a long history forms character – in people and in companies.Over the last 104 years, Kuoni has changed and modernised, and continually found new inspiration for innovative ideas. But throughout, it has stayed true to its ambitious mission of putting the individual desires and requirements of the most demanding travellers and the >authenticity< of experiences at the centre of all it does. It is this that has earned Kuoni its unique image.

Market report 2009 |

Market report 2009 est. 1906

market report 2009 |

market report 2009

4 KuoniGroupfactsandfigures5 Informationforinvestors6 AbriefportraitoftheKuoniGroup8 Messagetoshareholders

Organisation16 Businessmodel18 BoardofDirectors20 Groupstructure21 Thenewgrouporganisation22 GroupExecutiveBoard

Reporting30 2009–theyearoffinancial andeconomiccrisisandpandemic32 KuoniGroup39 Ataglance|KuoniGroup40 Switzerland43 Ataglance|Switzerland44 SouthernEurope45 Ataglance|SouthernEurope46 Asia47 Ataglance|Asia48 Scandinavia49 Ataglance|Scandinavia50 UnitedKingdomandBenelux51 Ataglance| UnitedKingdomandBenelux52 Destinations55 Ataglance|Destinations

58 Corporate&Business Development60 InformationTechnology62 CorporateResponsibility66 HumanResources68 Addresses70 Kuoniglossary72 Agenda2010

4

h Group turnover of CHF 3 894 million down 19.8 % on the prior year (2008: CHF 4 855 million)

h EBIT is at CHF 15.1 million (2008: CHF 150 million)

h EBIT margin is 0.4 % (2008: 3.1 %)

h Net result of CHF 1.6 million (2008: CHF 151 million)

h Cash flow from operating activities of CHF 46.7 million (2008: CHF 109 million)

h ROIC is 0.1 % (2008: 18.8 %) h Year-end equity of CHF 592 million and equity ratio of 32.0 %

Kuoni Group – facts and figures

CHF MILLION

2009

2008

Turnover 3 894 4 855

Total Northern Region 1 664 2 017

Scandinavia 1 012 1 193

UK & Benelux 652 824

Total Southern Region 1 462 1 871

Switzerland 821 1 028

Southern Europe 374 539

Asia 267 304

Destinations 894 1 101

Corporate 0 0

Earnings before interest and taxes (EBIT) 15.1 150.4

Total Northern Region 14.5 61.2

Scandinavia 5.3 29.0

UK & Benelux 9.2 32.2

Total Southern Region 33.5 80.8

Switzerland 1.5 39.4

Southern Europe 6.1 18.9

Asia 25.9 22.5

Destinations 15.5 38.5

Corporate – 48.4 – 30.1

Net result 1.6 151.0

Cash flow 46.7 108.7

Investments in tangible and intangible assets 44.2 59.5

Total assets 1 852 1 728

Equity 592 606

Equity ratio 32.0 % 35.1 %

Kuoni Economic Profit (KEP) – 64.3 71.9

Return on invested capital (ROIC) 0.1 % 18.8 %

Average number of employees (full-time equivalent) 9 070 9 797

5Marketreport2009

Informationforinvestors

1 Dividend-Proposal of the Board of Directors to the Annual General Meeting of Shareholders.   Subject to definitive approval by the Annual General Meeting of Shareholders.

CHF

2009

2008

Cash flow per registered share A 3.26 7.60

per registered share B 16.31 38.01

Net result per registered share A 0.02 10.54

per registered share B 0.08 52.68

Equity per registered share A 40.67 41.74

per registered share B 203.37 208.70

Dividend per registered share A 1.601 2.00

per registered share B 8.001 10.00

Stock market prices per registered share B high 387 616

low 253 290

at year-end 349 360

Annual trading volume in CHF million 697 1 447

Stock market capitalisation as at 31 December in CHF million 1 063 1 097

800

700

600

500

400

300

200

100

0

2008 2009

Jan JanDec DecOct OctAug AugSep SepNov NovMay MayJun JunJul JulMar MarApr AprFeb Feb

PERFORMANCE OF KUONI SHARE (CHF)  KUONI, SPI

6

The Kuoni Group –a brief portrait

The Kuoni Group is one of the world’s leading globally-active leisure travel organisations, with a worldwide workforce of 9 070 (full-time-equivalent) employees and consolidated turnover for 2009 of CHF 3 894 million. Kuoni’s activities are focused on its core leisure travel and destination management businesses.

The head office of Kuoni Travel Holding Ltd. is in Zurich, Switzerland, where Alfred Kuoni founded the company back in 1906. The Kuoni Group has steadily and systematically developed its position in the world travel market over the years, and has

branch operations today in more than 40 countries in Europe, Asia, Africa, Australia and North America.

In the premium and specialist segment, Kuoni is the world’s number-one provider. Kuoni aims to be not only the leading but also the most successful and most internationally-established tourist travel company in this business segment.

The Kuoni Group was named “World’s Leading Tour Operator” at the annual World Travel Awards for eleven years in a row.

Our GrOup

Head Office, Leisure Travel, Destination Management, Sales Office

Leisure Travel Destination Management (DM) Sales Office (DM)

As at 1 March 2010

Cape Town

Atlanta

Las Vegas

Orlando

Los Angeles

Honolulu

New YorkSt. Louis

Windhoek

Miami

7

Marketreport2009

Copenhagen

Rome

Nice

PragueViennaMunich

Cologne

Geneva

Genoa

Zurich

Ghent

Moscow

Yangon

TokyoBeijing

Muscat

Helsinki

Edinburgh

Stockholm

Hamburg

Innsbruck

BarcelonaMadrid

Budapest

London

Milan

GodalmingDorking

Frankfurt

Amsterdam

Paris

Lyon

Liverpool

Oslo

Berlin

AbuDhabi

MombasaArusha

Kathmandu

PhnomPenhHoChiMinhCity

ColomboKualaLumpur

Denpasar

Melbourne

Guangzhou

Vientiane

Sydney

ChennaiKochi

Goa

Trivandrum

Singapore

ShanghaiFukuoka

Osaka Nagoya

Sendai

Sapporo

Jakarta

Taipei

Bangkok

DubaiNewDelhi

Nairobi

MumbaiHongKong

Bangalore

GoldCoast

Hyderabad

Seoul

8

Whenwearetravelling,everysight,everyencounterandeveryconversationtriggerssomethingspecial.Wehaveexperienceswithotherpeople,withnature,withunusualthingsinspecialplaces.Weseepeople,landscapesandobjectsinadifferentlight.Wearefascinated,amazed,happyandoverwhelmed.

Longafterthejourneyhasended,itistheseperfectmomentsthatweremember.Kuoniformulatedits“PerfectMoments”corevaluein2008,andin2009weworkedevenharderontheconcept.Wewanttomakeitpossibleforallourcustomersandforyou,ourvaluedshareholders,toenjoytheseperfectmomentsinalltheirdifferentfacetswheneveryoutravelwithKuoni.Meanwhile,2009alsofoundusworkingveryhardandwithgreatdedicationinanextremelydifficulteconomicandsocialenvironmenttosetasuccessfulcourseforthefutureoftheKuoniGroup.

In2008,Kuoniinitiatedthemostextensivechangesinitshistory.Despitetheworstglobalfinancialandeconomiccrisisindecades,Kuoniacceleratedthepaceofchangein2009.Wehaveactedanti-cyclicallyandproactively.Wehaveused2009asanopportu-nitytoaskourselveseventougherquestionsandtoanalyseourorganisationsothatwecouldmakesounddecisionsandtakesustainableaction.Theaimistoprofitevenmorein2010and2011fromtheexpectedeconomicupswing.

Inordertocutexpenditure,welaunchedanextra-ordinaryinvestmentandcost-reductionprogrammeattheendofJanuary2009.ThisinvolvesatotalofCHF106millionofinvestmentoverthree-years.Keyinitiativeswerelaunchedinelectronicdistributionchannels,globalmarketingandbranding,aswellasonmeasurestoincreaseouremployees’skillsandefficiency.CHF30millionwerespentontheseareasduringtheyearunderreview.Aspartofthisambitiousprogram,afundamentalreorganisationoftheGroup’sstructurewasannouncedattheendofSeptember2009.ThissawKuonimovingfromadecentralisedto

afunctionalglobalorganisationalstructure.Theneworganisationhasatwinfocus:marketingandsalesononeside,andanewglobalProcurementandProduc-tionUnitontheother.Thisstructurewillhelpimproveresultsbycreatingsubstantialadditionalbuyingpowerandasingle-mindedsalesfocusinallourcoremarketsfrom2010onwards.

Thenewgroupstructurewillalsobringcostsavingsandfurtherinternationaliseproductsandservices.Thisreorganisationwillbefinishedbythemiddleof2010.Thechangesarereflectedinournew,moretransparentreportingstructure.DivisionsMarketRegionNorthandSouthreplacethepreviousStyleandSmartStrategicBusinessDivisions.DivisionDestinations(destinationmanagement)remainsinplace.Weexplainthenewgroupstructureinmoredetailonpage21.

Theglobalfinancialandeconomiccrisisthatbe-cameapparentinthefourthquarterof2008hittheentiretourismindustryhard.Widespreadrecession,oftenexacerbatedbylocalpropertycrises,createdanegativemoodamongconsumers.Demandforholidaysfellsharply.Asaconsequencecustomersinvirtuallyallmarketschangedtheirbookinghabits.Manymadethedecisiontobookaholidaylaterthaninpreviousyears,andtravelledatshortnotice.ThestrategicdecisiontosellEdelweissAirin2008hadapositiveeffecton2009resultsbyreducingourexposuretoflightrisk.

Asaresultofthecrisis,somecurrencieslostsignifi-cantvalueagainsttheSwissFranc.Thesecurrencyfluc-tuationshadanegativetranslationeffectonresults.ThemostimportantcurrenciesforKuoni,theBritishPound(–14.8%),theSwedishKrona(–13.6%),theNorwegianKrona(–10.3%),theEuro(–4.8%)andtheIndianRupee(–9.9%),allfellsubstantiallyagainsttheSwissFrancin2009.OnlytheUSdollarmaintaineditsvalueatthepreviousyear’slevel.

Dearshareholder,

9Marketreport2009

henningboysen

Chairman of the Board of Directors

peterrothwell

Chief Executive Officer

10

2009wasalsotheyearinwhichtheworldwascon-frontedwithitsfirstpandemicformanyyears.“Swineflu”brokeoutinMexicoinApril2009.Itquicklyspreadacrossallcontinents,promptingtheWorldHealthOrganisationtogiveitthehighestpandemicratingoflevel6.Inourhighlymobile,highlymedia-drivenworld,thisfirstwaveofswinefluledtogreatconcernamongconsumers.Fallingdemandfortravel,especiallyinAsia,EuropeandtheUSA,hadastrongnegativeeffectonthetourismindustry.

Giventheseriousnatureoftheseexternalinfluences,itwasverypleasingtoseethededicationandcommit-mentwithwhichmanagementandemployeeshavetackledourday-to-dayoperationalchallenges.DuringthisperiodtheyalsofoundtheenergytoworkonthechangesrequiredtosecureKuoni’sfuture,despiteshort-timeworkingandothermeasurestoreducecosts.Itwasaveryspecialeffortofwhichweareproud.

Inviewofthenumerousadverseexternalinflu-ences,KuoniGroupmanagedtoachieveasatisfactoryresultfor2009.TheGroupgeneratedturnoverofCHF3894million.Thisrepresentsadeclineof19.8%onthepreviousyear.Earningsbeforeinterestandtaxes(EBIT)stoodatCHF15.1million(–89.8%).UnderlyingEBIT–i.e.excludingthecostoftheinvestmentandcost-reductionprogramme–wasCHF45.3million.Wearepleasedthatwewereabletoconcludethechallenging2009financialyearwithapositiveEBIToperatingresult.

ThenetresultcametoCHF1.6million.Thesignificantdeclinecomparedwith2008ismainlyduetotheloweroperatingresultaswellastheverylowinterestrates,whichmeantthatKuonigeneratedalmostnofinancialincome.

2009’sturnoverofCHF3894millionincludedorganicturnoverdevelopmentof–14.8%,whileacquisitionsaccountedfor0.7%ofturnover.Thesignificantnega-tivecurrencyinfluencereducedturnoverby5.7%.

Thegrossprofitfor2009cametoCHF808million(–23.5%),andthegrossprofitmargindeclinedfrom21.8%inthepreviousyearto20.8%.

TheBoardofDirectorsrecommendstotheAnnualGeneralMeetingofShareholderson20April2010thatadividendofCHF1.60perregisteredshareAandCHF8.00perregisteredshareBbedistributedforthe2009businessyear.Thiscompensatesforthereduceddividendpaidinthepreviousyearowingtotheuncertainoutlook.

AlloftheKuoniGroup’sdivisionscontributedtoitsposi-tiveEBIToperatingresult,withparticularlystrongcon-tributionsfromtheNorwegian,Swedish,British,FrenchandIndianmarketsandDestinationManagement.

