The Monday Interview

March 23, 2014 1:26 pm

Peter Long, Tui Travel

Peter Long, CEO of Tui Travel. Photograph: Rosie Hallam©FT

Smooth operator: Peter Long has helped Tui Travel become one of the European industry’s two behemoths  

No business sector is more sensitive to crises than travel. They arrive with alarming frequency and when least expected, sending tour operators, travel agents, airlines and hoteliers into a familiar pattern of cancellations, recovery planning and accounting for lost earnings.

So you could excuse Peter Long, Tui Travel’s chief executive, for dismissing out of hand the Malaysian Airlines mystery as another potential industry crisis.

“It’s a tragedy and they’ve obviously got to find out what the cause was, but there is not a direct correlation that suddenly people become scared of flying,” he says. “And you know the statistics. It’s probably a higher risk driving around the M25 when the weather is bad than it is being up in an aeroplane.”

Mr Long has seen it all. The Gulf wars, the 9/11 terrorist attacks, Sars, volcanic ash, the Arab spring. The weather, and its everyday impact on people’s choice of holidaying at home or abroad, does not bother him. “The Good Lord decides that, it is what it is,” he says. “The biggest issues that we’ve had to deal with are the extreme disruptions. When we had the ash cloud and 143 aircraft on the ground – that kind of bothers me more.”

These events matter when you have a business with a turnover of £15bn and margins as low as 4 per cent. Tui Travel is the biggest tour operator in Europe – with 30m customers, 55,000 staff, 220 brands, operating in 180 countries – and it has reached that size under the seven-year stewardship of Mr Long, who this month marks three decades in the travel industry.

Holidays as a boy were spent in the West Country of England. Then there were family self-drive holidays to Austria and Italy. A trained accountant, his first career foray into travel in the mid-1980s was at International Leisure Group, then Sunworld.

He made his mark pioneering Turkey as a destination. “In those early years the infrastructure was so bad so you’d get electricity cuts, and then that would affect fridges,” he says. “Then you’d get food poisoning, and all those issues. And you look today at the quality and the way Turkish tourism has developed.”

Thirty years ago quantity rather than quality was the industry’s maxim, when competitors were in a mad dash for hotel contracts. “It was like a land grab – grab as many beds as you can and just put more capacity on,” he says. “Pretty unsophisticated. But that’s what you see in a market in any industry when it’s in its early stages of growth. Price then was the only driver.”

Tall, and prone to speaking at length in a deep monotone, he is both unflappable and undemonstrative. His face gives little away. Such im­placability perhaps comes from being a rare survivor in an industry renowned for churning up and spitting out tour operators and their executives with indecent haste.

Wyn Ellis, a leisure analyst with Numis, describes him as the “grand­father” of the industry. “So many people have crashed and burned in this industry, but he’s got Tui in a good place,” Mr Ellis says.

The 61-year-old Mr Long is also an actual grandfather. With four grandchildren, he is once again experiencing the pleasures and pains of family holidays. This has given him an in­sight into one of the big debates raging in the industry: the costs families have to bear in school summer holidays. Mr Long sympathises, and wants the government to stagger school holidays in order to spread the demand across more weeks in July.

The CV

Born: Malta, 1952

Education: Prices Grammar School, Fareham, Hampshire; qualified chartered accountant

Career: Starts out working in finance, manufacturing and construction
1984 JoinsHarry Goodman’s International Leisure Group
1991-96 Chief executive of Sunworld Holidays
1996 Joins First Choice Holidays
1999 Appointed chief executive
2007 Becomes chief executive of Tui Travel after merger of First Choice with Tui Tourism

Hobbies: Family holidays in Majorca, watching rugby

Family: Married with three sons and four grandchildren

A higher price at the beginning of July would enable prices at the beginning of August to be lower. That would mean those who are able to go at the start of July paying more. But since these people are parents who send their children to private school, “you could say they can afford it”, he says.

Mr Long was educated at a grammar school in Hampshire and qualified as a chartered accountant. His early business career included stints in manufacturing and construction before he entered the travel industry. In 1996 he joined First Choice Holidays, which was in difficulty, losing market share, its margins depleting.

His mentor was the late Ian Clubb, a Scottish businessman with a reputation as a turnround specialist. “I re­member him saying to me in the early days, ‘You understand tour operating, I understand the City. We’ll teach each other our respective skills’,” recalls Mr Long. “It was a very, very powerful team.”

They wanted to make First Choice stand out from the very crowded market, so they took the business into specialist holidays including treks to Mount Kilimanjaro, sailing holidays, and new destinations such as Croatia.

The internet was opening up new ideas to holidaymakers and changing tastes, and First Choice was ready to turn its back on package holidays and auction off its package holiday unit.

Then came a seismic industry mo­m­ent. UK group MyTravel, which was in talks to buy the First Choice unit, announced a merger with its German-based rival Thomas Cook, whose name wa­s given to the new entity.

First Choice abandoned the auction, and hastily announced its own rival merger, with the German operator Tui, whose brands included Thomson and Airtours. Tui Travel was created and Mr Long appointed as its CEO.

Europe’s travel industry was rapidly carved up by these two behemoths. Scale was everything. Smaller operators were swallowed up or went out of business. Thomas Cook and Tui Travel became big FTSE 100 companies, competing for every possible holiday to every reachable destination. That meant embracing the package holiday that Mr Long had been on the point of quitting before the merger.

“There was a period of fashion where customers used to like to talk with their friends and say, ‘Look, we’ve done this ourselves and it’s great. And we think we’ve saved some money’,” he says. “Now it’s, well, this is actually a lot of hassle.”

Besides, he adds, austerity has brought about a revival of package holidays, particularly all-inclusive deals. Scale makes the all-inclusive cheaper. Try putting together your own holiday, he says: “You will know. You go on to a website of any of the low-cost carriers on any peak dates now for summer, and the flight prices are ridiculous.”

More than half of Tui’s customers prefer all-inclusive deals. It is “here to stay”, says Mr Long. It is the “bedrock”. The company’s success earned him a pay package of more than £10m last year.

Mr Long’s career has not been without the odd blemish, notably an accounting error of nearly £120m in 2010 (“not one’s proudest moment”), which cost the finance director his job.

He has also resisted the idea of the company being merged with the German parent Tui AG, sceptical that it would create shareholder value. “Bluntly, it won’t happen,” he says.

But the biggest controversy during his tenure of Tui is one he has watched from the sidelines: the near-collapse of rival Thomas Cook.

It was not that long ago that Mr Long talked about picking up market share from Thomas Cook’s misfortunes, but these days he sounds surprisingly pleased about its recovery. “Cynically, that is good for us because it’s good to have a strong, healthy industry. And that’s the benefit for everybody. We do not want basket cases in an industry because people say, ‘Oh, why the hell should I invest?’”

Thomas Cook will not be relaxing at those words. Mr Long is two years into a five-year plan to expand Tui Travel by up to 10 per cent a year. “I won’t carry on being chief executive for ever, and I won’t ever outstay my welcome. But where I am today is [that] I love what I do. I’m very excited by the journey we’re on. I haven’t finished yet.”

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