Taking charge of a travel firm during the worst downturn in generations requires a particular brand of optimism. Kuoni's Peter Rothwell tells CEO how he has managed to keep a positive focus since he took the chief executive job at the beginning of 2009.
When Peter Rothwell took the reins of luxury travel company Kuoni in January 2009, the economy was much gloomier than when he agreed to become CEO in April 2008.
"From a general mood of optimism, it had become one of general pessimism," he says.
The economic outlook was bleak and Rothwell did not have long to settle in.
"The challenge for me was a big one," he says. "It was a different country, a different business culture and a different business model."
Rothwell joined the Swiss company from TUI Travel, a UK-based travel group that owns such brands as tour operators Thomson and First Choice. He had risen to deputy CEO at TUI after a 27-year career in the travel industry.
"The role of CEO is very challenging," he says. "Ultimately, the final decision rests with you. You must make your mind up. That's not to say you will be expected to have all the answers. As CEO, it is my job to utilise all the resources we have."
New man
The first thing Rothwell did was work out how Kuoni operated and how it could be improved.
"My job was to get to know the senior management and the key people who reported to them," he says. "I am trying to meet as many employees as possible. We have 10,000 employees, so understanding them and the way the organisation operates is vital."
One of Rothwell's responsibilities is stakeholder management, be that to the board, shareholders, senior managers, employees, the media or customers. "The CEO is there to make a difference, to deal with big issues and the areas that create value in the company," he says. "It is my job to understand the levers that make a difference, and to know when to pull them."
Coming new into the business meant Rothwell had no preconceptions or loyalties and he could be dispassionate about certain issues: "You don't know the business as well as other employees, so you are reliant on feedback you get from your senior people. But the new man is expected to make changes, however difficult they may be."
One of the first things he did was announce a three-year, £63m transformation programme to strengthen Kuoni through key strategic initiatives. It also meant cutting jobs.
As a worldwide business, Rothwell says Kuoni is well used to the ups and downs of the global economy.
"We recognise that there are good and bad years and certain events will have an impact on our business," he says. "The problem with the current economic crisis is that it rapidly hit the upmarket sectors of the population, such as bankers and City people, who are our typical customers. Secondly, we're used to events having a big impact on one region, but not on all regions at the same time. It's not a question of the east being down but the west doing OK. We're seeing the same patterns repeated country-by-country."
It is Rothwell's job to take the lead and that, for him, means controlling costs and cash and looking after customers.
"It is also important for the CEO to look ahead," he adds. "Nothing is permanent, including this downturn. Despite the increasingly important green agenda, the demand to travel will continue to grow in the long term. So we have to ensure that we are in a healthy position to capitalise when the upturn comes along."
Make the right moves
Another consideration that has helped Kuoni, Rothwell believes, is its relatively conservative approach to doing business. It is debt free and asset light.
In April 2009, Kuoni was 12% down in revenue (in local currencies). While that is better than the worst-case scenario Kuoni anticipated, the situation remains challenging.
"The good news for our customers is that hotels and airlines have capacities that they need to sell and are lowering prices," says Rothwell. "We can pass those savings on."
Indeed Rothwell, a self-confessed optimist, reckons difficult economic times provide opportunities for good businesses, and this is true in terms of potential acquisitions.
"You don't buy a house you don't want and it's the same with us," he says. "Now could be a good time to acquire other businesses, but they have to fit in with what we do, and add something substantial to what we already offer. We look at asset-light businesses, or ones that bring new expertise or a sustainable and different product."
In June 2009, Kuoni finalised a deal to acquire a 32% stake in Chinese travel firm Et-china. "Was it the bottom of the market? I don't know. Was it less than we would have paid 12 months ago? Definitely."
While becoming Kuoni CEO is a big step for Rothwell, he admits that being based in Zurich is not exactly a hardship posting. "It's one of the best cities in the world to live in. Last night after work I took a swim in the lake near my house. The country is spectacular for skiing and outdoors activities."
Rothwell does not seem to be a man content to sit back and relax. Already a commercial pilot, he is learning how to fly a helicopter. He recently learned how to ride a horse while in Africa on safari, and he skippers his own boat when sailing off the coast of Croatia.
"The world is a great place," he says, "I'm a big believer in learning and doing new things. There are always risks with new things, but it stretches you. In my opinion, if you're not learning, you're going backwards."