Greateffortsweremadeinallmarketstoreducecostsinresponsetothedeclineinturnover.Thevoluntaryactiontakeninthisregardbymanagementandem-ployees–includingwaivingsalaryandtakingunpaidleave–wasparticularlynoteworthy.TheExecutiveBoardandBoardofDirectorsalsoforewenttheequi-valentproportionoftheirsalariesandfees.

Inordertostrengthenitsfinancialsituationandtoberesourcedforthefuture,KuoniTravelHoldingLtd.carriedoutaCHF200millionfour-yearbondwitha3%couponin2009.Thebondswereplacedveryquickly,reflectingtheKuoniGroup’ssolidfinancialsituation.

InthenewGroupstructure,DivisionMarketRegionSouthincludesSwitzerland,France,Italy,Spain,IndiaandHongKong/China.Allofthesemarketswerenega-tivelyaffectedbythefinancialandeconomiccrisisandbyswineflu.

TheSwissmarketgeneratedturnoverofCHF821mil-lion,representingafallof20.1%.Inadditiontotheexternalinfluences,thelowerpricelevelsresultingfromrenegotiatedhotelprices,andthereductionin

11Marketreport2009

flightcapacitiesalsocontributedtoalowerturnoverthaninthepreviousyear.

HelveticTours,thepackageholidaybrandsuccessfullyrepositionedin2008,onceagaintookonapioneeringroleintheSwisstravelindustryduringtheyearunderreview.Itsbeachholidaycatalogueforthe2009/10winterseasonwasthefirsttobepublishedwithoutaprintedpricelist.Consumersbenefitfromthelatestdailypricewhentheybook.

TheSouthernEuropeunitincludesFrance,ItalyandSpain.Turnoverdeclinedby30.5%toCHF374million.Here,atrendtowardsshortandmedium-haulroutescontributedtothefallindemand,Kuoniinthesemar-ketsisapremiumprovideroflong-haultravel.

TheAsianunitincludesIndia,andHongKong/China.TurnovercametoCHF267million(–12.4%).ThedeclinecanbeattributedmainlytotheweakeningoftheIndianRupeeagainsttheSwissFranc.Pleasingly,turnoverinlocalcurrencyintheIndianmarketwasmaintainedatthepreviousyear’slevel.TherenewedgrowthofVFSGlobalmadeasubstantialcontributiontothissteadyresult.VFSGlobalprovidesembassiesandauthoritieswithcomprehensiveadministrativeservicesforissuingvisas.

DivisionMarketRegionNorthincludestheScandina-vian,British,BeneluxandRussianmarketsaswellastheairlineNovairandthesportsandfamilyholidayresortPlayitas.Allthemarketsinthisdivisionwerealsoaffectedbythefinancialandeconomiccrisisandbyswineflu.

Scandinavia(Sweden,Norway,Denmark,Russia,NovairandPlayitas)generatedturnoverofCHF1012million.The15.1%decreaseonthepreviousyearisduemainlytothenegativeinfluenceoftheSwedishKronaandNorwegianKronaagainsttheSwissFranc.Inlocalcurrencyterms,theSwedishandNorwegianmarketsachievedrecordturnoveronceagain,which

inviewoftheeconomicconditionswasanexcel-lentperformance.Duringtheyearunderreview,thePlayitasholidaycomplexonFuerteventura,nowunderScandinavianmanagement,wasconvertedintothemostup-to-datesportsandfamilyresortontheCanaryIslands.Thenumberofguests,especiallyfromDenmark,areincreasingsharply.InRussia,therestructuringmeasurescontinuedin2009.

TheUKandBeneluxmarketsgeneratedturnoverofCHF652million(–20.9%)in2009.TheBritishPound’ssteepdeclineagainsttheSwissFranchadthemainnegativeimpactontheresult.Inaddition,theongoingfinancialandeconomiccriseshittheUKhard.

DivisionDestinations,whichincludesalldestinationmanagementactivities,producedturnoverofCHF894millionfor2009.This18.8%declineontheprevi-ousyearisonceagainduemainlytotheexternalinflu-encesalreadymentionedandtheabsenceofturnovergeneratedatEuro’08.InAsiaespecially,consumersweregreatlyunsettledbythespreadoftheflupandem-ic,leadingtosignificantlyreduceddemand.

In2009theKuoniGroupmadefeweracquisitionsthaninpreviousyears.Wecontinuedtoexaminevariouscompaniestoaugmentourportfoliostrategi-cally.However,duringtheeconomiccrisisthepriceexpectationsofsellersandbuyerswereoftentoofarapart–becauseofgenerallyhealthyprior-yearresults.Nevertheless,weintendtocontinueKuoniGroup’sworldwideexpansionin2010andmakesomekeystrategicacquisitions.

Oneimportantacquisitionwas,however,madein2009.KuoniGroupboughtastakeofaround32%inEt-china.comInternationalHoldingsLimited(Et-china),makingKuonithebiggestsinglesharehold-erinthemostimportantSouthChinesetravelagency.Thisinvestmentmarkedthestartofalong-termpartnershipforKuoniinChina,amarketwhichisexpectedtoseeveryattractivegrowth.Thisexpansion

12

ofactivitiesinChinacouldbeoneofthebiggestmile-stonesinthemorethan100yearsofKuoni’shistory.Themedium-termaimistotakeoveramajoritystakeinEt-china.

On1January2009,KuonitookoverthetouroperatorCotravelinSwitzerland.ThecompanyisoneofSwit-zerland’sleadingprovidersofhighqualitystudytripsaccompaniedbyexpertguides.

On1December2009,KuonitookoverallthetravelactivitiesoftheTouringClubSchweiz(TCS).Thisincludestentravelagenciesandtheproductionofholidaysunderthe“ReisenTCS”labelformembersoftheleadingSwissmotorists’organisation.

Theefficientsaleoftravelproductsandservicesisoneofthekeychallengesforagloballyactivecompany.Duringtheyearunderreview,wecontinuedtodevelopoursalesthroughdirectcustomercontact.NewKuoniFlagshipStoresweresuccessfullyopenedinZurichandMilan.Severalhigh-streetstoresopenedforbusi-nessintheUK.

Oftheelectronicdistributionchannels,theshareofinternetbookingswas16%.Callcentresshareofbookingsstoodalsoat16%in2009.53%ofturnoverwasgeneratedthroughdirectcustomeraccess.Severalwebsiteswerecompletelyoverhauledduringtheyearbasedoncommontechnologywithstructuresadjustedtoholidaymakers’needs.Afreshnewvisualdesign,includingphotographsandvideos,providesadditionalinspirationforpotentialtravellers.

Asubstantialportionoftheresourcesallocatedtotheinvestmentandcostreductionprogrammelaunchedatthestartof2009wereinvestedinITprojects.Thestandardisationofourbookingsystemswascontinuedduringtheyearunderreview,leadingtomuchloweroperatingcosts.Theglobalbookingsystemwasintro-ducedinSpainearlyinNovember2009.ItwillnowbeprogressivelyextendedtofurtherKuonimarkets.

Asagloballyactivecompany,Kuoniattachesparticularimportancetoresponsible,sustainableconduct.TheGroup-widestrategyonCorporateResponsibilitywasfurtherdevelopedthroughout2009bothinsourcemarketsandindestinations.Kuonicontinuestotacklethekeyissuesproactively.Theseincludeprotectingchildrenfromsexualexploitation,ensuringfairwork-ingconditions,improvingthewatersituationatdes-tinations,andalleviatingtheconsequencesofclimatechange.Tofurthertheseaims,Kuonitrainsemployeesandserviceprovidersindestinations,andsensitisescustomerstotheseissues.Duringtheyearunderreview,forexample,Kuonisupportedaninternationalexpe-ditionthattravelledbyinflatableboatfromthesourceoftheGangestoitsdelta.Theideawastoincreasepublicawarenessofenvironmentalissuesaswellastohighlightthetouristpotentialoftheregionsalongtheriver.TheprojectisdescribedinmoredetailintheseparateBrandReportsectionofthisannualreport.

Wevaluetheawardswereceiveasaformofapprecia-tionandrecognitionforoutstandingperformance.Thedozensofawardswehavewoninourindividualmarketsencourageusinourday-to-daycommitmentandinourdeterminationtofocusKuonionsuccessandsustainability.Wemanagedtorepeatthisin2009.

Atthe2009AnnualGeneralMeetingofShareholders,ChairmanoftheBoardHenningBoysenwasre-electedtotheBoardofDirectorsforanotherthreeyearsandconfirmedasChairman.BoardMemberDavidSchnellwasalsoelectedforafurthertermofthreeyears.

InJanuary2009,theexperiencedBritishtourismspecialistPeterRothwellbeganhisjobasthenewChiefExecutiveOfficer(CEO)oftheKuoniGroup.InhisfirstyearheledKuonithroughadifficultperioddomi-natedbyadverseexternalinfluences,ensuringthatthecompanyrecordedapositiveresultattheendof2009.HesetprioritiesanddevelopedwithhiscolleaguesontheExecutiveBoardthenewandforward-lookingGroupstructure.

13

TheBoardofDirectorsofKuoniGroupthanksPeterRothwell,theMembersoftheExecutiveBoardandallemployeesfortheircommitmentduringaparticularlychallengingyear.

RetoWilhelm,aMemberoftheExecutiveBoardsince2002,leftthecompanyattheendof2009inconnec-tionwiththereorganisationoftheKuoniGroup.WethankRetoWilhelmforhisyearsofcommitmenttothecompany.Hehascontributedmuchtothesuccess-fuldevelopmentofhispartsofthebusiness.

LeifVaseLarsenwasappointedasanewMemberoftheExecutiveBoard.HeisinchargeofDivisionMarketRegionNorth.The46-year-oldDanehasbeenwithKuonifortenyears,mostrecentlyleadingtheScandi-naviaunitwithgreatsuccess.

Wewouldalsoliketoexpressoursincerethankstoyou,ourshareholders.Wearegratefulforyourcontinuedtrust,loyaltyandsupportin2009.Wecanlookbackonanextraordinaryyearofcrisisthatpresentedchal-lengestoyouandtousonadailybasis.Wearecon-vincedthatthereorganisationandrestructeringoftheKuoniGroupcarriedoutin2009willstrengthenthecompanyforthelongterm,facilitatingfurthergrowth,efficientcostmanagementandimprovedprofitability.

However,firstpriorityin2010willbetoovercomethecontinuingnegativeeffectsoftheglobalfinancialandeconomiccrisis.CurrentGroup-widebookinglevelsforthetouroperatingbusinessconfirmtheup-wardtrend.Weexpectafurtherincreaseindemandfortravelinthesecondhalfof2010.

In2008,Kuoni’sannualreportwascompletelyre-designedandadjustedtomatchKuoni’snewcorporateidentityandcorporatevalues.Wehavereceivedalotofpraiseforthisfromyoutheshareholders,whichwasverypleasing.Whatismore,forthefirsttimeKuoni’sannualreportwonlastyearseveralmajorinternationalandnationalawardsasthebestannualreportoverall

andthemostvisuallyattractiveannualreport.TheseawardsstrengthenourresolvetobuildfurtheronKuoni’ssuccessfulpositionasagloballeaderinpremiumandspecialisttravelbusinessandasanindependentcom-pany.Wehopethatyouwillalsofindthe2009annualreportfullofinteresting,informativeandattractivecontent.Ourdesiretobringyoucloserto“PerfectMoments”in2010isreflectedinthisyear’sreport.Wearededicatedtothistaskand,inatimefullofchangewearedeterminedtoexplainourdecisions,ouractionsandourideasaboutthefuturemoreeffectivelytoyou.

WeareconvincedthattheKuoniGroupwillcontinuetomeettheongoingchallengesandachieveouram-bitiousgoals.WiththefundamentalreorganisationoftheKuoniGroupformanyyears,weareinvestinginasustainableandsuccessfulfutureforKuoni.

HENNING BOySEN PETER ROTHwELLChairman of the Board Chief Executive of Directors Officer

Marketreport2009

Organisation

16 Businessmodel18 BoardofDirectors20 Groupstructure21 Thenewgrouporganisation22 GroupExecutiveBoard

16

The activities of the Kuoni Group are focused on two business areas, leisure travel (in the premium, specialist and mainstream segments) and destination management. For 2009, Kuoni’s leisure travel busi-ness accounted for 78 % of total group turnover.

With its business activity Destination Management, Kuoni is the market leader in the USA, India and East Africa and one of the biggest providers of destina-tion management services in Europe, Southeast Asia, South Africa, the United Arab Emirates and Australia. Kuoni’s destination management business accounted for 22 % of total group turnover for 2009.

Kuoni’s business areas are both assimilated within the overall group strategy of low vertical integration. This means that Kuoni owns hardly any fixed assets such as aircraft, cruise ships or hotels. Variable costs account for 79 % of Kuoni’s total expense.

