In Depth: EasyJet Holidays’ switch from OTA to operator marks fundamental shift

There is more than one striking aspect to easyJet Holidays’ ?deal with Hotelopia, which ?was announced on Monday.

There is more than one striking aspect to easyJet Holidays’ ?deal with Hotelopia, which ?was announced on Monday.

First, it counters the received wisdom that tour operators selling package holidays are doomed. Here we see an online travel agent (OTA) and low-cost carrier acknowledge that aspects of traditional tour operating are what customers want.

Second, there is Tui Travel’s decision to get into bed with easyJet through bed bank Hotelbeds and OTA Hotelopia as a means to capture a part of the mass market it has somewhat vacated with its tour operator strategy of differentiated product.

Third, there is the threat easyJet Holidays now poses to rivals, not just in Britain, but across Europe. The deal may present a challenge to Monarch, but it is aimed more at customers who are currently likely to book with On The Beach and Travel Republic and with OTA giants Expedia and Booking.com.

Fourth, there is disappointment for agents – but no surprise – that easyJet Holidays will not be sold through the trade. Yet the company says that this might change.

EasyJet Holidays general manager Mandy Round says: “With a full Atol we would be able to sell through the trade, but it is not in our strategy at present. We’ve been approached by members of the trade, but it’s not ?on the agenda ?for the moment.”

Figures add up

The scale of the deal is clear from a cursory look at the numbers. EasyJet carries 60 million passengers a year – 80% of them leisure, 45% originating in the UK – and it estimates 90% seek accommodation to go with flights.

If we assume the airline carries 30 million return passengers, that is a lot of rooms. Hotelopia offers accommodation at 60,000 hotels and apartments, and easyJet research among passengers in the past year suggests 65% recognise the Atol logo and “would be more likely to book a holiday if it was a package”. That must have produced a lightbulb moment at the company.

Round acknowledges the idea of becoming a tour operator “came wholly from Hotelopia”. Launching easyJet Holidays as an OTA three years ago “was right at the time”, she says. But she adds: “The industry has moved forward. Consumers understand you often get ?a better deal with a package. ?Atol is well recognised and ?well respected.

“Lowcostbeds has done a great job, but we were always going to go out to tender after three years. We chose Hotelopia because of the strategy they put forward.

“We asked those tendering how they would grow easyJet Holidays and Hotelopia said by taking the feed from Hotelbeds.

“They have fantastic relationships with hoteliers and their strategy is to become the biggest bed bank in Europe.”

Europe’s ‘number three’

So easyJet Holidays will act “more as a traditional tour operator”. “We will still offer huge flexibility on durations, departure airports, time of day,” says Round. “All that flexibility will apply, but there ?will also be the benefits of a traditional tour operator.”

She aims to make the company a clear number-three in the pan-European market behind Tui Travel and Thomas Cook. Round says:

“We’ve established the brand. There are two strong players; we want to be a strong number three. We’re already a strong number two to Air France in France, to KLM in the Netherlands and to Swiss in Switzerland, and we’ve not done anything much to promote easyJet Holidays in those countries so far.”

How does that sound to Tui Travel? Hotelbeds managing director Carlos Munoz insists there is no concern within the group at Hotelopia’s partnership. He says: “There is no tension. Tui Travel is very strong in differentiated content, but wants to participate in other industry segments.

“It is a great opportunity for Hotelopia. We have the knowledge to build easyJet Holidays and to build our business.

“We identified an opportunity, they saw the opportunity and we met in the middle.”Munoz adds: “Tui Travel is the world’s leading travel company. ?It can’t give up a big segment of the market.”