what-happened-to-thomas-cook

What happened to Thomas Cook?

Thomas Cook Group was a British travel company formed from the merger of Thomas Cook AG and MyTravel Group. Originally the company was founded in 1841 by businessman Thomas Cook and was widely considered to be the world’s oldest travel firm. Thomas Cook was a British travel agency founded in 1841 by Thomas Cook. After 178 years in operation, the company ceased operations in 2020 with approximately 600,000 customers traveling abroad. Shifting consumer preferences and the rise of online competitors like Airbnb, also speeded up its decline.

Background

Thomas Cook Group was a British travel company formed from the merger of Thomas Cook AG and MyTravel Group.

The original company was founded in 1841 by businessman Thomas Cook and was widely considered to be the world’s oldest travel firm.

Thomas Cook began by selling railway voyages and slowly expanded to travel-related businesses such as hotels, resorts, and airlines. 

After 178 years in operation, the company entered compulsory liquidation in 2019 after it failed to secure funding.

The demise of Thomas Cook had significant ramifications for customers and staff around the world.

Approximately 21,000 employees became jobless almost overnight and some 600,000 travelers became stranded overseas.

A quarter of these was from the United Kingdom, prompting the British Government to instigate the largest peacetime repatriation in history.

The story of Thomas Cook’s demise is told below. How did such a large and successful company operating in the golden age of travel collapse?

Changing travel preferences

No article about the demise of a travel company would be complete without mentioning Airbnb. As more travelers began organizing their own vacations, they had little need for a third-party service like Thomas Cook. 

Low-cost airlines such as EasyJet also took market share from the company in the extremely competitive European airline market.

Tim Jeans, former managing director of budget European carrier Monarch Airlines, would later remark that Thomas Cook was running “an analogue business model in a digital world”.

Political and meteorological factors

In 2016, political unrest in Turkey led to an attempted presidential coup. As one of the top destinations for Thomas Cook customers, the effect of the unrest on revenue was significant.

Two years later, a heatwave across much of Europe combined with the uncertainty around Brexit encouraged many travelers to stay at home.

As if that wasn’t enough, the value of the English pound dropped which weakened customers’ purchasing power overseas.

In isolation, it is likely the company could have overcome these relatively transient events. But Thomas Cook was already in a weakened and vulnerable state.

Debt

High debt was a chronic problem for Thomas Cook and probably what sealed its demise.

Shortly before it ceased operations, the company had $2.1 billion in debt accrued via several questionable deals. The 2007 merger with MyTravel Group drew the most criticism as it had only made a profit once in the past six years. 

Such was the level of debt that the company had to sell around three million holidays annually just to cover the interest repayments.

Between 2011 and 2002 Thomas Cook paid £1.2 billion in interest alone.

Liquidation

In August 2019, a last-minute rescue deal worth £900 million was drafted by Fosun International – a Chinese conglomerate and major Thomas Cook shareholder.

In a complex deal, Fosun would inject £450 million into Thomas Cook while taking a stake in its airline and tour operator divisions.

The remaining money would be given to Thomas Cook’s creditors and banks. However, the deal fell through after the company requested another £200 million to see it through the quiet winter season. 

Key takeaways:

  • Thomas Cook was a British travel agency founded in 1841 by Thomas Cook. After 178 years in operation, the company ceased operations in 2020 with approximately 600,000 customers traveling abroad.
  • As a third-party travel agency, Thomas Cook employed an outdated business model. As more consumers started planning their own vacations, there was little need for the company’s services.
  • Thomas Cook was subject to various meteorological and political disasters in the final years of operation. A high level of debt meant the company was extremely vulnerable to these damaging though largely short-lived events.

Other Failure Stories

What Happened to WeWork

what-happened-to-wework
WeWork is a commercial real estate company providing shared workspaces for tech start-ups and other enterprise services. It was founded by Adam Neumann and Miguel McKelvey in 2010. WeWork’s business model was built on complex arrangements between the company and its landlords. There were also several conflicts of interest between Neumann and WeWork, which provided the impetus for the failed IPO and significant devaluation that would follow.

What Happened to Netscape

what-happened-to-netscape
Netscape – or Netscape Communications Corporation – was a computer services company best known for its web browser. The company was founded in 1994 by Marc Andreessen and James H. Clark as one of the internet’s first and most important start-ups. The Netscape Navigator web browser was released in 1995 and became the browser of choice for the users of the time. By November 1998, it had been acquired by AOL, which tried unsuccessfully to revive the popularity of the web browser. Ten years later, Netscape was shut down entirely.

What Happened to Musical.ly

what-happened-to-musically
Musically, or Musical.ly as it is officially known, was a Chinese social media platform headquartered in Shanghai. After passing 200 million users in May 2017, the platform was shut down by tech company ByteDance in November. After its acquisition, ByteDance suggested Musical.ly would continue to operate as a standalone platform. Company representatives noted that it would be able to leverage ByteDance’s AI technology and enormous reach in the Chinese market. Musically was ultimately absorbed into TikTok in June 2018, with the app no longer available in August of the same year. Existing users were offered technical support and several new features as a sweetener.

What Happened to Vine

what-happened-to-vine
Vine was an American video social networking platform with a focus on looping video clips of six seconds in length, founded by Dom Hofmann, Rus Yusupov, and Colin Kroll in 2012 to help people capture casual moments in their lives and share them with their friends. Vine went on to become a massively popular platform. Yet by 2016, Twitter discontinued the mobile app, allowing users to view or download content on the Vine website. It then announced a reconfigured app allowing creators to share content to a connected Twitter account only. This marked the end of Vine.

What Happened to CNN Plus

what-happened-to-cnn-plus
CNN Plus was a video streaming service and offshoot of CNN’s cable TV news network that was launched on March 29, 2022. The service was ultimately shut down just one month after it was launched. Trouble began for the platform when parent company WarnerMedia merged with Discovery. The latter was unimpressed with paltry viewer data and, with $55 billion in debt to clear, was not interested in funding CNN+ moving forward. Other contributing factors to CNN Plus’s demise include a lack of compelling content and streaming service market saturation.

What Happened to Clubhouse

what-happened-to-clubhouse
Clubhouse is a social app that allows thousands of people to communicate with each other in audio chat rooms. At one point, the company was worth $4 billion and boasted users such as Mark Zuckerberg and Elon Musk. Clubhouse declined because it rode the wave of pandemic lockdowns and suffered when people resumed their normal routines. The decision to remove the invite-only feature also caused a rapid influx of new members and removed any exclusivity. Clubhouse management also failed to define a business model and was unaware of the components of a successful social media site.

What Happened to Facebook

what-happened-to-facebook

Main Free Guides:

Scroll to Top
FourWeekMBA