LEISURE TRAVEL

Kuoni’s premium-segment leisure travel products are focused on providing a high-value travel experience, and are marketed under the Kuoni brand. The prod-ucts are individually compiled and boast outstanding customer service levels, from flight and hotel book-ings to further amenities such as limousine transfers, restaurant reservations, event tickets and more. The product further includes concierge services in Swit-zerland, the UK, France, Italy and Spain. The personal assistance and advice provided meet every individ- ual customer wish within this luxury segment.

In the specialist travel segment, Kuoni is home to a number of skilled and professional companies offering quality products and services under their own brands, many of which are already familiar and long-established brands. These niche providers are generally viewed as the leading specialists for their particular destinations or travel products within

their respective markets. Here, too, personal advice is placed centrestage to address and fulfil specific customer needs.

In the mainstream leisure travel segment, Kuoni is active in the Swiss and Scandinavian markets, through such familiar brands as Helvetic Tours (Switzerland), Apollo (Sweden, Norway and Denmark) and Falk Lauritsen (Denmark). The products here are aimed at price-conscious customers seeking value-for-money and easy-to-book vacations, usually in inclusive-tour form. These products require less upfront advice, and are being increasingly booked online or via call centres. The general trend towards affordable quality hotel stays at beach holiday desti-nations further intensified in 2009, as demand for such products rose in response to the global financial and economic crisis.

Kuoni’s tour operating units continued to buy-in and combine both individual and inclusive-tour travel products and supplement these with further service elements. In doing so, the Group’s leisure travel operations also benefit from the expertise and experience of the specialists at Division Destinations and their global network of destination management offices. It is a business model that enables Kuoni to shape and influence the entire value chain. Follow-ing the transformation of its group structure from a decentralised to a function-based global organisation, worldwide procurement and production is organised in a new unit specially created for this purpose from 2010 onwards (see also the “New group organisation” section, from page 20).

Kuoni offers its leisure travel products and services via various distribution channels, from retail offices to the internet and call centres. The retail offices include Kuoni’s own branch outlets and third-party travel agencies. A further sales channel was also launched in markets such as the UK: mobile “personal

The business model –leisure travel and destination management

17OrganisatiOn MarketrepOrt2009

travelconsultants”whovisitcustomersathomeortheirplaceofworkandadvisethemontheirholidayplans.AllKuoni’sdistributionchannelsarefurthersupportedbytheGroup’smarketingandcommunica-tionsunits.

Kuonialwaysstrivestoofferitsproductsviathosedistributionchannelsthatitscustomersprefer.Dueregardisalsopaidtosocialchange:whileindividualtravellersstilltendtovaluereceivingpersonalandprofessionalface-to-faceadviceataretailoffice,theinternetcontinuestoplayanimportantroleasadistributorofeasy-to-booktravelarrangements.For2009,some16%oftotalturnoverderivedfromtheinternet,21%fromKuoni’sownbranchoutlets,16%viacallcentresand47%viatravelagents.Kuonithussellsthemajorityofitsproductsthroughdirectcustomercontact(53%).Thecompanynowaimstofurtherraisetheproportionofsalesachievedviadirectdistributionchannels,whetherthroughitsownbranchoffices,theinternetoritscallcentrefacilities.

DESTINATION MANAGEMENT

Kuonimaintainsacomprehensivenetworkofmorethan80salesanddestinationmanagementopera-tionsofferinglandarrangementsatvariousholidaylocationsaroundtheworldtotouroperators,travelagencies,eventandincentivearrangers,congressor-ganisersandcruisecompanies.Kuonihasconcludedcontractualagreementswithvarioushotelsonallcontinentsthatcanprovidethecapacitiesrequired.Kuonialsooffersfurtherlocalservicessuchastrans-fers,excursions,andsocialandactivityprogrammes.

Inadditiontogrouptravel,Kuoni’sdestinationmanagementalsomeetsindividualtravelneeds,thoughlandarrangementsforindividualtravellersarebeingincreasinglysoldtotouroperators,travelagenciesandbrokers(includingnumerousonlinehotelportals)viaKuoniConnect,thecompany’sown

web-basedsystem.Thisnewuser-friendlyonlineplatformwaslaunchedinautumn2009,whichallowstravelagentsallovertheworldtoaccesstheport-folioofhotelsundercontracttoKuoniandbookaccommodationasswiftlyandsimplyaspossible.

AspartofitsstrategiccollaborationwithSwissInternationalAirLines,Kuoninowoffersmorethan15000hotelsworldwideonitspartner’swebsite,too,togetherwiththecorrespondingonlinebookingoptions.Thenewarrangement,whichwasintroducedinMarch2009,hasalreadyearnedKuoninumerousnewcustomersinnewmarkets.

Kuoni’sdestinationmanagementunitsarealsoactiveintheattractiveMICEbusiness,providingmeeting,incentive,conferenceandeventtravelproducts.HerecustomersbenefitfromKuoni’sexpertiseindevisinglandarrangements,which,combinedwithitsextensiveprojectmanagementexperience,deliv-erssolutionsthatarespecificallytailoredtoeachclient’sneeds.

DestinationmanagementhasevolvedintoakeycomponentoftheKuonibusinessmodeloverthepastfewyears.Thesegmentalreadymakesasubstantialcontributiontooverallgroupearnings,andshowsgreatpotentialforfurtherbusinessgrowth.

18

BoardofDirectors

ChairmanoftheBoardofDirectorsofGlobalRefundGroup,Nyon;ChairmanoftheBoardofDirectorsofAPODANNORDICAS,Copenhagen;ChairmanoftheBoardofTrustees,PostgraduateEducation,CopenhagenBusinessSchool;MemberoftheBoardofDirectorsofTranscomWorldwideSA,Luxembourg;MemberoftheAdvisoryBoardoftheEcolehôtelièredeLausanne(EHL),Lausanne.Currenttermexpiresin2012.

ChairmanoftheBoardofDirectorsofDAMARES.R.L.,Milan.Currenttermexpiresin2010.

CEOofAxpoHoldingAG,Baden;ChairmanoftheBoardofDirectorsofElektrizitäts-GesellschaftLaufenburgAG,Dietikon;ChairmanoftheBoardofDirectorsofAxpoAG,Baden;ChairmanoftheBoardofDirectorsofCentralschweizerischeKraftwerkeAG,Lucerne;MemberoftheBoardofDirectorsofResunAG,Aarau;MemberoftheBoardofDirectorsofSwissgridAG,Laufenburg.Currenttermexpiresin2011.

HENNING BOySENChairman

WOLfGANG BEESERVice-Chairman

HEINz KARRER

Henning Boysen has been a member of Kuoni’s Board of Directors since 2003. In 2006, the Board elected Mr. Boysen, a Dane, to be its chairman. After studying economics, Henning Boysen began his career as a management consultant at Booz, Allan & Hamilton. In 1975 he joined SAS Service Partner as a project manager before going on to the posts of Chief financial Officer and then Executive Vice-President Catering. After stints as Chief Operating Officer (COO) of Saudia Catering and President of Aero-Chef A/S, he served as Chairman of the Board of Directors and CEO of Gate Gourmet Inter-national from 1996 to 2004, and as Deputy Chairman from 2004 to 2005. During this period as Chairman and CEO, Gate Gourmet grew from a medium sized European company to become a global player.

Tourism specialist and industrial economist Wolfgang Beeser, a Ger-man national, served as CEO of Thomas Cook AG from January 2004 to the end of 2005, and can draw on 40 years of experience in the tourism sector. He embarked on his tourism career with Neckermann Reisen in 1967. Ten years later he assumed responsibility for Neck-ermann’s global procurement of hotel capacities. In 1994 he was named CEO of the company, now renamed NUR Touristic. from 1997 to 1999 he headed the Thomas Cook Group, which was then still known as C & N Touristic, as a Member of Executive Management. He was elected to the Kuoni Board of Directors in 2002, but stepped down at the end of 2003 after being appointed CEO of Thomas Cook AG. He then returned to Kuoni’s Board in 2007 as its Vice-Chairman.

Heinz Karrer, who is a Swiss national, has been CEO of Axpo Holding AG, Switzerland’s leading energy company, since 2002. After studying economics at St. Gallen University (HSG), he began his career in 1985 when he was appointed General Manager of the Association of Swiss Manufacturers, Suppliers and Agents for Sports Goods. He went on to serve as Managing Director of Intersport Schweiz AG from 1987 to 1992 and as CEO of Intersport Holding AG from 1992 to 1995. He then moved to the Ringier publishing house where he remained until 1997, becoming CEO of Ringier Switzerland and a member of Ringier Ltd.’s Group Executive Management. from 1998 to 2002 he was a member of Swisscom’s Group Executive Management and head of the group’s Marketing & Sales Division. He has served on Kuoni’s Board of Directors since 2007.

19OrganisatiOn MarketrepOrt2009

SeniorAdvisor,BostonConsultingGroup,London;MemberoftheBoardofDirectorsofIntourist,Moscow;MemberoftheBoardofDirectorsofVisitBritain,London.Currenttermexpiresin2011.

BusinessConsultant;MemberoftheBoardofTrusteesoftheKuoni-andHugentobler-Foundation,Zurich;ChairmanoftheBoardofDirectorsofIFBCAG,Zurich;Vice-ChairmanoftheBoardofDirectorsofELMAElectronicAG,Wetzikon;MemberoftheBoardofDirectorsofAlpTransitGotthardAG,Lucerne;MemberoftheBoardofDirectorsofKardexAG,Zurich;MemberoftheSanctionCommissionoftheSIXSwissExchangeAG,Zurich.Currenttermexpiresin2012.

FounderandVice-ChairmanoftheBoardofDirectorsofarthesiaAG,ZurichandLosAngeles;ManagingDirectorofarthesiaAG,ZurichandLosAngeles.Currenttermexpiresin2010.

MemberoftheInstitutionofElectricalEngineers(MIEE),London;MemberoftheBoardofDirectorsofPegasusAirlines,Istanbul;MemberoftheAdvisoryBoardoftheStanfordSloanMaster’sProgramme,California;FellowoftheRoyalAeronauticalSociety(FRAeSoc),London.Currenttermexpiresin2010.

JOHN LINDqUIST

DAVID SCHNELL

ANNETTE SCHöMMEL

RAyMOND WEBSTER

John Lindquist, a US and UK citizen, is resident in London. He gained a degree in economics from Princeton University and MBA from Harvard University and then joined The Boston Consulting Group (BCG) as a consultant in 1974. He was elected a Partner in 1981 and a Senior Partner and Managing Director in 1993. With over 25 years experience advising on strategy and transformation programmes for airlines, hotels, tour operators, and government tourism promotion bodies on a global basis, he was one of the leaders of BCG’s worldwide travel and tourism practice. A Senior Advisor to BCG since 2004, he joined Kuoni’s Board of Directors in 2007. He is also a Board Director of Intourist, the largest travel and tourism company in Russia, and of VisitBritain, the government tourism promotion agency for the UK.

Kuoni’s Board of Directors has benefited from the great expertise and experience of Swiss business administration graduate David Schnell since 2002. Between 1985 and 1997 he worked at ELCO Looser Holding AG, initially as Chief financial Officer (CfO) and Member of the Executive Board, and later as Chief Operating Officer (COO) and Member of the Board of Directors. In 1997 David Schnell moved to become CfO and Member of the Executive Board of telecommunica-tions company Swisscom AG in Bern, where he stayed until 2002. Since 2002 David Schnell has been an independent business consul-tant and a Member of the Board of Directors of various companies.

German entrepreneur Annette Schömmel has been a member of Kuoni’s Board of Directors since 2004. After studying economics, German and communications, she worked at several respected adver-tising agencies before becoming a TV and film producer in Hamburg and Berlin. In 1994 Annette Schömmel founded the creative think-lab arthesia AG, based in zurich and Los Angeles, where she also sits on the company's Board of Directors as Vice-Chairman.

Raymond D. Webster, who is a citizen of New zealand and resident in the United Kingdom, joined Kuoni’s Board of Directors in 2006. He worked for easyJet airline plc. from 1996 to 2005 – from 2000 as Chief Executive Officer. Before that he was with Air New zealand in various functions, the last one being General Manager, Strategic Planning. He studied engineering at Canterbury University in New zealand and obtained an MSc in Air Transport Engineering from the Cranfield Institute of Technology in the UK, as well as a Master of Business Management from Stanford Business School in the USA.

As at 1 March 2010Board members’ detailed CVs can also be found on the Group’s website: www.kuoni-group.com.

