Analysis of Thomas Cook's Travel and Tourism Business Strategies

This report analyzes Thomas Cook's business operations, focusing on revenue management principles such as overbooking and pricing strategies. It defines how the tourism sector utilizes revenue management tools, including channel managers and booking engines, to boost profits. The report further examines the HR lifecycle stages, including recruitment, education, motivation, evaluation, and celebration, applied to a specific travel and tourism role. A performance management plan is detailed, alongside techniques to address negative behaviors. Additionally, the report covers relevant legislation in the travel and tourism industry, such as the Equality Act and Health and Safety Act, and the impact of company, employment, and contract law on business decision-making. Finally, it explores different financial statements, reporting mechanisms, and the importance of budgeting for controlling business performance and identifying variances. The report provides a detailed overview of Thomas Cook's business practices and strategies.

THE TRAVEL AND
TOURISM BUISNESS
TOOLKIT

Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Rationale and principles of revenue management for travel and tourism sector...................1
P2 Define how tourism sector implement revenue management tools to generate profits.........1
TASK 2............................................................................................................................................2
P3 Different stages of HR life cycle applied to a specific travel and tourism role.....................2
P4 Performance management plan for travel and tourism job role along with technique to
resolve negative behaviour..........................................................................................................3
TASK 3............................................................................................................................................4
P5 Different legislation in travel and tourism industry which organizations must adhere.........4
P6 Impact of company, employment and contract law on business decision-making................4
TASK 4............................................................................................................................................5
P7 Different kind of financial statements and reporting mechanism for travel and tourism
industry........................................................................................................................................5
P8 Importance and value of budget for controlling business performance and identifying
variances....................................................................................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Travel and tourism is a wide sector in hospitality industry and refers to those activities in
which a person goes different places with the aim of visits or business purpose. Tourism is the
practice in which a person travels to gain pleasure and spend good times with near ones (Ali,
Ryu and Hussain, 2016). These activities benefits in developing economic and social conditions
of a nation in form of donations, taxes, employment etc. This assignment is written in context
with Thomas Cook which is a UK based global traveling company, headquartered in London,
England. Company was founded in 1841 and offers holiday package, hotels, accommodations
and cruise line to their customers. This report is going to include rationale and principles
associated with revenue management. Implementation of revenue management tools to generate
and maximize profits will be discussed. Various stages of HR life cycle for a specific job role is
discussed. Beside this, a performance management plan, financial statement and budget is
prepared.
TASK 1
P1 Rationale and principles of revenue management for travel and tourism sector
The principle and rationale of revenue management in context with travel and tourism
sector are as following:
Overbooking- Thomas Cook is a Britain based tourism & travel sector and specialises in
providing quality products and services to their customers. This will benefits them in enhanced
brand loyalty. Website of the company is followed by the consumers due to of overbooking and
advance booking. It will benefit company in enhancing their customer base considerably.
Pricing- The organization also provide services at sensible price by adopting good
pricing strategy. Company offer high quality services so their customers are ready to pay high
amount for taking services of it. It will help Thomas Cook in gaining advantages like earning
high profit and help in management of revenue. If price will be high and quality of services and
products will be low then it will not attract more customers (Budeanu and et. al., 2016).
P2 Define how tourism sector implement revenue management tools to generate profits
There are different revenue management tools that can be applied to tourism and travel
sector. In this context, some tools are mentioned below:
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 Channel manager: In context with Thomas Cook, channel manager monitor and analyse
all operations that are related with business channels. This helps in maintaining prices
and inventory with the assistance of single manager. This tool will benefits in online
distribution so that customer base of firm can be increased.
 Rate shopper- This tool can be use to acknowledge the price rate of rival companies. In
this context, company formulates the pricing strategy of its services so that high profit
can be earned.
 Booking engine- It is a software application that is used by companies to secure
international reservations. It is related with channel manager due to which vacant rooms
are updated correctly (Rogerson, 2015).
TASK 2
P3 Different stages of HR life cycle applied to a specific travel and tourism role
There are five stages of HR life cycle, they are as following:
 Recruitment and selection: It is the procedure of hiring a qualified candidate for the
vacancy in an organisation. In context with Thomas Cook, recruitment will benefit
company in hiring suitable candidate for the position of HR executive. Right candidate
will utilize its knowledge and skills due to which profits of company will enhance
considerably. With the help of interviews, skills and other test, concerned company can
choose right candidate (Čavlek Ladkin and Willis, 2017).
Education- It is concerned with the understanding and qualification of workforce. When
HR manager of company will hire HR executive, then he must be given required information so
that business operations of HR executive can be performed desirably.
