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.