20

CEO P. Rothwell

APOLLO SWEDEN

P. Kjellin

APOLLO NORWAy

L. Berbu

PLAyITAS

A. de la Presilla Tönnesmann

UTE MEGAPOLUS

G. Bisgaard

KUONI UK

J. Edmunds

NOVAIR

A. fred

KUONI BENELUX

R. Broekhoven

APOLLO DENMARK

J. Lockhart

KUONI BELGIUM

P. Weymans

NORTHERN REGIONL. V. Larsen

KUONI SWITzERLAND

S. Leser

KUONI fRANCE

E. foiry

KUONI SPAIN

C. Lopez

KUONI INDIA

z. Karkaria

KUONI CHINA

M. Ng

KUONI ITALy

D. Ponzo

SOUTHERN REGIONS. Leser

CORPORATE CONTROLLING

R. Häsler

BUSINESS CONTROLLING

M. Müller

MERGERS & ACqUISITIONS

M. Simeon

INVESTOR RELATIONS

L. Bienz

LEGAL & COMPLIANCE

M. Neff

CORPORATE TREASURy

M. Bieri

fINANCEM. E. Katz

HUB SWITzERLAND

T. Goosmann

HUB UK

N. Delord

HUB SCANDINAVIA

T. filippopoulos

PROCUREMENT & PRODUCTIONR. Schafroth

DESTINATIONSR. Schafroth

DESTINATION EUROPE

S. Egli

DESTINATION NORTH AMERICA

J. Rossmango

DESTINATION INDIA/ SOUTH ASIA

D. Deva

KUONI CONNECT

I. Walter

SALES ASIA PACIfIC & USA

O. Moeschler

fINANCE & IT

T. Peyer

DESTINATION ASIA PACIfIC

L. Matzig / L. Kuenzle

DESTINATION AfRICA/DESTINATION ARABIA/SALES M-EAST & INDIAy. Noman

IT & SECONDARy GOODS PROCUREMENTB. Jokic

HUMAN RESOURCES

A. Brochier

BRANDING &MARKETING

R. Masala

DISTRIBUTION

M. Dahlquist

CORPORATE & BUSINESS DEVELOPMENTL. Pompeo

CORPORATERESPONSIBILITy

M. Leisinger

ASSURANCEMANAGEMENT

f. Bertisch

CORPORATECOMMUNICATIONS

P. Brun

Executive Board

As at 1 March 2010

Groupstructure

21Market report 2009

The Kuoni Group announced at the end of September 2009 that it would be adopting a new corporate structure which will transform it from a decentra-lised to a function-based global organisation. The changes are a further element in the investment and cost-reduction programme that was launched at the beginning of 2009.

The new structure features two divisions covering the North and South market regions, together with a new unit performing all procurement and produc-tion activities for both market divisions. Division Destinations remains the home of the Group’s global destination management operations. The new orga-nisation provides two clear focuses: on marketing and sales, and on developing global procurement and production capabilities.

The new group organisation draws on the model that has already been adopted at Kuoni Scandinavia, which has proved to be highly efficient and effective. The Scandinavian model has been further refined, however, to benefit from scales and better efficiency as well as to offer a broader product range and to pay due regard to the varied requirements within the Kuoni Group. In a further development, the globally-organised function-based units such as Finance, IT, Human Resources, Branding & Marketing and Distribution now also bear operational and strategic responsibilities in the new group structure.

The new organisational structure facilitates faster implementation of the existing growth strategy with an asset-light brand portfolio (hardly any fixed assets – aircraft, ships, hotels – are owned), especially since the planned Group-wide projects can also be realised more efficiently.

The new structure is the first radical reorganisation of the Kuoni Group for some time. A stronger customer focus, further growth, efficient cost management and improved profitability are its prime ambitions. The new structure eliminates the previous “Style” and “Smart” divisional distinctions based on travel product type. DIVISIONS MARKET REGION NORTH AND SOUTH: A STRONG CUSTOMER FOCUS

Division Market Region North comprises the markets of the UK, Sweden, Norway, Denmark, Benelux and Russia, the Scandinavia-based Novair airline and the

Playitas vacation resort on Fuerteventura. Division Market Region South consists of the markets of Switzerland, France, Italy, Spain, India and Hong Kong/China. Responsibility for marketing and sales remains with the various country organisations within the two divisions. Responsibility for buying-in and developing land arrangements has now been entrusted to the new global Procurement & Produc-tion Unit. But specific local business processes such as managing, monitoring and buying-in flight capaci-ties basically remain the responsibility of the market regions.

pROCUREMENT & pRODUCTION UNIT:ONE SOURCE FOR ALL MARKET REGIONS

The new Procurement & Production Unit accom-modates several “product categories” which are responsible for buying-in and developing land arrangements at the various leisure destinations worldwide. The products and services developed are then selected by the individual market organisations, in collaboration with the Procurement & Production Unit and in accordance with their own sales needs.

The Procurement & Production Unit will operate three centres of excellence, in Zurich, Dorking (UK) and Stockholm. Each of these is responsible for a set of clearly-assigned destinations and/or travel styles. By concentrating these activities, the Kuoni Group can take greater advantage of its purchasing power, and can also ensure that full and Group-wide use is made of all its expertise and experience. DIVISION DESTINATIONS: THE LAND ARRANGEMENT AND MICE SpECIALIST

Division Destinations is home to all the Kuoni Group’s destination management activities, and remains unchanged in the new group structure. The division puts a special focus on organising and advising on land arrangements for groups and individual travel-lers, MICE (meetings, incentives, conferences and events), special tours and sporting events. Some 15 % of the products and services provided by the division are used within the Kuoni Group; the remaining 85 % are purchased by international tour operators, retai-lers, conference and event organisers and individual travellers.

The new group organisation –a function-based structure for a stronger customer focus

organisation

22

British, born in 1959

After studying languages at Oxford University (UK), in 1982 Peter Rothwell embarked on an executive career that took him through marketing, product management, purchasing and sales at several British-based travel companies.

He became Managing Director of Airtours Holidays in 1995, thenCEO of Airtours UK Leisure Group in 1998. Peter Rothwell later served as COO at Thomson Travel Group and as CEO of TUINorthern Europe, where he also took over as Managing Director of TUI UK in 2004. He was appointed COO and Member of the Board of TUI AG Tourism in 2006, from where he moved to become Deputy Chief Executive of TUI Travel PLC, London, following the merger with First Choice in 2007.Peter Rothwell became CEO of the Kuoni Group on 1 January 2009.

peter rothwell

Chief Executive Officer

GroupExecutive Board

23MarketrepOrt2009OrganisatiOn

24

max e. k atz

Chief Financial Officer

Swiss, born in 1955

After earning a university of applied sciences degree in business economics, Max E. Katz embarked on his professional career in 1978, joining Unilever as a Brand Manager. From 1981 to 1987 he served as a Regional Controller for Jacobs Suchard AG both in and outside Switzerland. He then joined the Executive Board of Effems AG as the company’s Finance Director. In 1991 he moved to Hürlimann Holding AG to become Vice-President finance and a Member of the Executive Board. He joined Kuoni as a member of the Group Executive Board and Chief Financial Officer in 1995.For the 2008 financial year, Max E. Katz additionally was Speaker for the Group Executive Board.

25Market report 2009

stefan leser Executive Vice-President Southern Region,Chief Executive OfficerKuoni Switzerland

German, born in 1967

Having graduated in business administration (specialising in travel and transportation), Stefan Leser initially held a number of functions at various companies in the German travel sector. After completing an MBA in finance and strategic management at Augusta State University of Georgia, USA, he joined Atraxis AG in 1999 as Executive Vice-President Business Development, Market-ing & Sales. He later moved to EDS, going on to become CEO of EDS Switzerland AG and Head of Sales & Distribution for Central and Eastern Europe. He joined Kuoni in July 2005 as a member of the Group Executive Board, in the newly-created position of Executive Vice-President Corporate Development. He assumed additional responsibility for the unit Scandinavia in 2006. In 2007 he was appointed Head of Strategic Business Division Smart and CEO of Kuoni Switzerland. As part of the restructuring of the Kuoni Group in 2009, Stefan Leser was appointed Executive Vice-President Southern Region.

organisation

26

leif vase larsen

Executive Vice-President Northern Region,Chief Executive Officer Kuoni Scandinavia

Danish, born in 1963

After completing an apprenticeship with Maersk Line and graduating from Copenhagen Business School, Leif Vase Larsen embarked on his professional career in 1986 as financial analyst at Bull A/S. From 1990 to 1999 he held various Controlling and Financial management functions at the shipping company DFDS. In 2007 he completed an Executive MBA at the University of Stockholm.Leif Vase Larsen has been with Kuoni Scandinavia since the start. During the first seven years he served as Financial Director and has been since 2006 as CEO. 2009 he was appointed Executive Vice-President for Northern Region and at the same time became a member of the Group Executive Board.

27Market report 2009

rolf schafroth Executive Vice-President Procurement & Production, Chief Executive OfficerDestination Management

Swiss, born in 1965

After completing a commercial apprenticeship and earning a university of applied sciences degree in business economics, Rolf Schafroth joined Coopers & Lybrand in 1989 and went on to serve as a management consultant in Switzerland and the UK. In 1995 he moved to Deloitte & Touche, Switzerland, to perform the same function. A year later he joined Kuoni Switzerland as Head of Financial Controlling; and after just one year, in 1997, he was named Head of Finance & IT for Kuoni’s Incoming Strate-gic Business Unit. In 2003 he assumed overall responsibility for Incoming Europe, the Kuoni Group’s biggest incoming unit; and in 2006 he was named CEO of Destination Management, a new entity comprising all the Kuoni Group’s former incoming units. In 2007 he was appointed to the Group Executive Board as Head of the Strategic Business Division Destination Management. Following the restructuring of the Kuoni Group in 2009, Rolf Schafroth became Executive Vice-President Procurement & Pro- duction, while continuing as Chief Executive Officer Destination Management.

organisation

Reporting

30 2009–theyearoffinancial andeconomiccrisisandpandemic32 KuoniGroup39 Ataglance|KuoniGroup40 Switzerland43 Ataglance|Switzerland44 SouthernEurope45 Ataglance|SouthernEurope46 Asia47 Ataglance|Asia48 Scandinavia49 Ataglance|Scandinavia50 UnitedKingdomandBenelux51 Ataglance|UnitedKingdom andBenelux52 Destinations55 Ataglance|Destinations

30

10

8

6

4

2

0

– 2

– 4

– 6

– 8

– 10

20

16

12

8

4

0

InternatIonal tourIst arrIvals 2009 compared to 2008

Worldwide – 4 %

europe – 6 %

america – 5 %

Middle east – 6 %

asis/Pacific – 2 %

africa + 5 %

neGatIve/PosItIve CurrenCY eFFeCts average rates compared to 2008 and to the Swiss Franc (CHF)

Pound (GBP) – 14.8 %

Swedish Krona (SEK) – 13.6 %

Norwegian Krona (NOK) – 10.3 %

Euro (EUR) – 4.8 %

Indian Rupees (INR) – 9.9 %

US Dollar (USD) + 0.3 %

Source: KuoniSource: UNWTO (Estimation for 2009)

GROSS DOmESTIC PRODUCT (IN %)

UNEmPlOymENT RaTE (IN %)

Switzerland

Switzerland

UK

UK

France

France

Italy

Italy

Spain

Spain

Sweden

Sweden

norway

norway

Netherlands

Netherlands russia

usa

usa

Japan

Source: OECD Economic Outlook (January 2010)

IndiaJapan China

2009 2008

–1.5

4.3

8.09.4

7.8

18.1

8.3

3.3 3.5

9.3

5.1

–4.8

–2.3

–4.8

–3.6

–4.7 –4.3

–8.7

–2.5

+5.6

–5.3

+8.7

–1.4

2009wasovershadowedbytheglobalfinancialandeconomiccrisis.Atthesametime,anoutbreakofswinefluinMexicoledtoapandemicthatbyJune2009wassevereenoughfortheWorldHealthOrganisationtoraiseitsalertratingto6–thehighestlevel.Theeffectswerefeltbythetourismindustryallovertheworld.

TheseexternalinfluenceshadastrongnegativeimpactontheKuoniGroupduring2009.Becauseoftheeconomiccrisisthatemanatedfromthefinancialservicesindustry,demandforpremiumtravelfellsharply.Thisunfortunatetrendwasexacerbatedbywidespreadrecessionandnegativeconsumersenti­mentinallofKuoni’smarkets.

Unusually,therewasalsoaverysharpfallinvalueofKuoni’smostimportantcurrencies–includingtheBritishPound,AmericanDollar,SwedishKrona,NorwegianKrona,andIndianRupee–againsttheSwissFranc.

Expertsdeclared2009tobetheyearoftheworsteconomiccrisisforalmost80years.

Theoverviewoppositeshowsthekeyfigures(GDP,unemploymentrate)forKuoniGroup’smostim­portantmarkets,aswellastheworldwidechangesintravelactivitycomparedwiththepreviousyear.

