How the mighty have fallen. Travel Corporation today announced it is closing Creative Holidays and 100 staff will lose their jobs. Just a few years ago this was a business doing 300,000 pax and turning over up to $350m each year. Creative was huge – and then it wasn’t.
So what happened to Australia’s third largest travel wholesaler – one of the biggest and most powerful travel brands in the land?
Travel Corporation says it was due to forces beyond its control.
“The fiercely competitive environment in which we now operate has made for a difficult business proposition for a mass generalist FIT independent wholesaler such as Creative Holidays, hence we have reached this sad conclusion,” said its Australian CEO John Veitch.
But others believe that Travel Corporation mismanagement is to blame, executives making a series of strategically poor decisions that led to today’s announcement.
The seeds of Creative’s demise were sown when its major customer, Flight Centre, which at one point would have accounted for more than 50% of sales, decided to start its own wholesaler, Infinity Holidays.
Over time Flight Centre agents left the Creative fold and made their bookings through Infinity.
Meanwhile Helloworld agents were using their inhouse wholesaler Qantas Holidays.
This left Creative stuck in the middle with nowhere to go as a traditional wholesaler.
Or so management thought.
Some informed insiders don’t agree, arguing there was an opportunity to source new business and still be a wholesale force, albeit a smaller one.
But Travel Corporation didn’t see it that way and their solution was to change Creative’s business model by building a new technology platform and sell its product direct to consumers.
They were wrong on both counts.
Management’s decision to leave long-term tech provider Calypso proved seminal.
The new tech build – carried out 8000km from Sydney HQ in India – has been a waste of time, money and energy.
Industry speculation is that Creative spent $15m on the botched exercise.
Complicating matters was the rush to switch before the new system had been properly tested.
This meant many bookings could not be transacted online, as they had been previously, and that agents had to sit on the phone, sometimes for hours.
As a result was a massive decline in business, much of which went to Qantas Holidays.
Then there was the parallel shift to a multi-channel strategy, distributing direct to consumers in addition to agents
Travel Corporation believed that the Creative brand had resonance with consumers and could stand alone.
But they soon discovered Creative had no consumer brand equity – all of that resided with the agents handing over the brochure to the happy holiday makers.
That was a very painful lesson, and one that perhaps all traditional wholesalers should heed.
So it was back to square one.
Management did give the impression in recent times they were back on track and a Creative employee was recently heard saying the company had just achieved its first profitable month in almost two years.
MD James Gaskell, who was brought in to clean up the mess, told delegates at TRAVELtech that the business had ditched all B2C pretensions and was firmly focussed on selling through agents.
He suggested Creative was turning around and, while it wasn’t easy times, there appeared to light at the end of the tunnel.
Unfortunately not. Less than two months later, the last rites have been read for Creative, which will cease operations on December 31.
As a former employee in this business, I can tell you there was never any vision, goal or strategy, nor culture for that matter. Even when Infinity started up nothing was done to counter to inevitable loss of business. The B2C approach was much talked about for many, many years, and was always going to require time and investment. When the business finally decided to go down that path it was slapstick with unrealistic expectations around results. Underlying all that was outdated technology that was never going to take the business into the future for a business that needed to reinvent itself (it’s fine tech if all you want to do is wholesale forever but that model is dying). Disintermediation started in travel a long time ago, Creative did nothing about it til it was too late. Poor management is to blame (and certainly not the current management team). Reminds me of Kodak with print and digital, same theme, different industry. Failure to adapt. What a shame.
Interesting comments “former employee” (Anon). Whilst some of what you say carries ‘more of the same’ as what others say – I challenge greatly your unfounded perhaps inexperienced or not well thought out comment “never any vision, goal, or strategy, nor culture for that matter”. To go on and then vindicate the “current management team” suggests that you joined the business when the ingredients you say lack, were indeed already gone.
Quite clearly; you are an in idiot.
Competing on a B2C platform with out serious marketing dollar is a very tough gig. I feel deeply for all the loyal staff though talented people will get snapped up I am seeing really strong growth in online wholesalers such as GTA and Excite Holidays.
[…] Calls to Qantas Holidays surged yesterday after news broke that rival wholesaler Creative Holidays is closing on Dec 31. "We took more than 1600 calls yesterday, which is a 50% surge on our usual volumes," said Qantas Holidays MD Peter Egglestone, who added that it will be staffing up to cope with demand. See original story. […]