Client Interview

By The Drum, Administrator

February 2, 2007 | 8 min read

The expression \'rollercoaster ride\' is over-used, particularly in business parlance. It gets dusted down every time a seemingly healthy company experiences a few hiccups. But when MyTravel marketing and strategy director Tim Marsden utters the phrase, it quickly loses its hackneyed baggage. You understand that he means it in its genuine gut-churning, nauseating, green-faced context. What\'s more, he\'s been strapped in for the last six years.

\"I joined MyTravel about three or four months before everything went pear-shaped,\" Marsden explains, in a surprisingly upbeat tone. \"September 11 was arguably the start, but since then the entire industry has had everything thrown at it: the Iraq war, Sars, the tsunami, hurricanes, bombings in the UK, bombings in Egypt, bombings in Turkey. It\'s been a very, very rough ride.\"

It\'s been something of a war of attrition for the MyTravel Group - and, unfortunately, the company has been stuck on the frontline. In 2002, after already soaking up its fair share of bullets, the group\'s market capitalisation had fallen to an admittedly still impressive £400million, with an adjusted operating loss of £27.5m. Employee numbers were steady at around 25,000.

But by the end of the next trading year, that loss was - brace yourself - £390m and the market capitalisation had fallen to around £98m, with a share price in May of just 11p. Come the 2004 results, and the company was valued at just £30m. It had also shed almost 8000 staff. As Marsden says, \"a very, very rough ride\".

\"I went through the dark days of our trading loss of £300m,\" he says. "I think you either very quickly become incredibly resilient, or you walk away from it. It comes down to trying to survive and that\'s it - it\'s as blunt as that.

\"We had to effectively re-scale the business [partly done by selling subsidiary companies and overseas assets] to something we could get back on an even keel. Then we had to figure out how to put together a programme to convince customers to carry on going on holiday with us. All through that time, as a group, we were sending about two million customers a year on holiday, despite the fact we were going through dire straits.\"

But survive MyTravel did - with considerable success. So much so that the firm\'s stalwart Airtours brand has jetted back onto our screens for the first time in five years (which is why we\'re here today) and the company itself is now back in profitability (which is arguably why Marsden is still here today).

According to the 2006 accounts, the group made £43.8m before tax (£26.6m after) and, at the time of writing, enjoyed a market capitalisation of a shade over £1billion. Added to this comes the news that MyTravel is also vying for First Choice holidays with an original offer in the region of £500m, an acquisition that would surely herald MyTravel\'s return to holiday market hegemony. In his fast becoming trademark style of understatement, Marsden says: \"That\'s not a bad turnaround.\"

As is so often the case during trading tribulations, MyTravel\'s marketing budget was one of the first casualties, forcing Marsden to patch his strategy up and adapt. \"In those situations you know you haven\'t got the opportunity of massive budgets, so you have to change your marketing approach,\" he says. \"Direct starts take up a huge proportion of the budget as it\'s highly measurable. Likewise you spend a lot of money on developing your website for the same reason: to maximise your efficiency. In those times it\'s very difficult to judge the immediate, or even longer term, effects of advertising. Therefore, unfortunately, that\'s one of the things that goes.\"

Thankfully though, particularly for Clear Marketing in Didsbury (which has a relationship with the group stretching back some eight years), it also comes back again. \"The fact that we are back on air shows we\'ve become significantly more stable as a business and now we\'re pushing ahead for margin and profit growth,\" says Marsden. \"We\'ve gone through the survival stage, we\'ve consolidated and now we\'re looking to build. It\'s a case of turning the juggernaut around - now we\'ve done that, we can really move on.\"

The turnaround has been so complete, however, that it\'s surprising Marsden hasn\'t become a victim of his own \'direct\' success. After being so resolutely frugal with budgets and using what he calls \"market intelligence\" so effectively, was it not rather difficult to persuade the board to spend seven-figure sums on TV advertising? After all, it\'s a medium whose effects are \"difficult to judge\", as Marsden has already conceded.

\"To be fair, no,\" he says, with a smile which suggests he\'s justified this spend before. \"The directors listened to the case and they felt it was appropriate, given the stability of the business, for us to get a few million pounds.

\"We did two waves of brand tracking last year, and I think there was a danger that we hadn\'t been refreshing in our customers\' minds what we actually deliver.

\"We\'ve done a hell of a lot of work around the needs of customers and what they\'re looking for from their holidays. We\'ve changed with their changing needs. However, if you\'re not out there telling customers what you\'re about, they\'ll form their own opinion by whatever way they come into contact with you, be that anecdotal evidence, word of mouth, or what they can remember from going on holiday many years ago.

\"So the key objective with the campaign is almost to force a reappraisal of what Airtours actually is - to build a long-term vision of what the brand stands for and to put back value into the business. That was a compelling argument to put to the board.\"

For those of you who haven\'t seen the campaign yet, it looks more like a total re-launch than a re-appraisal - it puts emphasis on choice, options such as \"local flavours\" (marketed as more of a cultural alternative) and surprising destinations (China anyone?) - and Marsden seems happy with that observation. It\'s almost like he\'s trying to re-define the brand as something beyond a package operator.

\"I think that\'s almost become an anachronistic term now,\" he says. \"\'Package holiday\' might be the phrase for when someone else puts the holiday together for you, but I think what package meant 20 years ago is very different to how it is now. It\'s not just about lying on a beach in Spain for two weeks anymore.

\"If a customer views \'package\' as meaning reassurance, safety and the ease of someone organising the holiday for them, then that\'s great. But I think from a larger market perspective it might need a new label. We\'re increasingly talking about \'full-service holidays\' - I think that helps to persuade people how much we\'ve moved on.\"

What, in devil\'s advocate mode, doesn\'t communicate that the company has moved on is the fact that the beautifully shot adverts, dripping in brand values, end with a price-point holiday offer along the lines of: \"Tenerife, only £219.\" It looks like it\'s been shoe-horned in - and it probably has - in an effort to placate someone on the board who wanted a sales exercise above a branding campaign. Doesn\'t that detract from the overall objective and flavour of the activity?

\"Some people might see the contradiction there, talking of four and five-star hotels, and then putting in a price-point like that,\" accepts Marsden. \"But the post-Christmas booking period is still the biggest for the UK holiday market, and in such a tight trading period it\'s something you can\'t afford not to do. We have to be pragmatic from a sales and branding perspective and balance those needs. It\'s a case of finding the most appropriate compromise, and that\'s what we\'ve aimed to do. Time will tell whether we\'ve been successful.\"

What will also tell is the renewed brand tracking exercise the firm has planned for February, when it should be able the gauge the impact of the campaign on consumer perception of Airtours. If the right ripples have been made, Marsden suggests more campaigns will follow later in the year to ensure the company continues to make waves in an increasingly competitive marketplace.

After six nerve-racking years, neutral observers would surely wish Marsden success on this front. After all, he\'s been on the rollercoaster long enough - it must be time for a break perhaps even a full-service holiday.)


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