2009–theyearoffinancialandeconomiccrisisandpandemic

10

8

6

4

2

0

– 2

– 4

– 6

– 8

– 10

20

16

12

8

4

0

InternatIonal tourIst arrIvals 2009 compared to 2008

Worldwide – 4 %

europe – 6 %

america – 5 %

Middle east – 6 %

asis/Pacific – 2 %

africa + 5 %

neGatIve/PosItIve CurrenCY eFFeCts average rates compared to 2008 and to the Swiss Franc (CHF)

Pound (GBP) – 14.8 %

Swedish Krona (SEK) – 13.6 %

Norwegian Krona (NOK) – 10.3 %

Euro (EUR) – 4.8 %

Indian Rupees (INR) – 9.9 %

US Dollar (USD) + 0.3 %

Source: KuoniSource: UNWTO (Estimation for 2009)

GROSS DOmESTIC PRODUCT (IN %)

UNEmPlOymENT RaTE (IN %)

Switzerland

Switzerland

UK

UK

France

France

Italy

Italy

Spain

Spain

Sweden

Sweden

norway

norway

Netherlands

Netherlands russia

usa

usa

Japan

Source: OECD Economic Outlook (January 2010)

IndiaJapan China

2009 2008

–1.5

4.3

8.09.4

7.8

18.1

8.3

3.3 3.5

9.3

5.1

–4.8

–2.3

–4.8

–3.6

–4.7 –4.3

–8.7

–2.5

+5.6

–5.3

+8.7

–1.4

Marketreport2009 31reporting

32

TheKuoniGroupclearlyfelttheexternalinfluenceoftheglobalfinancialandeconomiccrisisthrough­outitsregionsandmarketsduring2009.Thecrisisdidbegininthefourthquarterof2008;andtheensu­ingeconomicdownturnsimultaneouslydepressedtheGroup’sbusinessthroughoutitsvariousregionstoanunprecedenteddegree.Unlikeearliercrises,suchastherepercussionsofthe2001terroristattacks,thebirdfluandSARS,thecurrentcrisisishavingasupra­regionalandfarmoresubstantiallydamagingimpactonthetourismbusiness.Consumerconfidence(andthusconsumerspending)hasbeendentedbyagrowingfearofunemploymentsincethecrisisbegan,restrictingtravelbudgets.Asaresult,demandforleisuretravelproductshassufferedtangibledeclines.Bookingtrendshaveseenradicalchanges:custom­ersarebookingtheirvacationsatshorternotice,aretendingtoprefershorterstays,andarealsooptingforregionsanddestinationsthatareclosertohome.

Inadditiontothemorematerialconsequencesofthecurrentfinancialandeconomiccrisis,thespreadofswineflufromthesecondquarterof2009onwardscausedahighlevelofconfusionaboutthesafetyoftravelling.Whilenoofficialrestrictionswereimposedontravelling,theswineflupandemicclearlydepressedGroupresultsfortheyear,andhadaparticularlyadverseimpactonNorthAmericandestinationsandontravelfromandwithinAsia.

Inthewakeoftheuncertaintiesonthecapitalmarkets,theaveragerateofallmajorcurrencieshadlostfurther(andlargelysubstantial)valueagainsttheSwissFranc.Developmentsofthiskindhaveasizeableeffectonconsolidatedresults,especiallyforacorporationwithsuchaninternationalbusinessmodelastheoneoftheKuoniGroup.

InlinewiththeoverallGroupstrategy,numerousacquisitionprojectswereevaluatedinthepremiumandspecialistsegmentinthecourseoftheyear.Thisresultedinthreeacquisitionspursued:CotravelAGandthetravelbusinessofTouringClubSchweiz(TCS)inSwitzerland,andanequity­consolidatedholdingofaround32%inEt­china.comInternationalHoldingsLimited(Et­china)inChina.

TotalGroupturnoverfor2009amountedtoCHF3894million,a19.8%declineontherecordCHF4855millionofthepreviousyear.Organicturnoverdevelopmentamountedto–14.8%;thenetimpactofcurrencymovementseroded5.7%fromtheconsolidatedturnoverresult;andthenetimpactofacquisitionsanddisposalshadapositiveimpactof0.7%.Allmarketswereaffectedbythenegativeexternaleffectsofthefinancialandeconomiccrisisandthecorrespondingmarkeddeclineindemandfortravelproducts.Inamarketarenathatsawatan­gibleincreaseincompetitionlevels,across­the­boardpricereductionsandlast­minutepromotionshadanadverseeffectongrossprofitmargins,especiallyinthemainstreamtravelsegment.Thedamageherewaspartlyoffsetbyintensiverenegotiationstosecuremorefavourableprocurementtermsinallbusinessareas.TheKuoniGroupachievedagrossprofitmarginof20.8%for2009(2008:21.8%).GrossprofitamountedtoCHF808million(2008:CHF1056million).

Despitethesignificantfallindemand,Kuonistillpostedapositiveoperatingresultfortheyear.Earn­ingsbeforeinterestandtaxes(EBIT)resultedatCHF15.1million.UnderlyingEBIT(i.e.netofthecostoftheongoinginvestmentandcost­reductionprogramme)amountedtoCHF45.3million.ThevariousunitsoftheKuoniGrouphavemadesubstan­tialimprovementstotheirfixedcostsbasesincethefourthquarterof2008–partlythroughstructuraladjustments,butalsothroughtemporarymeasuressuchasshort­timeworking,thevoluntarywaivingofsalaryandthetakingofunpaidleave.

ThestrengtheningoftheSwissFrancagainstothercurrencieserodedCHF3.8millionfromtheannualoperatingresult.

NetprofitamountedtoCHF1.6million.InadditiontothediminishedEBITresult,thedeclineinnetprofitfromitsprior­yearlevelisalsoattributabletoasubstantiallylowerfinancialresult:withinterestratesverylow,financialincomewasalmostimpossi­bletogenerateoverthecourseoftheyear.

TheBoardofDirectorsrecommendstotheAnnualGeneralMeetingofShareholderson20April2010

A positive Group result in an extremely difficult

market environment

Net turnover affected by external influences to an

unprecedented extent

Balance sheet still decidedly sound

Year-on-year turnover trends for the Markets

were as follows:

KuoniGroup

TURNOVER FOR INDIVIDUAL MARKETS

CHF MILLION

2009 20081 400

1 200

1 000

800

600

400

200

0

DestinationsUK & Benelux

SouthernEurope

Scandi naviaSwitzerland Asia

894

652

824

1101

539

374

1193

10121028

821

267 304

33Marketreport2009

thatadividendofCHF1.60perregisteredshareAandCHF8.00perregisteredshareBbedistributedforthe2009businessyear.Thisdistributioncompen­satesforthereduceddividendpaidinthepreviousyearowingtotheuncertainoutlook.

TheKuoniGroupannouncedtheadoptionofanewcorporatestructureinSeptember2009.Thereorganisationofthecompany’sbusinessactivitiesispartoftheinvestmentandcost­reductionpro­grammelaunchedatthebeginningoftheyear,whichisintendedtoacceleratethetransformationprocessandimproveGroupinfrastructure.Aspartofthisrestructuring,theKuoniGroupisadoptingafunctionalglobalorganisation,creatingmarket­basedsalesunitsthatwillenableittofocusmorefirmlyonlocalcustomersales,andonservingasatrustworthyadvisorforitscustomers.

ThenewstructureconsistsoftheDivisionsMarketRegionNorthandSouth–supersedingthepreviousDivisionsSmartandStyle–aswellastheDivisionDestinations,whichremainsunchanged.ThenewstructurealsoincludesanewglobalProcurementandProductionUnitwhich,from2010onwards,willdelivermaterialbenefitsontheprocurementfrontthatwillhaveasustainablypositiveeffectonnetGroupresults.

Division Market Region Southcomprisesthemar­ketsofSwitzerland,SouthernEuropeandAsia.ThedivisiongeneratedturnoverofCHF1462millionfor2009andachievedanEBITofCHF33.5million.

MarketSwitzerlandpostedturnoverofCHF821mil­lionfortheyear.Theresultwasa20.1%declineonitsprior­yearequivalent,thoughthisispartlyduetothefirst­timefull­yearimpactofthedisposalofEdelweissAir,whichwassoldinautumn2008.TheacquisitionofCotravelAGaddedCHF5.8milliontothe2009turnoverresult.ThetravelbusinessofTouringClubSchweiz(TCS),whichwasacquiredinDecember,addssomeCHF20million(annualised)tothedivision’sannualturnovervolume.

ThebusinessenvironmentintheMarketSwitzerlandwascharacterisedbytheeffectsofboththefinan­cialandeconomiccrisisandthespreadofswinefluthroughouttheyear.Thetrendtowardsshortertripsandcloser­to­homedestinationshadaparticularlystrongimpactonturnoverlevels.Here,thepremiumsegmentwashitharderbythedeclinesindemandthanweremoreinexpensivetravelproducts.

Thespecialistoperatorsmanagedtheyearrelativelywell.ParticularlyimpressiveperformanceswerepostedbyPrivateSafaris(EastAfrica)andDorado

LatinTours(SouthAmerica),whichbothexceededtheirprior­yearturnovers.LargelythroughthesaleofEdelweissAir,butalsoasaresultofmarketover­capacityandtoughcompetition(especiallythroughlast­minuteproducts),grossprofitmarginsufferedasubstantialdecline,fallingfrom24.5%to21.3%.Butthankstonumerouscostsavings,includingtheadoptionofshort­timeworkingandavoluntarywaivingofsalariesamongmanagementpersonnel,MarketSwitzerlandmadeapositiveCHF1.5millioncontributiontotheGroupEBITresult.

AllthecountryunitswithinMarketSouthernEuropewerehithardbyboththefinancialandeconomiccrisisandtheswineflupandemic.KuoniFrance,ItalyandSpainallsufferedbroadlysimilaryear­on­yeardeclinesintheirturnoverresults.MarketSouthernEuropeisstronglyfocusedonlong­haulleisuretravel,andthishassufferedaparticularlysteepdeclineinthecurrentcrisis.TurnoverfortheunitamountedtoCHF374million,30.5%downon2008.4.8%ofthedeclinecanbeascribedtotheweakeningoftheeuroagainsttheSwissFranc.Despiteanextremelydifficultcompetitiveenvironmentandstrongpres­sureonmarginsinallitscountriesofoperation,MarketSouthernEuropepostedapositiveEBITofCHF6.1millionfortheyear.

MarketAsia,whichconsistsoftheGroup’sbusinessunitsinIndiaandHongKong/China,postedturn­overofCHF267millionfor2009.Theturnoverwas12.4%downonthepreviousyear;butmostofthedeclinewascausedbytheIndianRupee,whichlost9.9%ofitsvalueagainsttheSwissFranc.KuoniIndiaachievedafurtheryear­on­yearincreaseinitsturno­verlevelsinlocalcurrency.KuoniHongKong/Chinafeltthefulleffectoftheeconomiccrisisandtheresultingslumpindemand,especiallyforlong­hauldestinations.Giventhefinancialandeconomiccrisisandtheramificationsoftheswineflupandemic,de­velopmentsfortheregioncanbeconsideredhighlyencouragingoverall.Asinpreviousyears,resultsweresubstantiallybuoyedbytherapidly­expandingbusi­nessofVisaFacilitationServices(VFSGlobal),whichclearlysurpassedits2008revenueresult.WithitsEBITofCHF25.9million,a15.1%improvementonthepreviousyear,MarketAsiaimpressivelyimproveditsearningsperformance.

Division Market Region NorthembracesScandina­via(consistingoftheSwedish,Norwegian,DanishandRussianmarkets,theNovairairlineandthePlayitasholidayresort),aswellasUnitedKingdomandBenelux.ThedivisiongeneratedaturnoverofCHF1664millionfortheyearandachievedanEBITofCHF14.5million.

reporting

34

MostoftheKuoniunitsintheScandinavianmarketwereabletosurpasstheirrecordturnoverlevelsof2008inlocal­currencyterms.KuoniSweden,KuoniNorwayandNovairallcontinuedthegrowthpaththeyhadembarkedoninpreviousyears.Followingitsexpansionandrefurbishment,thePlayitasvaca­tionresortalsosawatangibleincreaseinitsturnover.Asexpected,withitsrestructuringinthecourseof2009,businessatKuoniRussiamadeasmallercontri­butiontotheoverallturnoverresult.

TurnoverforMarketScandinaviawastoalargeex­tendalsostronglyaffectedbyadversecurrencymove­ments.TheSwedishKronalost13.6%againsttheSwissFranc,whiletheNorwegianKronafell10.3%.Turnoverdeclined15.1%toCHF1012million.

Themarketenvironmentsawstrongcompetitiontofillaircraftcapacitythroughouttheyear.This,andsevereshort­termcurrencymovements,putsizeablepressureongrossprofitmargins,whichdeclinedfromthe19.1%of2008to15.2%.KuoniScandinaviapostedanEBITfor2009ofCHF5.3million.

MarketUKandBeneluxgeneratedtotalturnoverofCHF652millionfortheyear(2008:CHF824mil­lion).Theyear­on­yeardeclinewasduetoalargeextenttothesteep14.8%declineinthevalueoftheUKPoundagainsttheSwissFranc.