Motivation- It is an encouragement by which employee tries to give their best
performance. In context with Thomas Cook, manager can motivate HR executive by training
programs and motivations sessions so that organisational work can be accomplished in a timely
manner. Other than this, HR executive can be given rewards and incentives so that his working
potential can be increased.
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Evaluation- Here the performance of HR executive will be evaluated and measured so
that it can be decided if the selected person is capable to handle all the responsibilities or not. If
the selected person is not able to perform well, training will be given so that HR executive can
improve its working potential and became more productive.
Celebration- This is the last stage where Thomas Cook is required to celebrate the hard
work of employees. In return of hard work, HR executive and other employees must be taken to
trips and visits so that they can further give their best performance (Mowforth and Munt, 2015).
P4 Performance management plan for travel and tourism job role along with technique to resolve
negative behaviour
Performance management is a tactics that is used by business organisations to measure
the performance and working potential of employees working in an organisation. Performance
management plan benefits an organisation in improving the performance level of employers and
employees so that high organisational productivity can be acquired. Different stages are defined
below:
 Planning: It is the first stage in which management department of organisation with
formulate proper plan related with operations, functions and activities of business. In case
of Thomas Cook, proper planning will benefits in finding and resolving issues in a timely
manner. In tourism sector, organisation is working by using advance and modern
operations so that desires of employees can be satisfied in a proper manner. In this aspect,
stages of HR life cycle can benefit in recruiting right candidate for company which can
do planning desirably (DeLacy and et. al., 2014).
 Monitoring- This is related with checking or observing aspects over a time period. In
context with Thomas Cook, manager is needed to analyse nature of workforce so that
their issues and grievances can be resolved properly. Regular monitoring of activities will
generate a sense of security in the minds of customer about offerings of Thomas Cook.
 Developing- In Thomas Cook, manager department of firm can adopt different theories
so that their workforce can be motivated in a desired manner. With the help of motivation
technique, profit margins of company can be enhanced in a considerable manner.
Development of organisation on continuous basis will help Thomas cook in gaining
competitive advantage over rival companies.
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 Rating- This tool can be used by firms to analyse performance of their workforce. In this
context, management department of Thomas Cook can give ratings to their workers in
accordance with their performance. In this regard, performance appraisals can be given to
the workforce . This will help company in identifying and retaining suitable candidates
for a long time period.
 Rewarding- With the help of this aspect, management department in Thomas Cook can
encourage their workforce so that they will deliver their best efforts. By giving, bonus,
perks, rewards and incentives to their workforce, performance of employees can be
managed in a desired manner.
TASK 3
P5 Different legislation in travel and tourism industry which organizations must adhere
There are some legislations which are essential to follow for businesses operating in tour
and travel. In this context, some legislations are mentioned below:
Equality Act, 2010- This Act came into existence in UK with the aim of updating,
consolidating and supplementing earlier formulated regulations and Acts. In case of Thomas
Cook, this Act will benefits in giving same rights to male and female population of company. For
example, if a male and female is working in company on same position, then firm is required to
provide them same amount. If they will not do this, then they have to pay fines and penalties
along with facing image degradation.
Health and safety act, 1974- This Act was passed by UK government in order to protect
the health and assure the safety of employees while performing their business duties and
operations. In case of Thomas Cook, company adhere to this Act so that employees can be
protected form uncertainties. In this regard, health insurance is given to employees. If this Act
will not be considered, victim employee can file a case against company (Dickinger, Lalicic and
Mazanec, 2017).
P6 Impact of company, employment and contract law on business decision-making
Company law: It is the body of law which governs the relation, rights, conduct of
businesses, organizations, persons and companies. It is defined as a legal practice which is
associated with theories of corporations. It will include all those laws that are associated with
business life cycle of a company. This law will include about business or commercial activities
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which are performed by Thomas Cook. These laws will cover investors, shareholders, directors
and employee rights. Manager in Thomas Cook is required to take decision after considering
these laws at individual basis. For example, if the laws associated with employees or shareholder
will be violated then it will result heavy fines and penalties of company. Hence, company is
required to take those decisions which follow rules and policies which came under this law.
Employment law:
Contract law: This Act is formulated by UK parliament to introduce reasonable notice
dismissal. It is legal binding agreement among employer and employee so that welfare of
employees and rights of employers can be protected in a desired manner. For example, if right of
workers will be violated in Thomas Cook then they have to pay heavy fine. All the rights and
benefits are given to employees in accordance with this laws so that organizational culture and
operations can be maintained in an efficient way. If decisions will not be taken in accordance
with contract law then government intervention will take place that will degrade image of
company in market (Fuchs, Höpken and Lexhagen, 2014).
Employment Law: It is a broad Act which include all those rules and procedures that are
associated with employees working in an organization. But it will not cover labor law collective
bargaining. In case of Thomas Cook, the main aim of this law is to offer security and safeguard
to employees against unfair means and discrimination. For example, If management department
of company will not give rights of workers then it negatively impacts the decision making in
terms of employees turn over and others.
