Thomas Cook links up with Expedia for vacation rental plan

Worldwide: Thomas Cook Group is hoping to start offering vacation rentals to its customers through its partnership with Expedia.

The two companies announced their partnership back in September 2017, which went live this summer. The alliance initially covered short-term breaks and Thomas Cook’s hotel-only offering, but with Expedia providing its technological resources, both sides are now looking to break into the vacation rental market.

Expedia said it would add select ‘Thomas Cook sun and beach hotels’ to its available inventory, but declined to disclose any further details about its plans with Thomas Cook.

Paul Hemingway, business change director at Thomas Cook, said: “One of the elements of the contracting allows us to distribute our package holidays, as well, onto their [Expedia’s] sites.

“So that’s another area where we see an opportunity to boost the distribution of our package sales. Expedia at the moment, in some markets, is more mature than [in] others around the sale of package holidays, alongside their dynamic packaging,” he added.

While traditional tour operators such as Thomas Cook and TUI package up their own vacations and use their owned airlines, dynamic packaging represents a newer idea, allowing consumers the choice and flexibility to select their own combination from a selection of airlines and hotels.

Hemingway said: “We’ve got lots of opportunities where we can see how we can work more closely together on other elements that maybe aren’t the main holiday. Elements like the ancillaries and areas like that where we both work with providers to add ancillary sales to the core holiday, be it insurance or airport hotels or parking.”

In the long term, Thomas Cook will look to use Expedia-owned HomeAway to supply it with vacation rentals.

Hemingway said: “The very longer-term opportunity is around areas like private accommodation. So Expedia owns HomeAway and we see potential trials around trying to look at what opportunities that gives us for an entirely different customer to target some of those private accommodations.

“That’s in the longer term, we’re right at the first stages of trying to sketch out what that could like. But, if you look at where the significant growth is, the likes of Airbnb or HomeAway, there’s significant growth in those areas.

“We’re obviously talking to Expedia about what that could look like and try to tap into that but there’s a whole host of challenges we need to overcome before getting to that point,” he added.

HomeAway and Airbnb’s successes have prompted a rethink within the traditional travel industry. The deal between Expedia and Thomas Cook would give customers to a reformed vacation package and allow the latter to move towards becoming a single, centralised travel company like TUI.

“Previously, it was very much market by market,” Hemingway said.

“We’d done some consolidation in Europe. So, we had a central procurement and contracting organisation for the majority of the central European business. But the UK was entirely separate and the Nordics was entirely separate as well.

“And the platforms that they were operating on weren’t the same platforms. So, if you contracted a city hotel, in one market, for example, that contract was exclusive in the main to that single market, and therefore, no other markets had access to that,” he added.

In 2013, Thomas Cook adopted a new ‘sunny heart’ master brand that it has gradually deployed across its source markets and merged with various other outlines as part of its centralised travel operator approach.

Hemingway said the deal would be mutually beneficial for Thomas Cook and Expedia in terms of shared revenue with the former having access to 60,000 more hotels and Expedia increasing its booking numbers.

Richard Clarke, senior analyst at Bernstein, agreed: “Thomas Cook is very good at driving direct traffic: in the UK, 83 per cent of sales are made through Thomas Cook channel and only 11 per cent of search traffic is paid for.”