 trading position continues to improve and trend towards our planned capacity. Although it is still early in the cycle, bookings for summer 2010 are also in line with our expectations.”

The group, he said, is “confident” it will meet expectations for the year. The figures sent Thomas Cook shares surging 8p or 3.70 per cent to 224.20p.

The tour operator, which merged with the former Airtours business MyTravel, in 2007, said average selling prices in the UK rose 6 per cent while in Canada, in the last four weeks, they had risen 4 per cent.

In the UK particularly, it said, it had seen “encouraging signs” in the past four week for the summer 2010 season, with bookings up 14 per cent and average selling prices up 2 per cent.

Selling prices for medium and long-haul holidays were up 7 per cent overall.

The group said it had also benefited from a higher-than-expected £125 million cost savings from its MyTravel merger.

Source:

http://business.timesonline.co.uk/tol/business/industry_sectors/leisure/

article6937386.ece

Appendix 5 – Case 4

From The Times

December 1, 2009

Next year will be no holiday, wary Thomas Cook warns its investors

Dominic Walsh and Elizabeth Judge

Thomas Cook, Europe’s second biggest tour operator, warned investors of tough times ahead yesterday, even as it reported full-year results that were better than expected.

Manny Fontenla-Novoa, its chief executive, said that although early bookings for next summer were in line with expectations, trading conditions could become more challenging in the face of rising unemployment, pressures on consumer spending, the weakness of the pound and next summer’s football World Cup.

“We always thought that 2009-10 was going to be very tough, perhaps even tougher than the year just finished,” Mr. Fontenla-Novoa said. “We’ve been planning for this for the last 12 months, reviewing our cost base and negotiating hard with our suppliers and particularly our hoteliers. We’ve shown that we can trade our way through difficult circumstances.”

He said that despite the economic backdrop, research among British consumers showed that they “remain intent on taking their holidays abroad next summer”. The group continued to receive strong bookings to medium-haul destinations outside the euro zone, such as Turkey and Egypt.

Underlying pre-tax profits for the year to September 30 hit £308.2 million, down 0.4 per cent, bucking City predictions of a 3 per cent fall, although that excludes £252 million of exceptional costs. Revenues at the travel company, which carries about six million UK holidaymakers each year, grew 6 per cent to £9.3 billion. Mr. Fontenla-Novoa said that Thomas Cook’s performance was particularly pleasing as it had come despite the worldwide recession and the financial impact of the swine flu outbreak. He said that bookings for the coming winter were starting to “trend towards our planned capacity”, after a sluggish start was followed by a rise in late bookings.

The group has a €1.8 billion (£1.6 billion) bank facility that expires in May 2011, but Thomas Cook said that it planned to complete the refinancing by next summer. Mr. Fontenla-Novoa said that early discussions with the banks had been positive and he ruled out an equity issue.

Separately, Thomas Cook announced the appointment of Paul Hollingworth, former finance director at Mondi Group, as chief financial officer. Peter Middleton, former chief executive of Lloyd’s of London and chief executive of Thomas Cook between 1987 and 1992, becomes a non-executive director.

Source:

http://business.timesonline.co.uk/tol/business/industry_sectors/leisure/

article6938242.ece

Appendix 6 – Case 5

From Times Online

December 1, 2009

Tui Travel on track despite sluggish demand

Robert Lindsay

Tui Travel, Europe’s largest tour operator, said today that underlying annual profits had grown 15 per cent in the year and that an improvement in bookings for winter holidays in the past few weeks after a slow start made it confident that it would meet targets for the current year.

The cautiously optimistic tone of the owner of the Thomson and First Choice brands mirrored that of Thomas Cook, which published its figures yesterday.

The company announced a rise in underlying pre-tax profits for the year to the end of September from £319 million to £366 million on revenue flat at £13.9 billion.

Peter Long, the chief executive of Tui, said the results demonstrated that, even in a recession, people are not prepared to sacrifice their main summer holiday.

After capacity cuts, all its summer 2009 holidays were sold, in line with expectations, despite people booking later.

Mr. Long said: “Our customers’ behaviour has demonstrated that, even against a backdrop of reduced consumer confidence, the main summer holiday is an essential expenditure.”

Meanwhile, bookings for winter holidays in the UK were down 4 per cent in the past four weeks, an improvement from a cumulative slide of 16 per cent, and a sign that people were continuing to book late.

Tui has cut the amount of winter holidays it sells in the UK this year by 15 per cent and average selling prices are up 10 per cent on last year, helped partly by selling a greater proportion of long-haul packages.

