Which way to turn for JTG?
Nine months ago, Boston Consulting Group (BCG) was invited into the corridors of Jetset Travelworld to run its expert eye over the business.
More specifically, it was handed the task of assessing where JTG was going wrong, how it could remodel itself and how it could remain relevant in today’s travel industry. In short BCG was charged with mapping the future strategy and direction of JTG, a strategy with the ultimate aim of driving up not only profits but the stagnating share price.
The cost of employing BCG’s expertise has spiraled – doubled, in fact, to several million, according to sources – leading to the inevitable conclusion that the job was larger and tougher than perhaps both parties had envisaged.
We are now, finally, at the business end of that review, with management closing in on a strategy for its disparate, fragmented and unwieldy retail division.
That said, to use the words of JTG chief executive Rob Gurney, “nothing has been decided”. Words that after nine months may come as a surprise to many.
In fairness, there are enormous complexities within JTG, the most obvious being that JTG is not just one business but almost 2000, all of them with the own P&L.
Gurney has been at pains to point out the consultative nature of the review, with suppliers and agents involved in the process. So talking to so many stakeholders is no easy task.
But sooner or later, a decision will have to be made, and it won’t please everyone.
For years, way before Jetset Travelworld and Stella Travel Services merged to form the existing ASX-listed business, JTG struggled with its dual Jetset and Travelworld brand strategy. More than once the latter’s future was debated. Each time it survived, wrongly.
If two brands was not ideal, it doesn’t take a highly remunerated BCG executive to conclude that the current structure of four bricks and mortar networks – Jetset, Travelworld, Harvey World Travel and Travelscene American Express – is unworkable.
Marketing so many brands in any meaningful way is a thankless task, particularly as there is no discernible difference between what the brands stand for and their customer proposition. JTG could have the same amount of marketing cash as Flight Centre but the money is being diluted by the need to promote so many networks.
So it is patently clear what needs to be done – streamline four brands into one national identity. What is less clear is how to go about that.
Of its brands, Harvey World Travel is by far the most recognised and is second only to Flight Centre in terms of consumer awareness in the travel retail arena.
Taking that in isolation, it would seem sensible for Gurney to bring his retail operations under the HWT banner.
Yet internally, HWT is not seen as the brand to carry JTG forward. It is regarded as too staid, too old fashioned, a brand unsuited to be the centre piece of a new-look division in 2013 and beyond.
So the preferred course currently on the table at JTG is the creation of a new identity altogether. Possible names have already been bandied around, but finding one that ticks all boxes is an enormous challenge.
Not only should it ideally have travel connotations, it must be available in the online world. But any name with any meaning or resonance has long been taken, which, I suspect, is why Qantas was forced into calling its online business, Hooroo. Throw enough money at anything and I guess the name will become known, but it’s not a great starting point.
I’d have thought repackaging and modernising HWT would have been the better way to go rather than building a brand from scratch.
But there could be another rabbit in the hat. Traveland.
JTG is said to still own the brand, which collapsed in 2001 following the demise of Ansett and, apparently, it still retains a degree of consumer awareness. Sure, it could be argued with some justification that Traveland is a tarnished brand and one that is damaged beyond repair.
On the other hand, its failure was a long time ago and consumers would realise that times have moved on and any association with financial woes and failure would rapidly dissipate.
Whatever strategy BCG and JTG come up with, one of the unknowns is what will happen to those brands which will inevitably fall by the wayside.
It has been suggested that agents will mount a bid to buy brands that are superfluous to JTG requirements, raising the prospect of HWT returning to its independent roots. That remains to be seen.
But it is highly likely that after this process, the number of agents in the JTG network will be drastically reduced. For starters, if there is a HWT, Jetset and Travelscene Amex in close proximity in a small town, they couldn’t all take the new identity, even in the unlikely event that they wanted to. That would be the very definition of cannibalising sales.
So what will happen to those agents who don't adopt the new brand?
However you cut it, tackling the retail question is a highly contentious, sensitive and complex issue for JTG. Gurney’s decision is eagerly awaited.
Email the Travel Weekly team at traveldesk@travelweekly.com.au
hwt jetset jetset travelworld rob gurneyLatest News
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