TASK 4
P7 Different kind of financial statements and reporting mechanism for travel and tourism
industry
Financial statement is referred to those statements which involves important information
associated with funds and finances that are invested by the company to perform their business
activities. It will benefits the company in representing their clear image, financial performance,
position and cash flows in front of stakeholders, markets and customers in a clear manner.
Different financial statements are mentioned below:
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Balance sheet- It is a financial document which include detailed information about the
liabilities, assets, shareholder equity of an organisation. In case of Thomas Cook, this document
is managed and prepared by the management department.
Mar '18 Mar '17 Mar '16 Mar '15 Dec '13
12 mths 12 mths 12 mths 15 mths 12 mths
Sources Of Funds
Total Share
Capital
37.02 165.22 165.13 31.7 25.36
Equity Share
Capital
37.02 36.68 36.59 27.27 24.77
Share
Application
Money
0.47 0.16 0.6 0.24 0
Preference
Share Capital
0 128.54 128.54 4.42 0.59
Reserves 1652.96 1123.05 1131.41 1113.18 585.43
Networth 1690.45 1288.43 1297.14 1145.12 610.79
Secured
Loans
142.58 182.94 131.7 1.28 1.24
Unsecured
Loans
-62.44 7.58 182.55 150.3 112.81
Total Debt 80.14 190.52 314.25 151.58 114.05
Total
Liabilities
1770.59 1478.95 1611.39 1296.7 724.84
Mar '18 Mar '17 Mar '16 Mar '15 Dec '13
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12 mths 12 mths 12 mths 15 mths 12 mths
Application Of Funds
Gross Block 218.68 201.2 194.93 106.9 105.21
Less: Accum.
Depreciation
33.87 23.06 11.8 43.72 42.11
Net Block 184.81 178.14 183.13 63.18 63.1
Capital Work
in Progress
0.89 5.77 2.97 1.17 4.13
Investments 1227.98 1227.67 1223.95 1158.31 593.29
Sundry
Debtors
367.41 219.16 189.31 216.1 176.16
Cash and
Bank Balance
688.63 446.58 506.68 164.45 92.79
Total Current
Assets
1056.04 665.74 695.99 380.55 268.95
Loans and
Advances
481.8 198.15 204.24 233.34 158.53
Total CA,
Loans &
Advances
1537.84 863.89 900.23 613.89 427.48
Current
Liabilities
1179.94 795.75 817.11 516.54 342.6
Provisions 1 0.78 10.31 23.32 20.57
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Total CL &
Provisions
1180.94 796.53 827.42 539.86 363.17
Net Current
Assets
356.9 67.36 72.81 74.03 64.31
Total Assets 1770.58 1478.94 1482.86 1296.69 724.83
Contingent
Liabilities
575.4 297.94 357.71 124.28 323.49
Book Value
(Rs)
45.65 31.62 31.85 41.82 24.64
Income statement- It is calculated by subtracting ll expenses taken place during the year
from the sales to arrive net profit and loss (Wattanacharoensil, 2014). In Thomas Cook, the
income statement of the company begins with sales and shows how much revenue earned over a
specific time period and it also report earning per share.
Fiscal year is October-September. All values
GBP millions. 2014 2015 2016 2017 2018
Sales/Revenue 8.59B 7.83B 7.81B 9.01B 9.58B
Cost of Goods Sold (COGS) incl. D&A 7.77B 7.1B 7.07B 8.25B 8.95B
COGS excluding D&A 7.59B 6.92B 6.86B 8.02B 8.72B
Depreciation & Amortization Expense 182M 184M 210M 230M 227M
Depreciation 146M 145M 174M 182M 168M
Amortization of Intangibles 36M 39M 36M 48M 59M
Gross Income 821M 731M 737M 757M 635M
2014 2015 2016 2017 2018
SG&A Expense 451M 445M 441M 502M 470M
Research & Development - - - - -
Other SG&A 451M 445M 441M 502M 470M
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Fiscal year is October-September. All values
GBP millions. 2014 2015 2016 2017 2018
Sales/Revenue 8.59B 7.83B 7.81B 9.01B 9.58B
Other Operating Expense 116M 18M 21M 16M 20M
Unusual Expense 241M 51M 81M 31M 131M
EBIT after Unusual Expense 13M 217M (81M) (31M) 14M
Non Operating Income/Expense 16M (27M) (19M) (21M) 47M
Non-Operating Interest Income 10M 10M 6M 4M 5M
Equity in Affiliates (Pretax) - - - - -
Interest Expense 155M 151M 146M 147M 129M
Gross Interest Expense 155M 159M 146M 147M 129M
Interest Capitalized - 8M - - -
Pretax Income (116M) 49M 35M 44M (63M)
Income Tax 1M 31M 33M 34M 110M
Income Tax - Current Domestic - - 8M (4M) -
Income Tax - Current Foreign 17M 27M 31M 46M 46M
Income Tax - Deferred Domestic (16M) 4M (6M) (8M) 64M
Income Tax - Deferred Foreign - - - - -
Income Tax Credits - - - - -
Equity in Affiliates 2M 1M (1M) (1M) 10M
Other After Tax Income (Expense) - - - - -
Consolidated Net Income (115M) 19M 1M 9M (163M)
Minority Interest Expense 3M (4M) (3M) (1M) -
Net Income (118M) 23M 4M 10M (163M)
