Quality Management in TUI Group

This document discusses the reasons behind TUI Group being ranked as the worst tour operator in the UK due to poor quality service. It also explores the financial capabilities and staff competence of TUI Group and provides recommendations for improving quality service through total quality management.

Quality management Boardroom
Simulation

Table of Contents
Overview of Case Study:.................................................................................................................1
Task 1...............................................................................................................................................1
Reasons behind poor quality that make TUI as the worst tour operator in UK...........................1
Financial capabilities and staff competence of TUI Group for improving its quality.................1
Recommendations for improvement of quality service by reference total quality management
service..........................................................................................................................................3
REFERENCES................................................................................................................................4

Overview of Case Study:
TUI is the number of tourism company of the world, having more than 1600 travel agencies
with 6 airlines and around 150 aircraft. It is known for its luxury tourist service but in July 2019,
it has rated as worst tour operators due to poor customer services, in terms of unprofessional
holiday reps, disappointing accommodation facilities and more.
Task 1
Reasons behind poor quality that make TUI as the worst tour operator in UK
In 2019, TUI Group ranked as worst tour operator for its package holidays, after getting a
number of negative reviews of customers on Trust Pilot and other websites. Therefore, surveying
on this firm and apply a gap model on its service quality, it has evaluated that due to worst
holiday packages, this company has failed to meet the customer demand in desired manner. After
Brexit and two fatal crashes of Boing 737, has weakened the capabilities of TUI in maintaining
its commitment (Tour operator TUI faces deepening losses, 2020). Therefore, it has failed to
provide airline services and managing entire services as described in holiday packages. So, most
of customer complaints are about long flight delays, unprofessional holiday reps, disappointing
in accommodations and more. In this regard, one of the main reason that has ranked TUI as
worst operator is its flight capacity, which has reduced due to groundings of Boeing 737 MAX
groundings.
Financial capabilities and staff competence of TUI Group for improving its quality
It has evaluated that after 737 MAX grounding, that impacts flight capacity of TUI
negatively and consequently results in increasing customer complaints. So, it highly suffers
decline in revenue over 26%. But since it is counted as one of the most successful operator in
tourism with luxurious services, therefore, it has good financial performance. This would can be
measured by its income statement as shown below –
1

Income statement of TUI Group
TUI AG ADR (TUIFY) Cash Flow Flag INCOME STATEMENT
Fiscal year ends in September. EUR in millions
except per share data.
2015-
09
2016-
09
2017-
09
2018-
09
2019-
09
TTM
Revenue 20012 17185 18535 19524 18928 19204
Cost of revenue 17616 15278 16536 17542 17257 17544
Gross profit 2395 1906 2000 1982 1671 1660
Operating expenses
Sales, General and administrative 559 394 390 417 334 349
Other operating expenses 1154 821 866 877 885 801
Total operating expenses 1714 1216 1256 1293 1219 1150
Operating income 682 691 744 688 451 509
Interest Expense 188 188 129 148 149 169
Other income (expense) 42 115 465 431 389 356
Income before taxes 535 618 1080 972 691 696
Provision for income taxes 87 153 169 191 160 158
Net income from continuing operations 448 465 911 780 532 538
Net income from discontinuing ops -69 687 -150 39
Other -39 -115 -117 -86 -116 -112
Net income 340 1037 645 732 416 427
Net income available to common shareholders 340 1037 645 732 416 427
Earnings per share
Basic 0.32 0.89 0.55 0.63 0.35 0.36
Diluted 0.32 0.89 0.55 0.63 0.35 0.36
Weighted average shares outstanding
Basic 1026 1168 1169 1175 1176 1178
Diluted 1039 1171 1169 1175 1176 1178
EBITDA 1424 1384 1727 1558 1350 865
2

As per this data, it has evaluated that turnover is grown by 4.4% from 2018 to 3.70 billion Euros.
Along with this, average rate of passengers within TUI Cruises is near about 149 Euros per day,
with 100% occupancy (TUI AG: Financial Report, 2019). While staff competency can be
measured in terms of workers, where currently it has more than 67k employees that helps in
managing its 16 cruise ships, 1600 travel agencies, 6 airlines and 30 group-owned hotels on 180
destinations. It also has a great leadership culture that helps in obtaining high contribution of
people, in offering best customer service.
Recommendations for improvement of quality service by reference total quality management
service
As after continuous complaints about poor quality of services of TUI Group, it has faced a
declined in its sales. In addition to this, it has also suffered heavy loss in financial outcomes with
negative brand image in tourist industry, after getting ranked as worst tour operator. Therefore, it
is recommended to TUI Group to make improvement in creation of great travel services. For this
purpose, it needs to increase its airline services first, by making an agreement with other airlines
like British Airways. This would help in providing timely flight services to customers. Along
with this, as customers have complained about delays in responding of their mails, therefore, it
needs to implement effective CRM system in its operations. Through this system, its workers can
timely respond to their emails for answering their queries and confirming orders of them, without
delay for more than two days. Along with this, it also needs to increase its staff competencies by
hiring new workers and trained existing also, to make them able how to increase customer
experience during entire journey or travel experiences at chosen destinations, by following few
simple steps, as shown in given graph –
3

Thus, by following these steps, CRM team of TUI Group can build a rapport with customers via
email, social media and other channels. This would help in giving priority to travellers to
understand their demand first by making proper communication. After then travel packages will
be designed as per preferences and budget of them, so that higher satisfaction of them can be
earned. In addition to this, throughout entire journey of each customer, a team will be developed
that will make proper communication with them, to identify needs and meeting accordingly.
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REFERENCES
Tour operator TUI faces deepening losses. 2020. [Online] Available Through: <
https://www.ft.com/content/1ea2c300-76dd-11e9-bbad-7c18c0ea0201>.
TUI AG: Financial Report. 2019. [Online] Available Through: <
https://www.bloomberg.com/press-releases/2019-12-11/tui-ag-annual-financial-report-part-1>.
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