Good news, bad news

Wednesday, 27th November 2019 07:43 - by Shant

Travel workers in the UK received some good news as Hays Travel expanded on its purchase of 555 shops from the collapsed Thomas Cook chain to announce that it will be hiring an extra 1500 staff over and above the 2330 employees it has already taken.  The Sunderland head office will take on 200 extra people as a function of the company's wider operations, with 500 extra staff to be taken on to handle their foreign exchange business.  

Hays Travel is run by John Hayes, with his wife owning 50.1% of the business, upholding family values as its core ethos on which the company was built.  Customer service is at the heart of the business, say the husband and wife team, and from 1900 staff, the workforce will be expanded to 5700 in total.  Notwithstanding the fact that the fall of Thomas Cook has left a big void in the market, the fact that EasyJet are also set to launch a package holiday operation shows that there is indeed a market for a well run and moreover, flexible business model for handling the travel needs of the public- certainly in the UK.  

Hays Travel was set up in 1980 as a small time operation, though failed to develop a strong presence due to strong competition at the time.  In order to compete, founder John Hays was forced to offer free travel insurance to win customers, and this clearly bit into bottom line profits.  However, developments this year have finally given him - and his wife - the opportunity to embark on the expansion they have sought.  Profitability is slim, totalling a mere £10million in its last financial year, but acting as an independent agent, it will be offer holidays from a range of operators, where Thomas Cook did not.  

On the flip side, WeWork as announced job cuts to the tune of 2400 globally, as it looks to streamline its business into a more cost efficient organisation, focusing on its core office rental activity.  

Co founder Adam Neumann was forced to step down earlier this year, having invested in projects more aligned to his personal interests, and in the first half of the year, the company lost close to $1bln, whilst facing a barrage of criticism over its finance as well as management approach.  

Its business model was also brought into question as it leases 'in bulk' over the long term, looking to capitalise on higher rates for short term leases.  This is based on the assumption that there is a strong flow of business start ups - something which has not weathered the best of times in the UK with the dark clouds of Brexit still hanging the economy.  

WeWorks biggest investor Softbank, has been forced to write down its valuation of its investment in WeWork from $47bln to just $8bln, resulting in its first quarterly loss in 14 years.  Chief Executive Masayoshi Son admitted that his 'judgement' was 'not right' in many ways. I would say that, that is putting it very mildly indeed.

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.