Comment: Is this the major re-think JTG needed?

Comment: Is this the major re-think JTG needed?
By admin


It’s taken 10 months, $11 million and plenty of robust internal debate, but Jetset Travelworld has finally bitten the bullet.

And the long-awaited announcement the company made on Monday morning is one its chief executive Rob Gurney will live or die by. Reputations are on the line and with it, JTG careers.

The unveiling of Helloworld – we’ll come to the brand name itself later – is the end result of a review initiated by Gurney last September and conducted, at considerable expense, by Boston Consulting Group (BCG).

Travel Today reported in May that a new brand to replace its four existing retail networks was under consideration and, indeed, the most likely option for the group.

And so it proved.

There can’t be too many in the industry who questioned the need for JTG to rationalise its retail brands.

JTG’s marketing spend was being diluted by having to support four major bricks and mortar brands. That could not continue. JTG was stitched together from the outset, and the stitching was always going to unravel. A major re-think was needed.

Whatever JTG decided, it was always going to put noses out of joint somewhere within the group. Agents are generally (but not always) loyal to their brands and to see those brands consigned to the scrap heap after maybe 20 years of investment and toil will be hard to digest. There will be anger and resentment.

However, for the consumer media to suggest Australia is about to lose some of the nation’s “best-loved travel brands” is just plain wrong.

Best loved?  There may be loyalty among their members and staff, but you’d be hard pressed to find many consumers who could even name Travelscene, Jetset or Travelworld, let alone describe them as brands they were fond of. Put simply, they have very low brand recognition.

To be fair, Harvey World Travel does not fall into that category. It has consumer cut through and is second only to Flight Centre in terms of brand recognition in the travel retail environment.

Which is why HWT is probably the brand JTG should have gone with it. Helloworld is a brand starting from scratch which, according to Flight Centre’s Graham Turner, could take 10 years to become a recognised name.

HWT on the other hand already has sizeable brand equity and almost 300 fully branded shops around the country. It would be starting from a position of relative strength.

It has been argued that HWT is an outdated brand, simply too old fashioned for today’s retail environment which has been borne out in consumer research. There is undoubtedly some truth to that.

In addition, persuading a Jetset, Travelworld or Travelscene agent to shift to HWT, historically one of their chief rivals, could be a hard one to sell.

But on balance, the cost of launching a completely new brand in the market, that will require every one of its agents to buy into and rebrand, could be even tougher.

In itself the name Helloworld is, I think, ok. It has a fun ring to it that could be developed, assuming that is, you can block out John Laws’ voice from the back of your mind.

Yet, before we go any further, it’s worth noting that Gurney refused to categorically confirm that the launch of Helloworld spelt the demise of HWT, Jetset, Travelworld or Travelscene.

I thought that was curious. It’s as if the former Qantas executive is hedging his bets. Does this mean that if Helloworld is rejected by too many retailers, JTG will revert to its existing structure or select one of its current brands to form the central pillar of its retail strategy? Perhaps HWT and the other brands are not destined for the scrap heap after all.

If that were to happen though, Gurney’s vision would have failed and the writing will be on the wall. And not just for him. The board has signed this off so they will also have to take the rap.

After all the talking and analysis, JTG is at the critical end of this process; getting buy-in from its agents.

Over the next couple of months, management will tour the country “communicating the values of Helloworld and details of the new retail models”.

JTG has already said it will bear the cost of rebranding shops so they reach an operational standard. Whether that outlay will be recouped by way of franchisee fees is unclear but rebranding 600 shops – the number Gurney believes will become fully branded Helloworld shops – will not come cheap.

I’d have thought that prospective members will also want to hear what commercial benefits they can expect by signing up.

Gurney has promised that unifying under one brand will lead to “enhanced growth, services and incentives for agents and suppliers”.

That’s all very well but what, exactly, will that mean for agents’ bottom lines? Will JTG be able to show agents details of improved commercial terms with suppliers?

Another issue facing the group is that of territories, or more accurately, lack of territories. It is surely inconceivable that a small country town or city centre shopping mall could have three Helloworld branded stores? While the wider strategy has finally been announced, there is a lot of detail to work through.

One certainty is that JTG’s rivals will be rubbing their hands in anticipation. There will, inevitably, be fall out. JTG will be expecting to lose agents from its ranks and competitors will be in the ear of many of them, selling the benefits of their respective groups.

The next few months could get very interesting.                                               

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