Kuoni Group has announced a move to exit from the tour operating business under a strategic review.
While ranking in the ‘top five tour operators’ in Europe, the group has put its tour operating business up for sale, covering operations in Switzerland, UK, Benelux, Hong Kong/China, India and Scandinavia. New owners are expected to be found in 2015.
The move affects 3, 800 employees in total. Holidays booked will not be impacted, with Kuoni saying ‘all units will continue to deliver their expert services to the accustomed standards of quality and reliability’.
Kuoni Group said: “Kuoni ranks among the top five tour operators in Europe and has a well-established presence in Hong Kong and India. In spite of this position, Kuoni’s outbound business faces increasing challenges from changing market conditions. In consideration of the fundamental changes in the industry and the unique position of Kuoni Group as a leading service provider to the global travel industry, the board of directors and group executive board have decided to focus the company’s resources on those core activities in which Kuoni already enjoys a leading market position with attractive prospects. Kuoni has therefore decided to exit the tour operating businesses.”
The Swiss group has announced it will have a new set-up structured under its core business of Global Travel Distribution (GTD), Global Travel Services (GTS) and VFS Global moving forward, which represents 60% of its consolidated turnover.
GTD, previously known as FIT, will be its B2B wholesaler which already sells 38,000 room nights a day online. This will operate under the GTA, TravelCube and Travel Bound brands.
GTS will comprise of Group Travel Experts and Destination Management Specialists (DMS) organising accommodation, transportation, tours and activities and handles 50,000 leisure tours a year.
VFS Global focuses on travel-related processes such as visa applications.
“These core businesses benefit from leading global positions and exposure to high growth markets. They already represent around 60% of Kuoni’s current consolidated turnover,” the firm said in a statement. “Kuoni’s position as a unique service provider with a strong focus on Asia offers attractive opportunities to further drive growth and profitability by leveraging the Group’s scale, exploiting cross-selling opportunities and developing more new business.”
To maximise growth the firm will focus on markets with long-term growth potential such as Asia, the Middle East and Africa.
Preliminary numbers show Kuoni saw a 2.8% drop in consolidated turnover in its 2014 financial year to CHF5.5 billion. Its outbound business in the Nordics declined by 14.1% to CHF844m, while the outbound Europe/Asia sector fell 5% to CHF1.3bn. Turnover in DMS fell 12.6%, while the VFS Global arm grew 11.3%.
Kuoni Group employs approximately 8,000 people and generated CHF3.4 billion turnover in 2014. Its full year results expect GBP85m in EBIT with a net result of CHF66m.
New group executive board
Kuoni Group’s new group executive board includes CEO Peter Meier, CFO Thomas Peyer, GTD’s Ivan Walter, GTS’ Rolf Schafroth and VFS Global’s Zubin Karkaria.
“Kuoni Group’s new strategic direction will transform the company into a unique, clearly positioned player in the global travel industry. The new group focus will lead to a win-win situation for customers, employees, shareholders and partners alike.”