In Germany, capacity has been cut by 9 per cent.

As for the crucial 2010 summer, Tui is planning for capacity to be flat on last year and average selling prices are so far up 7 per cent year on year.

Outside the UK, lower fuel prices have meant that it can reduce summer holiday prices without hurting its profitability, which it expects to stimulate demand further.

Tui is raising the total full-year dividend by 10 per cent to 10.7p a share. The share price edged up 0.5p to 246.9p in early trading.

The company was formed in September 2007 from the merger of Tui-owned Thomson in the UK with First Choice.

After the exceptional costs of integrating Thomson and First Choice in the UK, pre-tax losses narrowed from £267 million to £52 million.

Mark Brumby, analyst at Astaire, a stockbroker, said: “TUI is doing most things right but 2010 could be difficult. Visibility is limited, rising unemployment, austere budgets across its markets and a World Cup will do little to encourage travel.

“Tax rises, interest rate rises and a possible further weakening in sterling will not help.”

Source:

http://business.timesonline.co.uk/tol/business/industry_sectors/

article6938622.ece

Appendix 7 – Case 6

From Times Online

January 5, 2010

Tour operators slash long-haul holiday prices

A holiday price war is luring Britons to exotic climes, but the large tour operators behind the deals have been slammed over poor customer service

Adam Sherwin

Some of the biggest package holiday companies offer the poorest service, according to the Which? magazine customer satisfaction table compiled from the experiences of its 4,500 members.

Thomas Cook has hired Jamie Redknapp and his pop star wife Louise to front a new advertising campaign but its holiday reps received the lowest rating in the poll. Cosmos and First Choice fared little better.

The survey was topped by VFB Holidays, the specialist company which first introduced the self-catering “gîte” holiday in France to British travellers 40 years ago.

VFB achieved an average customer score of 94 per cent. Second was Trailfinders (89 per cent) and third was Explore, part of the Holidaybreak company, which scored 88 per cent.

Overall, 92 per cent were satisfied with their tour operator’s organisation of their holiday, with VFB getting a 100 per cent score in this category.

Cosmos was in last place with a score of only 57 per cent, with only 44 per cent describing the company as efficient. First Choice and Crystal – part of the Tui holiday empire – scored 63 per cent. Thomas Cook came second bottom with 58 per cent. The average customer score for the companies in the survey was 77 per cent.

VFB, founded in 1970 by Michael Bruce-Mitford and his French wife, Françoise Julien, offers around 300 cottage destinations, most of which are family owned and in rural or semi-rural locations, with an emphasis upon “the real France”. The company has expanded to offer apartment and hotel deals in Corsica and excorted river breaks through France and Belgium.

Liz Barnwell, VFB Holidays marketing manager, said: “We have a very loyal customer base who come back year after year so that’s probably why we have come out so well in the survey.”

Although the Arctic conditions and New Year price discounts have encouraged many Britons to seek New Year breaks in the Canary Islands, the Caribbean and Turkey, Ms Barnwell believes France still has its attractions.

“People know what they are going to get and there are fewer issues with airport security,” she said. There are bargains available for recession-hit families. “We have up to 30 per cent off some cottages compared to this time last year. People can find the property to suit their budgets.”

The Which? survey found that the average spent on a trip away had risen from just under £900 per person in a 2008 survey to more than £1,000 now, with 22 per cent playing £1,600 or more.

But the new year price war means that package deals are available for considerably less. Thomas Cook is promising 14-night holidays for the price of 11 nights, if booked in January, alongside free child places, pre-school family offers, single-parent family offers and free meals for children on some deals.

Kuoni UK is offering savings of up to 30 per cent in what it claims is its “biggest luxury holiday sale”. Destinations available include the Maldives, the Rocky Mountains in the United States and the Masai Mara in Kenya.

Operators are desperate to kick start the market, with business reportedly down 5 to 10 per cent on this time last year, which itself proved a difficult year for the travel industry.

The Which? survey found that about 82 per cent were satisfied with holiday reps, 93 per cent were happy with their accommodation abroad, while 95 per cent thought websites and brochures were accurate.

Rochelle Turner, head of research for Which? Holiday, said: “It’s great to see the small operators doing so well. They have the advantage of being able to offer a more personalised service – something valued by many.

“However, larger tour operators still have an important role to play in offering affordable holidays to families. The vast number of holidaymakers that these companies deal with each year means it may often be harder to provide the attention to detail their smaller rivals can offer.

“Although the larger tour operators performed well in terms of the accommodation they offer, they really need to up their game across the board and give their customers what they expect in terms of quality of service and value for money.”