Extraordinaries & Discontinued Operations - - - - -
Extra Items & Gain/Loss Sale Of Assets - - - - -
Cumulative Effect - Accounting Chg - - - - -
Discontinued Operations - - - - -
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Fiscal year is October-September. All values
GBP millions. 2014 2015 2016 2017 2018
Sales/Revenue 8.59B 7.83B 7.81B 9.01B 9.58B
Net Income After Extraordinaries (118M) 23M 4M 10M (163M)
Preferred Dividends - - - - -
Net Income Available to Common (118M) 23M 4M 10M (163M)
EPS (Basic) (0.08) 0.02 0.00 0.01 (0.11)
Basic Shares Outstanding 1.44B 1.49B 1.53B 1.53B 1.53B
EPS (Diluted) (0.08) 0.02 0.00 0.01 (0.11)
Diluted Shares Outstanding 1.46B 1.49B 1.53B 1.54B 1.53B
EBITDA 436M 452M 485M 469M 372M
Budget
Name of Fee Low High
Initial Franchise Fee £32,000 £40,000
Travel and Living Expenses During Training £4,000 £7,000
3 Months' Rent £26,250 £367,500
Security Deposit for Lease £9,000 £225,000
Leasehold Improvements and Construction Costs (assuming no pool) £1,750,000 £2,800,000
Selectorized Equipment and Free Weights £125,000 £500,000
Cardiovascular Equipment £150,000 £500,000
Signage £35,000 £85,000
Initial Inventory, Other Equipment and Supplies £12,000 £56,000
Computer System and Gym Management System £20,000 £35,000
Advertising and Marketing £25,000 £170,000
Miscellaneous Opening Costs £10,000 £65,000
Additional Funds - 3 Months £20,000 £150,000
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Name of Fee Low High
TOTAL ESTIMATED INITIAL INVESTMENT* £2,218,250 £5,000,500
P8 Importance and value of budget for controlling business performance and identifying
variances
Budget is defied as a financial plan which is valid and followed for a period of one year.
It includes sales, planning, revenues, volume, liabilities, expenses, costs, cash flows and other
assets of the company. Budgets are considered as backbone of an organisation as without these
budgets, it is not possible for businesses in travel and tourism to perform their business
operations in a desired manner (Höpken and et. al., 2015). It is vital for Thomas Cook to manage
and control their budget as it will results in high growth and profitability. There are different
kind of budget which is stated below:
Operating budget- It will include all expenses and revenue of the company that is
incurred in a single year. Other than this, it will include all direct and indirect costs which are
paid & received by company during that financial year. This budget is prepared by management
of company in advance of their reporting period. It is considered as a plan according which firm
is going to manage its financial transactions. It will benefits Thomas Cook in maintaining clean
image of the company regarding sales, labour, material cost, production etc. In accordance with
this budget, company formulate its other policies and strategies so that wide number of
customers can be attracted towards the offering of company. These budgets can be designed and
formulated on weekly, monthly or yearly basis to analyse policies and strategies of competitors
in a proper manner (Höpken, Fuchs and Lexhagen, 2014).
Master budget- It is an expensive business strategy which will define expected
purchases, future sales, production level, capital investments that can either repaid or acquired.
In case of Thomas Cook, the master budget will involves all budgets of company along with
balance sheet and budgeted income statement. Management of this company frames budget by
combining their sales, operating income, assets and other activities that can help the company in
gaining their objectives and targets in an appropriate manner (Kasemsap, 2018).
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CONCLUSION
From above mentioned report, it has been concluded that travel and tourism sector had to
follow different rules, policies and regulations so that government can not interrupt in their
business. There are different stages associated with HR lie cycle that help company in treating
their workforce properly. With the help of performance management plan, improvements in the
skills and capabilities of employees can be carried out. Different employee legislation like
contract law, employee law allow businesses to work in an ethical manner. Various financial
statements and budget helps the company in managing their funds & expenses in a proper
manner.
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