TheUKwasoneofthefirstcountriestofeelthepinchofthefinancialandeconomiccrisis,andisoneofthosethathavefeltitmostseverely,too.KuoniUK’sproductrange,whichisgearedtothehigher­endmarket,washithardbythebankingcrisis,combinedwithrapidly­risingunemploymentandmissingbonuspayments.

BothKuoniUKandKuoniBeneluxreportedsteepdeclinesindemandfortheircorelong­haultravelproducts,asaresultofboththeeconomiccrisisandthespreadofswineflu.Bothunitsrespondedto

thechangedcustomerbookingbehaviourwithnewproducts,developedandofferedatshortnotice,tosuccessfullycounterthedeclinesindemand.

Inthisdifficultoverallbusinessenvironment,grossprofitmarginforMarketUKandBeneluxslippedfrom17.5%to16.9%.EBITfortheyearamountedtoCHF9.2million,withbothunitspostingposi­tiveoperatingresultsdespitetheirsizeablefallsindemand.TheoverallEBITdeclinewasalsopartlyduetoadversecurrencymovements.

BusinessatDivision Destinationswascharacterisedbyasubstantialfallindemandatmostunits,andinEuropeinparticular.Thedivisionwasalsoespeciallyhardhitbytheglobaleconomicandfinancialcrisis,andbytheswineflupandemic.

Theslumpinthedemandforlong­haulleisuretravel(whichwasseeninboththeindividualandthegrouptravelsector)andcompanies’radicalreductionsoftheirincentiveeventsbothhadasizeableimpactontheturnoverofwhathadbeenthestrongest­growingdivisionwithintheKuoniGroupoverthelastfewyears.Ontopofthesemarketinfluences,however,resultsforthedivisionwerefurtherburdenedbyadversecurrencymovements.

TotalturnoverforthedivisionamountedtoCHF894million(2008:CHF1101million.).Boththeacquisitionsaddedtothedivisionin2008,intheUnitedArabEmiratesandAustralia,madepositivecontributions.Butwithmarketpricesgenerallysuf­feringsignificantdeclines,grossprofitcameundersubstantialpressure.Thiswascountered,however,bycontinuouslyrenegotiatingprocurementtermsandconditions.

Grossprofitmarginfortheyearamountedto17.6%,animprovementof1.3percentagepointsonitsprior­yearequivalent.Withanenhancedgrossprofitmar­ginandradicaladjustmentstooperatingcosts,allthe

Group turnover by activity

and market

22 % DestinationManagement

78 % Leisure Travel

22 % DestinationManagement

16 % UK & Benelux

25 % Scandinavia

21 % Switzerland

7 % Asia

9 % Southern Europe

35 Market report 2009reporting

division’s units posted positive operating results, and EBIT for the division amounted to CHF 15.5 million.

The portfolio of the Kuoni Group showed a healthy spread of turnover throughout the three divisions and their markets. As in previous years, increases were seen in the relative shares of the Scandinavian and Asian markets as well as of Division Destina-tions. The Markets Switzerland, South Europe as well as UK and Benelux saw their shares of Group turnover decline.

In the leisure travel sector, Kuoni earned three quar-ter of its turnover outside Switzerland. The Kuoni Group positions itself as a leisure travel organisa-tion with the two business activities of leisure travel (which accounted for 78 % of total turnover in 2009) and destination management (which accounts for the remaining 22 %, but whose share of total turnover showed a further slight increase in 2009, in line with the prevailing trend of the last few years.)

The Kuoni Group achieved earnings before interest and taxes (EBIT) of CHF 15.1 million for 2009. The underlying EBIT, which excludes the costs incurred for its investment and cost-reduction programme, resulted at CHF 45.3 million for the year. The prime cause of the steep decline in operating earnings power compared to 2008 was the slump in demand, which was itself the product of negative external influences. The lower turnover volumes eroded CHF 209 million from the EBIT result. The decline in gross profit margin (gross profit as a percentage of turnover) from 21.8 % to 20.8 % reduced the Group EBIT result by a further CHF 39.0 million.

All the Group’s units substantially adjusted their fixed costs in the course of the year. The cost reductions were achieved by both structural changes and tem-porary measures such as short-time working and the waiving of salary amounts. All in all, the Kuoni Group reduced its fixed costs by CHF 113 million. The Group workforce was also downsitzed; the average number of employees (in full-time-position terms) stood at 9 070, a reduction of 7.4 %. The average exchange rates have developed strong negatively in Swiss-Franc terms compared to the prior year. Among the major foreign currencies, the UK Pound declined 14.8 %, the Swedish Krona lost 13.6 %, the Norwegian Krona fell 10.3 % and the In-dian Rupee lost 9.9 %. The cumulative effect of these losses eroded CHF 3.8 million from the Group EBIT result.

As in previous years, all markets made a positive contribution to the Group operating result. The

Kuoni Group earnings portfolio remained largely well balanced. Market Asia further improved its EBIT result, despite highly adverse currency movements: as a result, Market Asia was – for the first time – the big-gest single contributor to the Group operating result. With the general slump in demand, all other markets suffered year-on-year EBIT declines (the particularly steep decline for Market Switzerland is also due to the fact that the prior-year result included the one-off effect of the sale of Edelweiss Air).

As a result of a change to International Accounting Standards (IFRS), an adjustment was made in 2009 to the recognition of brochure costs. This change in accounting policy effects the income statement, the balance sheet, the statement of changes in equity and the cash flow statement. Prior-year results have been restated accordingly. Further details of these changes can be found on page 9 of the Financial Report.

No amortisation of goodwill has been effected since 2005, in line with international accounting standards that have abolished the ordinary amortisation of goodwill on acquisitions. Goodwill is still appraised annually, however, and corresponding impairments are effected if required.

The Kuoni Group reported a net financial result of CHF 0.8 million for 2009, substantially below the CHF 23.0 million of the previous year. The decline is due primarily to lower interest rates. Last year’s result, however, also included CHF 6.5 million from the release of provisions relating to a legal dispute about the sale of BTI Central Europe, as well as CHF 3.8 million of profit from the sale of subsidiar-ies. The financial expenses of CHF 4.5 million (2008: CHF 5.6 million) include interest on bank and other debts and non-operating exchange-rate losses.

Tax expenses stood at CHF 14.3 million (2008: CHF 22.4 million). The tax ratio was higher because some units reported losses for which no deferred taxes could be capitalised.

The Kuoni Group posted a net result of CHF 1.6 mil-lion for the 2009 business year (compared to a net profit of CHF 151 million for 2008). Given the extra- ordinarily challenging market conditions in which it was achieved, the result is testimony to the high flexibility of the Kuoni Group and its business model, and to their capability to swiftly adapt cost levels to changed and changing economic conditions.

Earnings per registered share B amounted to CHF 0.08 (2008: CHF 52.68). The Board of Directors will rec-ommend to the Annual General Meeting of Share-holders on 20 April 2010 that a dividend of CHF 1.60

36

per registered share A and CHF 8.00 per registered share B be distributed for the 2009 business year.

Capital expenditure on tangible and intangible assets amounted to CHF 44.2 million in 2009, CHF 15.3 mil-lion lower than the prior-year level. The lion’s share of this spending went on extending or renovating branches, updating the Playitas hotel resort, and expanding the VFS Global business. A significant part was linked to the investment and cost-reduction programme launched at the beginning of the year, the main investment items being a new holiday travel reservation system and new e-business technology.

The Kuoni Group held cash and cash equivalents of CHF 665 million on 31 December 2009, an increase of 46 % on the end of 2008. Most of the increase comes from the bond that Kuoni Travel Holding Ltd. issued in October 2009 to strengthen its financial position. This CHF 200 million issue carries a coupon of 3 % and a term of four years. Cash and cash equivalents also included CHF 342 million of advance payments from customers (2008: CHF

329 million). This 4.1 % increase on the previous year is due to a steady improvement in booking activity in the last few weeks of 2009. The Group reported a year-end net cash position of CHF 59.3 million (2008: CHF 88.0 million).

Cash flow from operating activities amounted to CHF 46.7 million, a decline on the CHF 109 million of the previous year. Free cash flow amounted to CHF 4.7 million (2008: CHF 55.5 million). The de-cline is due to the lower operating result. The change in net working capital was much improved on the previous year.

Kuoni Group’s equity went down from CHF 606 mil-lion to CHF 592 million, giving a group equity ratio of 32.0 %. This is better than most companies in the travel sector, reflecting the Kuoni Group’s sound balance-sheet.

After falling (in line with general market trends) in 2008, the price of the Kuoni registered share B remained largely stable throughout 2009, and closed the year at CHF 349.00. Share price movements throughout the year were heavily influenced by the uncertainties felt in and around the travel industry.

OUTLOOK

There were already signs of a year-on-year increase in booking figures in the fourth quarter of 2009. This steady improvement in bookings has continued in the first weeks of 2010. However, as in 2009, people are still booking their holidays at short notice.

Real-economy challenges are likely to remain the big-gest influence on business trends in 2010. Upcoming tax increases and the continuing fear of unemploy-ment continues to tighten travel budgets among Kuoni’s target customers.

The Kuoni Group will continue to take consistent advantage of any market opportunities that might arise in the course of 2010. At the same time, the Group will further pursue the programme of key strategic initiatives which was launched last year, and which will see total investments in enhancing Group efficiency of some CHF 106 million over a three-year period. The prime emphases of the programme are on differentiating the Kuoni product, optimising distribution and reducing costs.

As well as proactively executing these anticyclical in-vestments to strengthen our corporate performance, Kuoni will continue to pursue its present strategy of combining organic growth with selected acquisitions to further expand its business volume at rates which

The transformation of the EBIT compared to 2008 and a breakdown by Markets produces the following picture:

GROUP EBIT BY MARKET/DIVISION

CHF MILLION

2009 2008

Impact on EBIT of turnover decline

–209

Impact of reduction

in operating costs

+113

Year-on-year EBIT change

EARNINGS BEFORE INTEREST AND TAXES (EBIT)

CHF MILLION

Impact of decline in gross

profi t margin

–39

–135

Switzerland ScandinaviaAsiaSouthernEuropa

DestinationsUK & Benelux

45

40

35

30

25

20

15

10

5

0

0

– 50

– 100

– 150

– 200

– 250

– 300

39.4

1.5

25.9

18.9

6.1

22.5

5.3

29.0

9.2

32.2

38.5

15.5

37Marketreport2009reporting

areconsiderablyhigherthanthemarketasawhole,andtherebysignificantlyenhanceitsearningspowerandpotential.TheadaptionofthenewGroupstruc­tureenablesKuonitofocusevenmorefirmlyonitscustomersandtheirspecificwishesandneeds.

Allinall,Kuoniintendstofurthersharpenitsfocusonitscore“travel”competency,andwillbeactivelyseekingandexploitingnewdistributionchannelsforitsvarioustravelproducts.Indoingso,Kuoniaimstomaintainaclearemphasisonthepremiumsegment,astrongpositioningrowthmarkets,abroadrangeofproductsthatarecloselyalignedtoindividualcus­tomerneeds,rigorouscostmanagementandapolicyofactivelypromotingnewdirectsaleschannelstosecureitscontinuedbusinesssuccess.

VALUE-BASED MANAGEMENT

Thevalue­basedmanagementapproachattheKuoniGroupisbasedonthe“economicprofit”concept.ThisaimstokeeptopmanagementalignedascloselyaspossibletocreatingaddedvalueonbehalfoftheGroup’sowners.Thecentralmanagementperfor­manceindicatorisknownasKuoni Economic Profit or KEP.DevelopedbyKuoni,thisindicatorincludesvariousparametersthatpaydueandfullregardtoallofthecompany’sspecificcharacteristics.

KEPiscalculatedfromnetoperatingprofitaftertax(NOPAT)lessthecostofcapitalinvestedinopera­tions.TheGroup­levelweightedaveragecostofcapi­tal(WACC)hasbeensetatasustainablerateof8.5%.SpecificWACCratesthataccommodategeographicalandcurrencyconsiderationshavealsobeensetfortheGroup’sindividualdivisionsandmarkets.NOPATdividedbytheaveragecapitalinvestedinoperations

givesreturnoninvestedcapital(ROIC),whichiscomparedwiththeWACCfortheKuoniGroupand/oritsconstituentunitstodeterminevalue­addingperformance.

Kuonihasintegratedthisvalue­basedmanagementapproachbasedontheKEPperformanceindicatorintoitsentiremanagementprocess,toensurethatithasasustainableeffect.Tothisend,planningandbudgeting,performancemeasurement,internalandexternalcommunicationsandmanagementcompen­sationmodelshaveallbeenconsistentlyadaptedtothevalue­addingphilosophy.

The target-setting and planning processKEPgoalswhichreflectinvestors’expectationsofareturnontheirinvestedcapitalthatisappropriatetotheirinvestmentriskaresetaspartoftheannualstrategicplanningprocess.Inaddition,andbasedonKuoni’senterprisevalue,KEPgoalsaresetfortheGroupasawholeandforitsDivisionswhoseachieve­mentwillprovidethecompany’sshareholderswithareturnontheirinvestmentthatisatleastashighasKuoni’sWACC.