The customer score was a combination of customer satisfaction and how likely people were to recommend the tour operator to a friend. Companies were also rated on the organisation of their holiday, any journeys involved, the accommodation, tour reps, customer service and overall value for money.

Top ten holiday destinations by volume of searches since New Year’s Day

1. Canaries – Tenerife, Gran Canaria, Lanzarote, Fuerteventura
2. Spain – Costa del sol, Costa Blanca, Barcelona
3. USA – Florida, NYC, Las Vegas
4. Egypt – Red Sea Resorts
5. Greece – Crete, Corfu, Rhodes
6. Caribbean – Dominican Republic, Cuba, Barbados, St Lucia
7. Turkey – Dalaman
8. Thailand – Phuket
9. Cyprus – Paphos
10. Mexico – Cancún

Source: Travelsupermarket.com

Source:

http://www.timesonline.co.uk/tol/travel/news/article6976466.ece

Appendix 8 – Case 7

Source:

http://news.bbc.co.uk/1/hi/wales/north_west/8472918.stm

Appendix 9 – Case 8

Source:

http://news.bbc.co.uk/1/hi/wales/8494631.stm

Appendix 10

Emotional Competence Framework

SOURCES: This generic competence framework distills findings from: MOSAIC competencies for professional and administrative occupations (U.S. Office of Personnel Management); Spencer and Spencer, Competence at Work; and top performance and leadership competence studies published in Richard H. Rosier (ed.), The Competency Model Handbook, Volumes One and Two (Boston : Linkage, 1994 and 1995), especially those from Cigna, Sprint, American Express, Sandoz Pharmaceuticals; Wisconsin Power and Light; and Blue Cross and Blue Shield of Maryland. Much of the material that follows comes from Working with Emotional Intelligence by Daniel Goleman (Bantam, 1998).

PERSONAL COMPETENCE

Self-Awareness

EMOTIONAL AWARENESS: Recognizing one’s emotions and their effects. People with this competence:

• Know which emotions they are feeling and why
• Realize the links between their feelings and what they think, do, and say
• Recognize how their feelings affect their performance
• Have a guiding awareness of their values and goals

ACCURATE SELF-ASSESSMENT: Knowing one’s strengths and limits. People with this competence are:

• Aware of their strengths and weaknesses
• Reflective, learning from experience
• Open to candid feedback, new perspectives, continuous learning, and self-development
• Able to show a sense of humor and perspective about themselves

SELF-CONFIDENCE: Sureness about one’s self-worth and capabilities. People with this competence:

• Present themselves with self-assurance; have “presence”
• Can voice views that are unpopular and go out on a limb for what is right
• Are decisive, able to make sound decisions despite uncertainties and pressures

Self-Regulation

SELF-CONTROL: Managing disruptive emotions and impulses. People with this competence:

• Manage their impulsive feelings and distressing emotions well
• Stay composed, positive, and unflappable even in trying moments
• Think clearly and stay focused under pressure

TRUSTWORTHINESS: Maintaining standards of honesty and integrity. People with this competence:

• Act ethically and are above reproach
• Build trust through their reliability and authenticity
• Admit their own mistakes and confront unethical actions in others
• Take tough, principled stands even if they are unpopular

CONSCIENTIOUSNESS: Taking responsibility for personal performance. People with this competence:

• Meet commitments and keep promises
• Hold themselves accountable for meeting their objectives
• Are organized and careful in their work

ADAPTABILITY: Flexibility in handling change. People with this competence:

• Smoothly handle multiple demands, shifting priorities, and rapid change
• Adapt their responses and tactics to fit fluid circumstances
• Are flexible in how they see events

INNOVATIVENESS: Being comfortable with and open to novel ideas and new information. People with this competence:

• Seek out fresh ideas from a wide variety of sources
• Entertain original solutions to problems
• Generate new ideas
• Take fresh perspectives and risks in their thinking

Self-Motivation

ACHIEVEMENT DRIVE: Striving to improve or meet a standard of excellence. People with this competence:

• Are results-oriented, with a high drive to meet their objectives and standards
• Set challenging goals and take calculated risks
• Pursue information to reduce uncertainty and find ways to do better
• Learn how to improve their performance

COMMITMENT: Aligning with the goals of the group or organization. People with this competence:

• Readily make personal or group sacrifices to meet a larger organizational goal
• Find a sense of purpose in the larger mission
• Use the group’s core values in making decisions and clarifying choices
• Actively seek out opportunities to fulfill the group’s mission

INITIATIVE: Readiness to act on opportunities. People with this competence:

• Are ready to seize opportunities
• Pursue goals beyond what’s required or expected of them
• Cut through red tape and bend the rules when necessary to get the job done
• Mobilize others through unusual, enterprising efforts

OPTIMISM: Persistence in pursuing goals despite obstacles and setbacks. People with this competence:

• Persist in seeking goals despite obstacles and setbacks
• Operate from hope of success rather than fear of failure
• See setbacks as due to manageable circumstance rather than a personal flaw

SOCIAL COMPETENCE

Social Awareness

EMPATHY: Sensing others’ feelings and perspective, and taking an active interest in their concerns. People with this competence:

• Are attentive to emotional cues and listen well
• Show sensitivity and understand others’ perspectives
• Help out based on understanding other people’s needs and feelings

SERVICE ORIENTATION: Anticipating, recognizing, and meeting customers’ needs. People with this competence:

• Understand customers’ needs and match them to services or products
• Seek ways to increase customers’ satisfaction and loyalty
• Gladly offer appropriate assistance
• Grasp a customer’s perspective, acting as a trusted advisor

DEVELOPING OTHERS: Sensing what others need in order to develop, and bolstering their abilities. People with this competence:

• Acknowledge and reward people’s strengths, accomplishments, and development
• Offer useful feedback and identify people’s needs for development
• Mentor, give timely coaching, and offer assignments that challenge and grow a person’s skill

LEVERAGING DIVERSITY: Cultivating opportunities through diverse people. People with this competence:

• Respect and relate well to people from varied backgrounds
• Understand diverse worldviews and are sensitive to group differences
• See diversity as opportunity, creating an environment where diverse people can thrive
• Challenge bias and intolerance

POLITICAL AWARENESS: Reading a group’s emotional currents and power relationships. People with this competence:

• Accurately read key power relationships
• Detect crucial social networks
• Understand the forces that shape views and actions of clients, customers, or competitors
• Accurately read situations and organizational and external realities

Social Skills

INFLUENCE: Wielding effective tactics for persuasion. People with this competence:

• Are skilled at persuasion
• Fine-tune presentations to appeal to the listener
• Use complex strategies like indirect influence to build consensus and support
• Orchestrate dramatic events to effectively make a point

COMMUNICATION: Sending clear and convincing messages. People with this competence:

• Are effective in give-and-take, registering emotional cues in attuning their message
• Deal with difficult issues straightforwardly
• Listen well, seek mutual understanding, and welcome sharing of information fully
• Foster open communication and stay receptive to bad news as well as good

LEADERSHIP: Inspiring and guiding groups and people. People with this competence:

• Articulate and arouse enthusiasm for a shared vision and mission
• Step forward to lead as needed, regardless of position
• Guide the performance of others while holding them accountable
• Lead by example

CHANGE CATALYST: Initiating or managing change. People with this competence:

• Recognize the need for change and remove barriers
• Challenge the status quo to acknowledge the need for change
• Champion the change and enlist others in its pursuit
• Model the change expected of others

CONFLICT MANAGEMENT: Negotiating and resolving disagreements. People with this competence:

• Handle difficult people and tense situations with diplomacy and tact
• Spot potential conflict, bring disagreements into the open, and help deescalate
• Encourage debate and open discussion
• Orchestrate win-win solutions

BUILDING BONDS: Nurturing instrumental relationships. People with this competence:

• Cultivate and maintain extensive informal networks
• Seek out relationships that are mutually beneficial
• Build rapport and keep others in the loop
• Make and maintain personal friendships among work associates

COLLABORATION AND COOPERATION: Working with others toward shared goals. People with this competence:

• Balance a focus on task with attention to relationships
• Collaborate, sharing plans, information, and resources
• Promote a friendly, cooperative climate
• Spot and nurture opportunities for collaboration

TEAM CAPABILITIES: Creating group synergy in pursuing collective goals. People with this competence:

• Model team qualities like respect, helpfulness, and cooperation
• Draw all members into active and enthusiastic participation
• Build team identity, esprit de corps, and commitment
• Protect the group and its reputation; share credit

Source:

http://www.eiconsortium.org/reports/emotional_competence_framework.html (Accessed: 09 February 2010)

Appendix 11

THE EMOTIONAL COMPETENCE FRAMEWORK

An emotional competence is a learned capacity based on emotional intelligence that results in outstanding performance at work. For superior performance in jobs of all kinds, emotional competence matters twice as much as IQ plus technical skill combined.

Source:

http://www.public.iastate.edu/~sjwong/emotional_intelligence.pdf

(Accessed: 09 February 2010)