Thomas Cook Group

Burmeister outlines hotel expansion plans

Thomas Cook Group aims to expand its hotel portfolio, manage more properties itself and increase tour operator sales of own brands, hotels chief Ingo Burmeister told fvw in an interview.

January 02, 2018
Ingo Burmeister has ambitious growth plans for Thomas Cook’s hotels business.
Photo: Thomas Cook

Europe’s second-largest tourism group is moving away from its long-standing asset-light strategy with a stronger focus on its own hotel portfolio under Ingo Burmeister, who took over as head of Thomas Cook Hotels & Resorts last May, tasked with growing the business. He previously held various management posts at TUI, including as head of the premium club brand Robinson.

At present, Thomas Cook has 170 hotels operating under one of its brands. In winter 2018/19, the group plans to have 191 own-brand hotels, including 69 Sentido up-market properties targeted mostly at couples, 60 Smartline budget hotels, 17 adults-only Sunprime resorts, 13 Sunwing family hotels, nine Sunconnect hi-tech properties, eight Aldiana club resorts and three Casa Cook lifestyle hotels.

In the medium-term, however, the number of own-brand hotels is planned to rise to about 300 properties. This would include a significant expansion of the Aldiana club holiday resorts. “The aim is to increase the number of Aldianas to 15 resorts and thus nearly double revenues,” Burmeister said.

A central role in this expansion will be played by the strategic partnership with LMEY, the hotel investment company that owns Aldiana and successfully returned it to profit over the last year. As part of this partnership, Cook has acquired a 42% stake in the German club brand which it had sold off a decade ago and is now promoting its resorts more strongly in the German holiday brochures.

One key measure will be the creation of a joint investment fund to build or renovate, own and operate hotels on a management basis. The investment fund will initially own 2 unnamed Cook hotels and 3 Aldiana resorts, build new hotels or renovate existing ones, and eventually have a portfolio of 40 hotels, including Aldiana, Sunwing, Sunprime, Casa Cook and Sentido properties, followed later by Smartline and Sunconnect hotels.

Burmeister explained that LMEY has experience in hotel construction and renovation, while Thomas Cook can contribute management experience and “immense” sales power. “If we focus on our own hotel brands, that will give us strong sales and profit leverage,” he said.

The fund should also attract external investors with the promise of good profits, including a double-digit ROI. "We can prove that we can operate hotels profitably, and we have sizeable sales leverage,” he commented.

Overall, Thomas Cook wants to increase the proportion of its own-brand hotels that are under its own management to 40% in future. At present, about 80% of the 170 hotels are operated on a franchise basis.

One of Burmeister’s top aims is to increase the share of tour operator sales that include one of the group’s own-brand hotels. This is just 12% at present. But he said: “My aim is to exceed a revenue share of 30%.” This would be a similar level to TUI, and would generate various advantages for Thomas Cook, including higher quality, higher revenues and a better profit margin.

One consequence is that the group’s tour operators, including Thomas Cook Germany, will have to focus more strongly on marketing and selling holidays in the group’s own properties in future. “Every marketing message must have our hotel brands as a central theme,” Burmeister said. Sentido and Casa Cook are already well-known on the German market but Sunwing and Sunprime have a low profile at present.

In parallel, the group wants to increase the proportion of own-brand hotels that it markets on an exclusive basis from about 70% at present to 100% in the large source markets.

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