Performance measurement and assessmentTheKEPandROICfortheKuoniGroupanditsDivi­sionsarecalculatedeveryquarterandcomparedwiththecorrespondingbudgetedandprior­yearfiguresasanintegralpartofthereportingprocess.Thedevel­opmentofKEPovertime(knownas“deltaKEP”)andchangesinthedifferencebetweenROICandWACCrevealthevalueaddedbytheGroupasawholeanditsDivisions.Linkingtheseresultstotheoperationalvaluedriversofturnovergrowth,costefficiencyandcapitalefficiencyalsorevealshowsuchvaluewasachieved.

Jan DecOctAug Sept NovMay June JulyMar AprFeb

PERFORMANCE OF KUONI SHARE (CHF) KUONI

400

350

300

250

200

150

100

50

0 2009

3838

Value communicationThepresentationofKEPandROICtrendsfortheKuoniGroupispartofKuoni’sexternalcommuni­cationswithfinancialanalystsandinvestors.ThisclearlyandbindinglyillustratestheKuoniGroup’sfocusonsustainablevaluecreationtotheoutsideworld,too.

Variable compensationKEP(i.e.actualKEPinrelationtobudgetedobjec­tives)istheprimefinancialcriterionfordeterminingbonuspaymentstomembersofseniormanage­mentattheKuoniGroup,i.e.membersoftheGroupExecutiveBoardandseniormanagementgroupwide.Thedefinitionofasinglegroupwidemedium­term­orientedbonusplanisintendedtoensureconsistentalignmenttosustainablevaluecreationwithintheKuoniGroup.

HavingsubstantiallyraiseditsKEPthepreviousyear,theKuoniGroupsawKuoniEconomicProfitfallsharplyduringtheyearunderreviewowingtothedifficulteconomicconditions.ThesignificantfallinturnoverimplicatedthatNOPATwasmuchlowerthaninthepreviousyear.Despitesharpcutsinoperatingcosts,costefficiencywassubstantiallybelowthe2008figure.ThereductioninthegrossprofitmarginalsocontributedtothelowerNOPAT.Owingtoacquisitions,averageinvestedcapitalwentupduringtheyearunderreview,resultinginaslightdeclineincapitalefficiency.Asaconsequence,KEPfellbyCHF136.2milliontoCHF–64.3million.The return on invested capital (ROIC)was0.1%,or3.5%afteradjustingforspendingontheinvestmentandcost­cuttingprogramme.KuoniGroup’snetresultwasthereforeinsufficienttocoveritscapitalcostsin2009.

CHF MILLION 2009 2008

Net operating profit after tax (NOPAT)

0.5

131.7

Average invested capital 759.6 701.2

Return on invested capital (ROIC) 0.1 % 18.8 %

Weighted average capital costs (WACC)

8.5 %

8.5 %

ROIC – WACC spread – 8.4 % 10.3 %

Kuoni Economic Profit (KEP) – 64.3 71.9

Delta KEP – 136.2 11.5

KEy FIGURES

80

60

40

20

0

– 20

– 40

– 60

– 80

20

18

16

14

12

10

8

6

4

2

0

20072006

60.471.9

48.1

2008

KEP

CHF MILLION

20072006 2009

0.1

2009

–64.3

17.0

18.8

16.1

2008

ROIC (%)

39reporting

AT A GLANCE – KUONI GROUP

Given the business parameters within which it was achieved, the Kuoni Group posted a satisfactory net result for 2009 in an unprecedentedly difficult market environment. The global economic and financial crisis and the repercussions of the swine flu pandemic prompted unparalleled declines in the demand for travel products in all Kuoni regions. The consolidated income statement was further saddled by strongly adverse exchange-rate movements in all key foreign currencies. Group turnover for the year totalled CHF 3 894 million. Organic turnover development amounted to minus 14.8 %. Despite the extremely challenging market environment, the Group achieved an EBIT for the year of CHF 15.1 million. All the Group’s divisions contributed to this black-ink operating performance. The Group net result amounted to CHF 1.6 million.

Marketreport2009

2005 20072006 2008 2009

2005 20072006 2008 2009

60

50

40

30

20

10

0

– 10

– 20

6000

5000

4000

3000

2000

1000

0

2005 20072006 2008 2009

200

150

100

50

0

– 50

– 100

TURNOVER

CHF MILLION

EARNINGS PER REGISTERED SHARE B

CHF

EBIT NET RESULT

EBIT AND NET RESULT

CHF MILLION

40

TheSwissmarketgeneratedturnoverofCHF821mil­lionin2009.Thisrepresentsafallof20.1%onthepreviousyear(2008:CHF1028million).Earningsbeforeinterestandtaxes(EBIT)cametoCHF1.5mil­lion(2008:CHF39.4million).

TheglobalfinancialandeconomiccrisisandtheeffectsofswinefluresultedinasignificantdropindemandintheSwissmarket.Thelowerpricelevelresultingfromcontinuouslyrenegotiatedhotelprices,andareductioninflightcapacitiesalsocontributedtothefallinturnovercomparedwith2008.Ashiftinconsumerdemandawayfromlong­haulandtowardsshortandmedium­haulrouteshadanegativeimpactontheturnoverfigure.Pricelevelswereadditionallydrivenlowerbythefactthatoilprices–andthereforekeroseneprices–werelowerthanin2008.Risingmarginsonpackageholidaysduringthesummermonthsandonthespecialistbrandswerenotenoughtocompensateforthefallinmarginsforthewholeyearcausedbytheintenselycompetitiveenvironment.BasedonthecancellationofholidayflightstoMexicoforthewholesummerseason,theeffectofswinefluwascalculatedashavingreducedEBITbyCHF3mil­lion.Thepreviousyear’sresultswerealsoliftedbythesaleoftheEdelweissAiraircraft:i.e.EBITeffectofCHF9.5millionfromthesavingondepreciation.

ThedecisionbymiddleanduppermanagementandtheExecutiveBoardtoforegohalfamonth’ssalary,andtheintroductionofshort­timeworkingfrom1September2009ledtoasignificantreductionincosts.Thesewerejusttwoofthemanysavingsmeas­urestakenintheSwissmarket.

Inmid­2009Kuonilaunchedtheinternaltrans­formationproject“PatrouilleSuisse”.Thisistrans­formingtheSwissmarketfromaproduct­orientedorganisationtoaconsumer­focusedstructure.Around100peopleareworkingonthevarioussub­projectswithinPatrouilleSuisse.Amongotherthings,acustomersegmentationsystemisbeingdevelopedsothatKuonicanspeaktoandwincustomersinamoretargetedway.Customercontactduringandaftertravelisbeingredesignedtooffercustomersgreateraddedvalue.Kuonihassetitselfthegoalofperfecting

everymomentofthetravelexperience.Theideaistoimprovethequalityofthetravel,thedestinationsandtheservicesandsosetKuoniapartfromotherprovid­ers.Otherprojectsfocusonthefurtherprofession­alisationofexistingandnewsaleschannels.Kuoniwantstobeabletoidentifyandlookafteritscustom­erswherevertheycomeintocontactwithKuonianditsproducts.

On1January2009,KuonitookovertheBasel­basedtouroperatorCotravel.ThiscompanyisoneofSwit­zerland’sleadingorganisersofhigh­qualitystudytripsaccompaniedbyexpertguides.On1December2009KuonialsotookoverallthetravelactivitiesofthemotoringorganisationTouringClubSchweiz(TCS),includingtentravelagenciesandtheproductionofholidaysunderthe“ReisenTCS”label.TheseholidaysarenowbeingofferedinpartnershipwithTCStoits1.6millionmembersandareavailableintheapproxi­mately100KuoniandHelveticTourstravelagencies.

Kuoni Market Management (formerly Tour Operating): Helvetic Tours breaks new ground and drops its printed price lists

HelveticTours,thepackageholidaybrandthatwassuccessfullyrepositionedin2008,onceagaintookonapioneeringroleintheSwisstravelindustryduringtheyearunderreview.Itsbeachholidaycatalogueforthe2009/10winterseasonwasthefirsttobepublishedwithoutaprintedpricelist.Consumersbenefitedbygettingthelatestdailypricewhentheybooked,whetheratthetravelagency,ontheinternetorthroughthecallcentre.Pricescanalterdependingonsupplyandde­mand,meaningthatnewlynegotiatedhotelpricescanbeofferedtocustomersstraight­away.Afixed,printedpricelistincludedinthesummer2009holidaybro­churewasoutofdateassoonasitappeared.In2010thecity­breakprogrammesofferedbyHelveticToursandKuoniwillalsodispensewithaprintedpricelist.Ho­telsareconnecteddirectlytotheKuonibookingsystemandcanupdatetheiroffersatanytime,whichmeansthatKuoniandHelveticTourscitybreaksareasup­to­dateandattractiveasthoseavailableontheinternet.

DivisionMarketRegionSouthSwitzerland

Internal transformation project launched

Helvetic Tours drops printed price list for

freshly updated prices

Second Flagship Store opened in Zurich

41Marketreport2009reporting

Becauseofthefinancialandeconomiccrisisandtheconsequentfallindemand,reduced­pricespecialofferswereofferedundertheKuonibrandforthefirsttimein2009aspartofthe“Luxuriössparen”(“luxurysavings”)campaign.Newlynegotiatedhotelpriceswereofferedtocustomersastheybecameavailable.Demandfortheseproductswasveryhigh.In2009newholidayprogrammesforAfrica(EastandSouthernAfrica)andIndiawerelaunchedundertheKuonibrand.

In2009atrainingcampwasrunforallemployeesinMarketManagement(formerlyTourOperating).Severalinternalworkshopswereheld,includingsomewithexternalexperts,toexploreKuonibrandvalues.

Thetopdestinationsin2009forSwisscustomerswereEgypt,Greece,CyprusandtheCanaryIslands(Spain).Inthelong­haulsector,theDominicanRepublicbenefitedfromthecancellationofdirectflightstoMexico.FollowingpoliticalunrestinKenyain2008,demandfortraveltoEastAfricastartedtoriseagainin2009.

Atthe2009TravelStarAwards,KuoniSwitzerlandcarriedoffeightgold,silverandbronzeprizes,thusconfirmingitsplaceasSwitzerland’sbesttouroperator.

Kuoni retail: second Flagship Store opened in Zurich

FollowingtheopeningofthefirstSwissKuoniFlag­shipStoreinBellevue(Zurich)in2008,thesecondwasopenedinSeptember2009onZurich’sfamousBahnhofstrasse.Theinteriordesign–colours,materialsandaccessories–werealltailoredtomatchtheinternationalambienceofthestore’slocation.

The“MeineAgentur”(“myagency”)project–uniquewithintheSwisstravelindustry–wasstarteddur­ingtheyearunderreview.FouryounggraduatesofKuoni’strainingschemenowmanagetheconvertedandmodernisedHelveticTourstravelagencyinZu­rich’sWiedikondistrict.The“youngesttravelagencyinSwitzerland”usesweb­basedsocialnetworksaspartofitscommunicationsstrategy,andorganisesspecialeventsandcampaignstoattractyoungcon­

sumers.Theprojectwillrunforatleastthreeyears.Kuoni’saimistogivetalentedyoungpeopletheop­portunitytotakeonresponsibilityandusecreativenewideastoappealtonewcustomers.

On1December2009,KuoniSwitzerlandtookoverthetravelactivitiesoftheTouringClubSchweiz(TCS).TenTCSbrancheswereincorporatedintoKuoni’snetworkoftravelagencies.NewagencieswerethuscreatedinSchwyz,Stans,Glarus,WetzikonandMontheywhileduplicatelocationsweremerged.

Thekuoni.chwebsitewascompletelyrenovateddur­ingtheyearunderreview,anditsstructureadjustedtosuitholidaymakers’variousneeds.A“HolidayFinder”hasbeensetup,forexample,whichshowsuserstailor­madeholidayoffersbasedoncriteriatheyenter.Thepersonalised“MyKuoni”arealetscustomerscreatetheirowntravelprofileandsaveawishlistofholidaysandhotels.ThenewKuoniweb­sitehasalsobeengivenafreshdesignoverhaulthatusesphotographsandvideostogiveconsumersnewinspirationfortheirholidays.In2009thewebsitestartedtoincludeindependenthotelratingsfrom“TripAdvisor”.Beforechoosingtheirhotel,consum­erscanreadreviewsfromotherhotelguestsdirectlyontheKuonisite.TheHelveticTourswebsitewasgivenavisualmakeoverduringtheyearunderreview.Bookingthroughthesitewasmadeeasierandnowcoversmoreproducts.

