The “strategic partnership” between Thomas Cook and Hong Kong-listed investment group Fosun International, was announced this morning, with Fosun also buying a 5% stake for £91.8 million.
Part of the deal is to “explore several collaboration opportunities in the medium-term to capitalise on the fast-growing Chinese domestic and international tourism market.” These initiatives include “the development of tour operator activities in China to organise international travel for Chinese holidaymakers under the Thomas Cook brand name.”
“Medium-term” means that details are thin on the ground, although the release mentions “collaboration opportunities with Fosun’s other travel and leisure businesses”. Last month Fosun completed a €939 million takeover of French tour operator Club Med, and there is much talk in Europe about how Club Med and Thomas Cook will work together.
But in China, Fosun is the largest private shareholder in China International Travel Services (CITS), a vertically integrated travel business with 120 travel agencies in key cities in China, giving Thomas Cook China an instant offline distribution network. Thomas Cook has been playing digital catch-up in Europe so it will be interesting to see how it approaches China.
As the IHG report released this week said, Chinese travellers like packages and group travel, which works in Thomas Cook’s favour. The big Chinese OTAs Qunar, eLong and Ctrip have also been looking at international outbound travel.
Ctrip in particular is looking beyond China, buying Travelfusion at the start of this year and linking up with Amadeus as part of its overseas expansion plans. And we still are waiting to find out exactly what Alibaba has in mind for its standalone travel business alitrip.com.
Clearly the OTAs could sell Thomas Cook tours, if the commercials work. Thomas Cook in Europe has been keeping its own-brand inventory away from third-party online distributors so it might have to change its tune to build scale online.
If Thomas Cook is going to offer package holidays to the Chinese market, there is also the question about airline partnerships and how it will approach the regulatory environment. Speculation aside, the announcement is another example of how dynamic the Chinese travel market is, with international outbound increasingly front of mind.
In a way, the presence of Thomas Cook in China is a sign that the market is starting to mature.
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