Thomas Cook, the world’s oldest travel company, declared bankruptcy on Monday. After 178 years of being the biggest British name in holiday booking and inventing guided tours, the firm has gone bust.
Founder Thomas Cook was a pioneer in the travel industry in the 19th century, just like Amazon or Google has been in the tech world in recent decades.
Sensing that people were curious to see the world, Cook established a travel agency in 1841 with his own name as the brand. He arranged groups of tourists to visit different cities by train, with the itinerary and accommodation planned by his company.
During the firm’s initial stage, Cook arranged to take a group of temperance campaigners from Leicester Campbell Street railway station to a teetotal rally in Loughborough, eleven miles away. On July 5, 1841, he escorted around 500 people, who paid one shilling each for the return train journey.
That marked the world’s first guided tour organized by a travel agency. His company later expanded destinations to other cities in Europe and even in America and Asia.
As another innovative offering, Thomas Cook issued traveler’s cheques in 1874, allowing his customers to exchange foreign currencies in other countries. Travelers were struggling to exchange different currencies back then, and it was unsafe to carry too much cash. Amid this situation, Thomas Cook offered a solution that became very popular.
After purchasing a traveler’s cheque before they start a journey, travellers could use the cheque to exchange local currency at the destination and pay for fares and hotels.
In a time when there was no internet, credit cards or long-distance fixed-line phone calls, traveler’s cheque was a great innovation and offered much convenience for travelers.
As the world’s largest travel agency with offices in major destinations across the world, Thomas cook built a close relationship with ship companies and hotels, enabling the firm to provide innovative service offerings.
The network Thomas Cook built can be compared to the dominance of Alibaba and Tencent in China’s industry chain today. It created an alternative “circular notes” and a payment network, backed by its leading market position. It was like what the internet giants do today to step into creating their own digital currencies and digital payment networks.
However, problems began in the recent past as Thomas Cook couldn’t keep up with the evolving global travel industry, which has been disrupted by internet technology.
Today travellers can easily book hotels and purchase airline tickets online, with all the price information and service details available on the internet. They may not need the service from travel agencies as they can arrange their own trips at ease with abundant information available online.
Also, it has become so much easier now for travelers to exchange foreign currencies, do spending with credit cards or use digital payment services around the globe. The growing trend of “disintermediation” has eroded the value of Thomas Cook and other travel agencies.
However, that doesn’t mean that travel agencies are doomed as a business altogether. The firms just need to innovate in order to keep up with changing demands of travelers.
A good example would be Japan-focused EGL Tours, which has expanded into hotel and resort development business in the country and offers tailor-made trips for Hongkongers to capture a niche market.
We have also seen some travel agencies that provide special group trips focused on activities such as in-depth cultural tours.
As the travel and tourism industry witnesses a paradigm shift, only the smart and the fittest will survive on the battlefield.
This article appeared in the Hong Kong Economic Journal on Sept 24
Translation by Julie Zhu with additional reporting
[Chinese version 中文版]
– Contact us at [email protected]