UK accommodation supplier to the trade Youtravel says it must continue to improve profitability if it is to invest in technology to improve its service to travel agents.
The Meeting Point-owned bed bank is poised to officially launch in other non-English speaking European countries on the back of a new technology platform.
Confirming the firm does not plan to replace chief sales officer Paul Riches following his decision to quit after just nine months, Meeting Point chief executive Roula Jouny said YouTravel intended leave the low margin sector to others.
“We will grow by focusing on providing Youtravel with ‘castle’ properties so we don’t work on thin margins or no margins,” she said. “We want product that’s not comparable with our competition. We don’t want to get into a price war. Our UK market is going to be driven more by product, technology and service, so it’s not really 100% a sales job anymore.”
Jouny was speaking after the demise of rival Lowcost Beds, part of the Lowcost Travel Group which collapsed last month leaving thousands of holidaymakers out of pocket.
She said the challenge in the UK market is that the dominance of the budget carriers means there is extreme price transparency, much more so than in the German market where the majority of holidaymakers buy packages with charter flights.
Jouny said this leaves OTAs and other agents scrapping over thin margins on the hotel element of the holiday which prompts aggressive discounting, and even selling below what it paid for the room in the case of Lowcost before its demise.
“Transparency is huge in the UK, the market is much more driven by the low-cost airlines whereas in Germany we have three million customers, 70% of which use charter flights and we package a lot of our business. In Germany you have got the price of the airline ticket where there is still some flexibility.”
Ground handler Meeting Point is part of the larger FTI Touristik group and it believes it has the benefit of volume when it comes to negotiating deals with suppliers.
Jouny said increasingly large international hotel groups are looking to agree non-static dynamic pricing partnerships so they can yield manage better, and YouTravel will benefit from new technology that has allowed it to agree these deals for long-haul and city properties to be available to the trade.
The firm will also be heavily promoting its own growing Labranda hotel chain that has properties in key Mediterranean destinations like the Canaries aimed at the leisure market.
“We are bringing YouTravel closer and closer so it can take advantage from the benefits of being part of a larger group. More and more we are learning about the UK market and from other’s mistakes. We are not going to get into these price wars and not just going to be a technology platform.
“I want to sell unique product which is profitable for both me and my clients. We watched Lowcost very closely and we knew where it was going. There is so much we can do in the UK market but with existing partner and more about managing accounts and making sure the technology is there. We will be much more closer to clients and talking about our product, because this is what we want to sell.
“Technology is an ongoing investment. It’s not going to stop, we need to make that investment all the time, but you need to be profitable to make that investment for the long run.”
Jouny said the UK market has performed well for YouTravel so far is year with sales volumes up 38% and profitability tracking even higher.