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Thomas Cook jobs saved as Hays Travel swoops on 555 stores

A Thomas Cook travel agent store 
The deal could save 555 stores across the country and is a boost for struggling British high streets.  Credit: Matthew Horwood/Getty Images Europe

Holiday firm Hays Travel has stunned the City with a “mightily ambitious” deal to take over Thomas Cook’s 555 UK stores, rescuing up to 2,500 jobs. 

The swoop catapults the family-owned firm into the national spotlight and will almost quadruple its store estate from 190 to 745. 

It provides a lifeline to Thomas Cook staff made redundant by the 178-year-old travel company’s collapse into insolvency on September 23 and is a much-needed boost for Britain’s ailing high streets

But the buyout, for an undisclosed sum, sparked scepticism that family-owned Hays can make a profit from the stores in the face of rising online competition when listed giant Thomas Cook could not.

Patrick O’Brien, a retail analyst at GlobalData, described the move as “mightily ambitious”.

He said: “Thomas Cook may have been brought down by debt.

"But even without debt, a physical store network of such a size cannot be supported while the trend towards online holiday booking continues.”

High street travel agents “can’t drive the hardest or best bargain” for customers because of their overheads, said Jonathan De Mello, retail consultant at Harper Dennis Hobbs.

He sad: “You just don’t need anywhere near the amount of stores that Thomas Cook, or even Hays (already) have.” 

The decision to take over all of the stores “implies to me that they really don’t know what they’re doing”, Mr De Mello said. 

The total business rates bill for Thomas Cook’s shops in England and Wales alone was almost £12m this year, figures from real estate adviser Altus Group show - more than the £10m profit reported by Hays in its most recent accounts.

Julie Palmer, of turnaround firm Begbies Traynor, said: “While on the face of it this looks like a savvy deal, you have to question the logic behind it.

“Has (Hays) been gung-ho in trying to secure a cheap deal without assessing the viability of taking on these stores?”

Hays Travel’s management rejected the concern. Asked whether his company could withstand the pressure on the High Street, 70-year-old managing director John Hays said the company already has long experience surviving in a hostile environment.

He said: “We certainly don’t feel that we’re insulated in any shape or form.” 

Hays’ strategy of using its online presence and shops in combination give it an edge over Thomas Cook’s failed model, he added.

Thomas Cook’s website was the “enemy” of its shop staff, Mr Hays said, with different prices offered online and in-store.

By contrast, Hays’ shops “interact positively” with its website and two-thirds of customers who book holidays in its shops research online beforehand, he said. 

The 555 Thomas Cook stores will operate under the Hays name as it has not bought the Thomas Cook brand.  

If some of the acquired stores prove unviable in areas where there is overlap with Hays’ existing branches, they will be closed, Mr Hays said. 

"A good percentage" of the shops should re-open as early as Thursday, Mr Hays confirmed. “Obviously it will take us a few days to get up and running,” he said. 

Hays has been granted a six-month licence by the liquidators to occupy the stores and to negotiate with landlords  either to secure new terms or to take on the existing leases. Hays said it had already approached 140 landlords. 

Mr O’Brien said he expected Hays to "aggressively renegotiate leases with landlords as well as close many [stores] in the first year while it works out what size of portfolio could be sustainable in the longer term".

Sources close to the deal said that Hays' relatively robust finances made it an attractive buyer for the liquidator and for landlords. It is one of the most reliable payers in the travel industry, they said. 

Headquartered in Sunderland, Hays Travel is the country’s largest independent travel agent. 

It sells holidays from a range of third party travel companies, including the likes of Jet2 and Tui. It offered customers Thomas Cook holidays until the firm went bust. 

Started by John Hays at the back of his mother’s childrenswear shop in Seaham, Co Durham in 1980, the company has grown a network of 190 stores and 1,700 employees. 

Owned and run Mr Hays and his wife Irene, 65, Hays Travel's annual turnover is more than £1bn, according to its most recently filed accounts. The company reported net assets of £40m as at the end of October 2018. 

The firm is encouraging redundant staff who worked at Thomas Cook’s stores to contact it to apply for jobs and is aiming to take on up to 2,500 plus another 100 at its Sunderland headquarters.

On Wednesday it said it had already recruited 597 former Thomas Cook staff. 

Joining Hays will not invalidate employees’ claims for redundancy pay from Thomas Cook’s liquidators, sources close to the insolvency process confirmed. 

Many of the staff who had been offered jobs were very emotional and “a reasonable percentage have actually cried”, Mr Hays said. "We have been [emotional] as well because we are a family business."

Jim Tucker of KPMG, one of the special managers brought in to oversee the liquidation of Thomas Cook’s retail division, said: “This is an extremely positive outcome, and we are delighted to have secured this agreement. 

“It provides re-employment opportunities for a significant number of former Thomas Cook employees, and secures the future of retail sites up and down the UK high street.”

Proceeds from the sale will be used to pay back Thomas Cook's creditors.

The deal to take over the Thomas Cook shops was struck on Tuesday night at “seven minutes to midnight”, Mrs Hays said. 

In keeping with its family-run ethos, she said it was an “absolute requirement” of the deal that Hays’ staff were informed of the deal on Wednesday morning before any public announcement.