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TUI Group has been staffing up on technologists as it automates key processes, such as handling airport transfers and customer service. It’s all part of a broader digitization trend by Europe’s largest holiday package operator.
The travel group, headquartered in Hannover, has about 600 software developers, up from about 100 seven years ago, said TUI Group’s Frank Rosenberger at Skift Forum Europe. Many are working on unifying the group’s five technology stacks onto one platform.
TUI Group is hiring for more than 200 digital and technologist positions. Separately, it has 300 engineers at Musement, a tech subsidiary focused on tours, activities, and experiences.
TUI Group aims to “turn itself into a digital platform,” as Skift recently reported. On the one hand, the investment in technology is a bit overdue, given that the company has an estimated 50,000-person workforce. On the other hand, TUI is now ahead of many hotel groups and cruise lines in recognizing technology’s importance by staffing accordingly.
Expanding the TUI Business Model With Software’s Help
Skift spoke a couple of weeks ago with Peter Ulwahn, TUI Musement’s chief digital officer. On March 31, Ulwahn became CEO of the TUI Musement subsidiary and a member of the TUI Group executive committee.
Musement’s strategy reflects the contours of TUI Group’s broader expansion. Musement offers more than 200,000 experiences from third-party operators through its consumer agency, by TUI as package add-ons, and through resellers such as travel agencies, other tour operators, and cruise lines.
Think of Musement as a metaphor. At the large group level, TUI looking to branch out from offering its signature vertically integrated service — which funnels travelers from group-owned agencies to group-operated flights, hotels, and cruise ships — to one that also offers travel products via third parties and provides technical solutions on a business-to-business model to third parties.
One part of that business plan is for TUI Group to grow in helping other companies transfer passengers between airports, hotels, cruise lines, and attractions.
Optimizing Traveler Transfers
One example of TUI Group’s tech strategy is how it has been changing how it handles airport transfers, especially in Spain, Greece, and Turkey.
Consider a popular destination like Mallorca, Spain. On a typical peak season day, TUI Group might have 20,000 travelers arriving around the same midday period at the small island and needing transfers to hotels or cruise ships.
Transferring that volume of passengers requires a military-style operation. For context, in 2019 TUI helped travelers with “shared transfers” — or bussing groups of visitors from hotels or cruise ships out and back.
“Worldwide, about [$7.1 billion] €6.5 billion a year is spent by travelers on shared transfers, which we already have a huge operation in,” Ulwahn said. “We’re already one of the biggest providers of what the cruise lines call ‘turnarounds.’”
TUI’s goal has been to boost the efficiency of its transfers. Pre-pandemic, it was taking teams an average of two-and-a-half hours to use its previous planning tool to prepare route networks and schedules.
To speed things up, TUI acquired technology from a startup called Mobi and blended it with a system build internally for managing services. The combined system takes mere seconds to update plans and is more accurate, Ulwahn said.
“When we launched this in Mallorca, we had the example of four German guys who didn’t get on the bus after their plane arrived,” Ulwahn said. “They went for beers instead. They’re basically ‘no shows’ on the bus, which departs, and then the guys show up. In the old practice, the staff would take quite a while to solve the problem. In the new world, they press some buttons on their iPad in seconds and find availability on the next transfer.”
TUI teams are being trained on the new system in phases, enabling workers at airports, ports, and local offices to manage transfers with tablet-based tools. By summer 2023, TUI will use the system for all TUI transfers, including excursions.
Expanding Lines of Business
The system’s modern flexibility enables TUI to create a small side business of selling its system as a tool for other companies to use for their own needs. It will be widely selling the tech to third parties, such as cruise lines and other tour operators soon, Ulwahn said.
“Our aspiration is to both increase the upsell we’re having from TUI customers but also give our business-to-business clients a platform that will increase their revenue,” Ulwahn said.
Company executives described their platform in an interview as “a cloud-based platform in an event-driven, micro-service environment with a microweb front-end user experience.” What that essentially means is that their system plays well with other technological systems out in the world. TUI sometimes it owns the transfer operations, sometimes contracts out, and sometimes offers its tech to other companies. So having tech systems that play well with others is important.
TUI hopes one benefit will be a reduction in customer confusion. About 30 percent of the calls coming into its customer service centers were questions about transfers, such as arrival times.
The tech changes, especially the more intense automation of customer service issues and operations such as transfers, can’t come fast enough. It remains an open question if Europe’s largest travel company can remain competitive when it has essentially been burdened with approximately $11 billion (€10 billion) of gross debt.
In a bright spot, TUI Group said in recent weeks that its booking volume is on track to recover to pre-pandemic levels and that it plans to repay the more than $4 billion it received in government help.
Expanding its business lines may help over time.
“Post-pandemic we expect the transfers market will grow to perhaps €45 billion by 2025,” Ulwahn said. “Out of that, roughly [$22 billion] €20 billion is taxis and private transfers, where we have a play that we’ll share more about in the future.”
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