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.
| Event | Description |
|---|---|
| Founding of Thomas Cook | Thomas Cook, a British travel pioneer, founded Thomas Cook & Son in 1841. It started as a company organizing train trips for temperance movements but evolved into a travel agency. |
| Early Growth and Expansion | Thomas Cook & Son grew rapidly, offering escorted tours and travel services. It became a prominent name in the travel industry, arranging trips worldwide. |
| Innovations in Travel | Thomas Cook introduced various travel innovations, including traveler’s checks, railway timetables, and package holidays. These innovations revolutionized the travel experience. |
| Acquisition of Other Companies | Over the years, Thomas Cook acquired several travel-related companies, expanding its reach and services. |
| Ownership Changes | Ownership of Thomas Cook changed multiple times over its history, with periods of private ownership, public ownership, and mergers with other travel companies. |
| Financial Difficulties | In the 21st century, Thomas Cook faced financial difficulties due to factors like high debt, changing travel trends, and increased competition from online travel agencies. |
| 2007 Merger with MyTravel Group | To strengthen its position, Thomas Cook merged with MyTravel Group in 2007, forming the Thomas Cook Group. The merger aimed to create a more competitive travel company. |
| Challenges in the Digital Age | The rise of online booking platforms and changing consumer preferences posed challenges to traditional travel agencies like Thomas Cook. |
| Financial Crisis and Bailouts | Thomas Cook faced financial crises, requiring financial assistance from banks and negotiations with creditors to avoid bankruptcy. These efforts provided short-term relief. |
| Closure of Stores and Job Losses | To reduce costs, Thomas Cook closed a significant number of physical stores and laid off employees. These measures aimed to streamline operations and cut expenses. |
| Brexit and Currency Fluctuations | Factors like Brexit uncertainty and currency fluctuations affected travel bookings, making it challenging for the company to predict and manage its finances. |
| Final Attempt to Secure Funding | In 2019, Thomas Cook attempted to secure a bailout package to rescue the company, but negotiations with stakeholders, including the UK government, were unsuccessful. |
| Bankruptcy and Cessation of Operations | In September 2019, Thomas Cook Group declared bankruptcy and ceased operations, leaving thousands of travelers stranded and prompting the UK’s largest peacetime repatriation effort. |
| Impact on Travel Industry | The collapse of Thomas Cook had a significant impact on the travel industry, affecting employees, travelers, and other businesses connected to the company. |
| Sale of Assets | After its collapse, various assets and brands of Thomas Cook were sold to other travel companies, including its airline and hotel brands. |
| Lessons Learned | The fall of Thomas Cook highlighted the challenges faced by traditional travel agencies in the digital age and the importance of adaptability and financial resilience. |
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.
Quick Timeline
- Thomas Cook Group was a British travel company formed from the merger of Thomas Cook AG and MyTravel Group. It was originally founded in 1841 by businessman Thomas Cook and was considered the world’s oldest travel firm.
- In 2019, after 178 years in operation, the company entered compulsory liquidation due to its failure to secure funding. This left approximately 21,000 employees jobless and stranded around 600,000 travelers overseas.
- Thomas Cook faced challenges from shifting consumer preferences as travelers increasingly organized their own vacations, reducing the need for a third-party travel agency like Thomas Cook.
- The rise of online competitors, like Airbnb, and low-cost airlines, such as EasyJet, also took market share from Thomas Cook in the competitive European travel market.
- Political unrest in Turkey and a heatwave in Europe, combined with uncertainty around Brexit, further impacted Thomas Cook’s revenue and operations.
- High levels of debt, accumulated through questionable deals and mergers, were a chronic problem for Thomas Cook and contributed significantly to its downfall.
- A last-minute rescue deal by Fosun International, a Chinese conglomerate and major Thomas Cook shareholder, fell through, leading to the company’s liquidation.
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