Page 1 of 2

Asset-Light with Low Fixed Cost

Kuoni’s business model

Kuoni’s commercial activities focus on two business areas: Leisure Travel and Destination Management. Leisure Travel business, which includes the premium, specialist and mainstream segments, accounted for 75 % of groupwide turnover during the year 2010.

In Destination Management business, Kuoni occupies the number one position in the USA, India and East Africa, as well as being one of the leading providers in Europe, Southeast Asia, South Africa, the United Arab Emirates and Australia. Destination Management activities generated 25 % of the Group’s turnover during the reporting period.

The two business areas are integrated within a business strategy of minimal vertical integration (asset-light). This means that Kuoni owns practically no aircraft, ships, hotels or other fixed assets. As a result, variable costs account for 79 % of the Group’s total expenditure in 2010.

Leisure Travel

Premium-segment leisure travel focuses on higher-value products and is marketed under the Kuoni brand. Travel arrangements are put together individually with a very high level of customer service. In addition, concierge services in Switzerland, the United Kingdom, France, Italy and Spain provide a personal advisory service that caters for the individual needs and wishes of customers in the luxury segment.

Within the specialist segment, a series of highly competent companies within the Kuoni Group offer top-class holidays and services, under their own long-established, well-known brand names. Within their markets, these niche providers are regarded as the experts of choice for their particular destinations or types of holiday. Here too the focus is on personal advice and arrangements tailored to match customers’ specific wishes.
Kuoni offers mainstream leisure travel in Switzerland and Scandinavia under wellknown holiday brands like Helvetic Tours (Switzerland), Apollo (Sweden, Norway, Denmark), and Falk Lauritsen (Denmark). Their products are targeted at cost-conscious customers who are looking for easy-to-book, best value holidays, usually in the form of all-inclusive package arrangements. Depending on the market, these companies use various distribution channels to market and sell their holidays and services: these include retail outlets, the internet, call centres and new smartphone applications. Retail outlets can be the company’s own branches or third-party travel agents for distribution. Direct customer contact was expanded in 2010 with the opening of numerous Kuoni travel agencies in the United Kingdom, the Netherlands, Spain, Italy and Switzerland.

While the personal contact and expert advice available in the travel agencies are important when people are making individual travel arrangements, the internet is a major sales channel for easy-to-book holidays. In 2010 19 % of tour operating turnover was generated via the internet, 24 % via Kuoni’s own branches, 13 % via call centres and 44 % via external agents. Direct customer access thus accounts for the majority of Kuoni’s sales (56 %). The company’s aim now is to continue to grow the share of holidays it sells directly.

Destination Management

Kuoni has a comprehensive global network of more than 90 sales and Destination Management operations. These offer land arrangements at numerous destinations worldwide to tour operators, travel agencies, event and incentive specialists, conference organisers and cruise ship companies. It has contractual agreements in place with hotels on every continent to supply the necessary capacity.