Mr Joussen, the last business year again had a number of special moments up its sleeve for you and your colleagues …

2019 had a distinctive flavour in every respect. We pursued our hotel strategy systematically with a record number of openings. We have expanded our offering with 25 new hotels in nine countries, so we now have over 400 properties in the portfolio. We have two new luxury expedition vessels at Hapag-Lloyd Cruises and the new Mein Schiff 2 has joined our fleet of cruise liners. Our excursion and activity platform Musement has been available to 200 million Asian customers since March in cooperation with Ctrip, and it has of course already been integrated into the TUI app for our guests in Europe. Parallel to that, we sold the French airline Corsair in spring and the specialist tour operators Berge & Meer and Boomerang in summer. They were not part of our core business, so they didn’t generate any synergies. This enabled us to sharpen our profile even more. Taken together, all these factors are concrete steps towards implementing our strategy. We are consistently restructuring and placing a clear focus on strategy, business and investment.

But there were some difficult moments in the past year, weren’t there?

The grounding of the Boeing 737 Max confronted our industry with major challenges. The Group Executive Committee quickly agreed: our customers’ holidays are our top priority and must not suffer. It was, after all, just before the Easter holidays and the launch of the summer season. We rapidly sourced replacements and were able to ensure every trip, just as our customers rightly expect from TUI. However, the follow-on costs of the grounding are enormous and weigh on our annual result to the tune of 300 million euros. TUI is as fit as a fiddle and was very successful again in 2019, but naturally the 737 Max will show up in this year’s balance sheet. Of course, we were affected by Thomas Cook exiting the market and that stretched many of our colleagues, especially in the first few weeks – for example, when they were helping our former competitor’s customers who had been stranded on holiday. We did a lot to offer new prospects to hard-working Thomas Cook staff. In the UK and destination countries in particular, we organised job fairs and also began recruiting very quickly.

TUI shareholders have been accustomed to a double-digit rise in earnings over the last four years. In 2019 investors were treated to two profit warnings. What’s going on?

2019 was an unusual year. What’s clear is that TUI is still a growing company. And the growth in tourism is intact. It is still the case that more people are travelling every year. That isn’t going to change. Quite the reverse: in many countries around the world, there are new middle classes emerging who are discovering the joys of travel for themselves. From the start of 2019 there were signs that the weakness of sterling in the wake of the Brexit announcement, but also the aftermath of the phenomenally hot summer of 2018 with shifts in destination demand, would have a massive impact on the already low margins of our traditional tour operators. Shortly afterwards came the grounding of the 737 Max, with the earning effects I have just mentioned. This underlines the fact that the first step in our strategic development, the move from tour operator to investor, developer and operator of hotels, cruises and holiday experiences, is turning out to be absolutely correct. In this tough environment we have once again achieved earnings at the same level as our record year 2018 – once we factor out the one-off impact of grounding of the Boeings. The transformation since 2014 is a strong foundation and the basis for our success. Now we are about to enter the second stage. This will be a bigger step and will change TUI even more deeply.

Why have you initiated the second stage in the transformation? Wouldn’t this be a good time to restore some calm in the organisation?

If you want to maintain your lead, standing still is not an option. The future never lies in a historical business model. Our customers’ needs are changing, and so are their lifestyle and their holidays. Thanks to our successful transformation into a hotel and cruise group, we have established a strong springboard for the consolidation that is now taking place in the market. We began more than two years ago to place our business on a more digital footing – by investing in IT and digital platforms, artificial intelligence and the digital development of new markets in the world’s growth regions. Much of what we had begun doing was not immediately apparent in its strategic and commercial significance to TUI. That has changed. It is paying off: for customers because of a more personalised offering, and for the Group because of access to new markets. And of course in our earnings.

Where is the Group heading?

Hotels and cruises will remain strong pillars, but we are becoming a true digital and platform company. It’s less capital-intensive and more scalable. That is where we are heading. The restructuring has begun. Purchasing the Milan-based technology company Musement to market activities and events globally was an important piece of that.

“Platform” sounds intriguing. What exactly should we understand by that? Will we soon stop travelling with TUI?

On the contrary, customers will be getting far more services from TUI. We will also be offering integrated travel in future. But with algorithms and artificial intelligence we can already do things that were impossible in the past. We can offer much more personalised services, and on a big scale, so for a large number of customers. In the old days, if you customised production, your costs immediately spiralled. Today, with the right infrastructure, it’s no problem to combine personalised offerings with attractive pricing. We are doing that, for example, by linking Musement, our new activities portal, into our smart CRM system. On one side around 150,000 products, on the other 28 million customers. The result is a kind of Amazon for holiday experiences. The advantage of a platform company as against a product company is that yields are much higher and require less capital input. For hotels I need land. Ships are also capital-intensive, and due to the shortage of shipyard capacity in Europe there is a long lead time between placing the order and taking delivery. That is why for the last two years we have been investing selectively in platforms for digital business models.

A second theme for the future goes by the unwieldy name of GDN-OTA. What’s behind that?

Admittedly quite unwieldy, like so many names in the digital world. We have developed a completely innovative global distribution network for our own hotels. Now we will open it up to third-party hotels. 200,000 customers a year are already using it to make bookings. This offers great potential to hotel-owners. You might say we are showing them the ropes. We give them the technical wherewithal to essentially market every room separately. Whether customers are willing to pay extra for certain services is a personal decision and takes different forms, and the offering should be just as individual. Today, via the usual portals, I can only market a handful of room categories; through us a hotel can market every room separately, like the room that gets the morning sun or a room near the Kids’ Club. And all this for a chance of enhanced earnings and at an absolutely competitive cost. The hotels benefit and so do we at TUI. We need these platforms and services anyway for our own hotel companies and brands. That’s why we developed the IT. Opening it up to others brings us efficiency gains and additional revenues.

What role will the national markets still play?

Confining yourself to trading in travel modules, which is the classical tour operator business, has become harder for the whole sector – and it won’t get any easier in the future. That’s why the market-based companies are closing ranks, and hence becoming more efficient. There is no way around that. Nonetheless, the markets still have an important role to play. They cater for a huge outreach, already 21 million customers, and ensure high capacity rates for our hotels. That is why our own hotels are far more profitable than other hotel companies. Despite that, the markets must tackle constant change. We are currently harmonising our IT across all markets. That applies to almost every department from sourcing to flights, from distribution platforms to customer relations. In the future this will all be founded on a common standard. We could translate that by saying we build one car, then we sell and run it in all the markets. In two years that harmonisation should be complete. So within a short space of time we will have created a simple, flexible organisation across all market organisations while at the same time securing TUI’s strengths in all European markets. This is above all our extremely efficient distribution, close to the customer and to the market with all its distinctive characteristics.

The TUI brand is well established. People trust it. Will that still matter in five years?

TUI stands for unique experiences, quality, security and innovation in holiday activities. Brands are actually crucial in the digital world. If I book a service online in a country that may be 4,000 kilometres away, I want to know who is behind it. TUI’s customers know that very well. Our strong, distinctive brand is and remains a key competitive advantage. A holidaymaker in a hotel recently told me “once TUI, always TUI”. Our 70,000 employees take pleasure in that recognition and trust. It is above all to their credit.