Private Safaris, Rotunda Tours and intens travel (PRZ AG): Kenya recovers from the unrest of the previous year; South Africa, India and China suffer from the economic crisis

Private Safaris,theEastAfricanspecialists,sawturnovergoupagainin2009afterthepoliticalunrestinKenyain2008.In2009theKuoniMaraBushtopsCampinKenyawasonceagainchosenasthebestcampofitskindinEastAfrica.PlanstosetupfurthercampsintheSerengetiNationalParkareduetoberealisedthisyear.Duringtheyearunderreview,holidaysinEastAfricawereproducedundertheKuonibrandforthefirsttime.

42

Rotunda Tours,thespecialistforSouthernAfrica,sufferedadeclineinturnoverowingtothefinancialandeconomiccrisis.NowthatholidaysarebeingproducedinSouthAfricaundertheKuonibrand,RotundaTourscanalsosellitsproductsinFrench­speakingSwitzerland.ThewholeregionisexpectedtoattractalotmoreattentionasaholidaydestinationthisyearasaresultoftheFIFAWorldCupinSouthAfrica.In2009RotundaTourswonaTravelStarGoldAwardastheBestAfricanTourOperator.

intens travel,thespecialistfortraveltoIndiaandChina,sufferedin2009notonlyfromthedropinturnoverresultingfromthefinancialandeconomiccrisis,butalsofromtheimpactoftheterrorattacksinMumbai.However,itwasabletobuildonitsleadingpositionintheSwissmarketfortraveltoIndiabyconcentratingmoreonserviceandproductdifferen­tiation.

TraveltoChinawashitbyfallingdemandin2009.ChinahasnotyetrecoveredintheSwissmarketfromtheimpactofthesevereearthquakeandthepoliticaldisputeswithTibet.

Manta Reisen: price falls lead to decline in turnover

ThespecialistfordivingholidaysandtraveltotheIndianOceansawturnoverfallin2009owingtogener­allylowerprices.Increasedlast­minutebookingsforthekeywinterperiodcouldnotcompensateforthedecline.TheMaldivesandMauritiusremainthemostpopulardreamislanddestinations.TheportfolioofMaldivesproductswasenhancedbythedebut“FirstClassAll­InclusiveResort”.MantaReisenwonaTravelStarGoldAwardasBestTourOperatortotheIndianOcean.

Railtour Suisse / Frantour Suisse: increased cooperation

Therestructuringofthetwotraintravelcompanieswascontinuedduringtheyearunderreview.Procure­mentandproductionofholidayswasmerged,butthetwobrandsandtheofficesinCantonsBernandGenevaremaininplace.Therestructuringledto30joblosses,andbothtraintravelspecialistspostedlowerturnover.Productswereadjustedtomatchthe

tendencyofcustomerstobookatlatenotice,andthenumberofholidayswithinSwitzerlandwasincreased.RailtourSuissewonaTravelStarGoldAwardastheBestCity­BreakTourOperator.

Kontiki-Saga AG: booming demand for Iceland

ThespecialistinholidaystoNorthernEuropeonlysawturnoverslipalittlein2009.OntheotherhandduetomarginimprovementsarecordEBITwasachieved.Productinnovationsplusspecialistandreaders’holidaysledtopositivedemand.Iceland,whichwashitsohardbytheeconomiccrisis,didbestofallasadestination.Bookingsmatchedtherecordlevelofthepreviousyearthankstothepublicityandthelowerprices.Kontiki­SagawonaTravelStarSilverAwardin2009.

Dorado Latin Tours: another increase in turnover

TheSouthAmericantravelspecialistcanlookbackonasuccessful2009.Argentina,ChileandPeruwerethemostpopulardestinations.Turnoverwentuponceagain.DoradoLatinTourswonanotherTravelStarGoldAwardasBestSouthAmericanTourOpera­torin2009.

Unique Travel: new holiday destinations in Croatia

TheCroatiaspecialistsufferedunderthefinancialandeconomiccrisisandpostedadeclineinturnovercomparedwiththepreviousyear.DirectflightsfromSwitzerlandtotheCroatianholidayareasofIstriaandKvarnerwereintroducedforthefirsttime.UniqueTravelalsoproducedtheCroatiaprogrammesforHelveticToursandDirektReisen.

Direkt Reisen: integration into Kuoni Market Management

Thedirectholidayproviderwasstreamlinedandre­structuredduringtheyearunderreview.Atthesametimethebrandwasgivenanewvisualidentity.DirektReisenwasintegratedintoMarketManagementthisyearinordertobenefitmorefromsynergieswithinKuoniSwitzerland.Theestablishedbrandanddistri­butionchannelsare,however,beingretained.

43reporting

AT A GLANCE – SWITZERLAND

Lower prices and reduced flight capacities in a generally difficult economic environment led to a fall in turnover. Costs were reduced significantly by a combination of middle and senior managers waiving part of their salaries, the introduction of short-time working and other savings measures. A positive operating result (EBIT) was achieved in the highly competitive Swiss market despite all the negative external influences. The Helvetic Tours package holiday brand once again played a pioneering role in the market, introducing flexible daily prices instead of a printed price list. Kuoni’s network of travel agencies was bolstered by the acquisition of Touring Club Schweiz’s travel business.

Marketreport2009

2005 20072006 2008 2009

2005 20072006 2008 2009

2005 20072006 2008 2009

45

40

35

30

25

20

15

10

5

0

1 200

1 000

800

600

400

200

0

50

45

40

35

30

25

20

15

10

5

0

TURNOVER

CHF MILLION

EBIT

CHF MILLION

ROIC (%)

44

Within the Division Market Region South, the South-ern Europe Unit covers France, Italy and Spain. All of these markets were heavily affected by the finan-cial and economic crisis and all posted similar falls in turnover compared with the previous year. The spread of swine flu also acted as a brake on demand. Overall the Southern Europe Unit achieved turnover of CHF 374 million (– 30.5 %) (2008: CHF 539 million). Earnings before interest and taxes (EBIT) came to CHF 6.1 million (2008: CHF 18.9 million).

France: changing competitive environment creates greater pressure

Kuoni France posted turnover of CHF 245 million in 2009 (2008: CHF 345 million). The decline was mainly due to the widespread recession, which hit France hard over the course of the year under review. In addition, a changed competitive environment meant that sales of Kuoni France’s products through a large chain of travel agencies were significantly lower. A change in holiday habits towards short and medium-haul routes also resulted in lower turnover. Kuoni is a leading premium long-haul travel pro- vider in France, and is one of the country’s five big-gest tour operators.

In 2009 the favourite destinations for French holi-daymakers were once again the Maldives and Egypt. However, demand for both destinations was lower than last year. By contrast, the number of holidays to Indonesia and Kenya went up.

In 2009 Kuoni’s travel agency in Lyon was completely renovated before reopening in September.Kuoni France also relocated its headquarters to Saint-Ouen, north of Paris, in July 2009.

Italy: direct sales expanded

Kuoni Italy reported turnover of CHF 105 million in 2009 (2008: CHF 145 million). Here too, the difficult economic conditions led to a very restrained mood among consumers. An increase in last-minute offers,

especially to the Indian Ocean and South Africa, and particularly in the second half of the year and for the important Christmas season, was not enough to com-pensate for the decline. The expansion of direct sales begun in the previous year was continued in 2009. This included a call centre to provide advice directly to customers, an improved internet platform and, since the start of 2010, mobile personal travel consultants.

In June 2009 Italy’s first Kuoni Flagship Store was opened in the middle of Milan. Since the start of 2009 customers have also been offered a Concierge Service.

The most popular holiday destinations for Italians in 2009 were the USA, Australia, India and Polynesia (South Sea Islands). Owing to the widespread reces-sion, demand for these holidays was lower in 2009 than in the previous year. By contrast there was a welcome increase in demand for holidays in South Africa, Japan and, to a certain extent, China and Mauritius.

Spain: new global booking system

Kuoni Spain posted turnover of CHF 25 million for the year under review (2008: CHF 38 million).The fall comes largely as the result of a poor economic climate made worse by the continuing Spanish real estate crisis. In addition, demand for holidays fell in the wake of the first wave of swine flu in spring 2009. Spain was the first country in Europe to be hit seri-ously by swine flu.

A Concierge Service was also introduced in Spain in 2009. A new holiday programme that combines cruises with land arrangements was also launched.

In November 2009 Spain also became the first market in the Kuoni Group to start using the stand-ard Group-wide booking system.

Favourite holiday destinations included the USA, Thailand, the Maldives and China.

Division Market Region South Southern Europe

New premises in France

First Flagship Store opened in Milan

Concierge Service introduced in Spain

45 Market report 2009reporting

At A glAnce – southern europe

The Southern European markets (France, Italy and Spain) were hit hard by the financial and economic crisis. A trend away from long-haul towards short and medium-haul routes led to a fall in turnover. At the same time, the spread of swine flu had a negative effect on consumer sentiment. In mid-2009, Spain became the first country in Europe to be affected by the pandemic. Numerous cost-cutting measures were not enough to compensate for the decline in EBIT caused by lower turnover. The first Kuoni Flagship Store in Italy was opened in Milan. The company’s French headquarters were moved, resulting in lower costs. And Spain became the first market to start using the standardised, Group-wide booking system.

2005 20072006 2008 2009

2005 20072006 2008 2009

2005 20072006 2008 2009

600

500

400

300

200

100

0

25

20

15

10

5

0

70

60

50

40

30

20

10

0

turnoVer

chF Million

EBIT

chF Million

roic (%)

46

During the year under review the Asia Unit (India, Hong Kong/China) recorded turnover of CHF 267 million (2008: CHF 304 million). This 12.4 % decline can be attributed mainly to the weakening of the Indian Rupee against the Swiss Franc (– 9.9 %). Given the global financial and economic crisis, the fact that turnover could be kept at the previous year’s level in the Indian market is a very good performance. Earnings before interest and taxes (EBIT) increased pleasantly to CHF 25.9 million (2008: CHF 22.5 mil-lion). The continued growth of VFS Global (Out-sourced Consular Services) made a large contribu- tion to this result.

India: first Corporate Travel Centre opened

In the year under review Kuoni India posted turn-over of CHF 229 milion. (2008: CHF 256 million).The retail network of the Kuoni brand was increased from 14 to 19 shops. Kuoni India became the first travel company in India to open its own leisure travel offices within one of the biggest Indian IT companies. The company’s approximately 100 000 employees can use this to book their holidays. A programme of skiing holidays was launched for the first time. Kuoni is the first premium provider in India to offer such a product line.

Favourite travel destinations for Indians in 2009 included Southeast Asia, the United Arab Emirates (Dubai), Europe, Egypt, Turkey, Australia and New Zealand.

Kuoni continues to be India’s leading travel company. Kuoni again received numerous awards during the year under review. These included Best Travel Agency – India (TTG Asia Award) and an award from the Indian Ministry of Tourism for Kuoni’s exceptional contribution to the growth of tourism in India.

The Kuoni Academy, founded in 2003, further ex-panded its network of locations. The number of train-ing centres – Kuoni’s own and the franchises – was increased from 11 to 21. A new 10 000 square meters flagship training centre was opened in Mumbai. Kuoni Academy provides training and development courses for people working in the tourism industry.

VFS Global continued to grow. In 2009 the number of Visa Application Centres (VAC) rose to 337 in 45 countries. The introduction of a concept of Joint

VACs for visa applications for multiple countries offering Schengen visas (for Europe) has made processing more efficient and cheaper. Working for embassies and authorities, VFS Global handles the monitoring and processing of all the administrative tasks involved in issuing visas.

hong Kong / china: stake taken in southern china’s biggest travel company Et-china

In 2009 turnover fell to CHF 38 million (2008: CHF 49 million). This fall is due mainly to the effects of the global financial and economic crisis and swine flu. These external factors had a strong nega-tive effect on demand for travel.

During the year under review Kuoni Hong Kong introduced an electronic booking system for travel agents, which allows them to check directly online for availability and booking options for group travel. A system was also introduced for direct customer contact which shows customers photos to help them visualise the products when discussing holidays.

The most popular holiday destinations included Central and Eastern Europe, Russia, the Middle East, Egypt, Tunisia, Kenya, South Africa and South America. Among neighbouring countries, Vietnam, Cambodia and Bhutan were the top destinations. In Hong Kong, Kuoni China has established itself as a premium-segment specialist for cruises, long-haul travel, niche products and services.

At the start of June 2009, Kuoni Group bought a stake of around 32 % in Et-china. This made Kuoni the biggest single shareholder in the Southern China’s biggest travel company. The medium-term aim is for Kuoni to take over a majority stake in Et-china. Et-china includes Guangzhou International Travel Services (GZL) and it specialises in group package holidays within China and abroad. It also runs a leading internet platform for individual travellers. In addition, the company is involved in a joint venture with China’s biggest airline, China Southern Airlines, for whom it processes all ticket sales.

Division Market Region South Asia

Stake taken in biggest southern Chinese holiday

company

Further growth at VFs Global

new flagship training centre opened in Mumbai

47 Market report 2009reporting

At A glAnce – AsiA

The Asian markets, particularly India, maintained turnover at the previous year’s level in local currency terms. the main reason for the overall reduction in turnover was the fall in the value of the indian rupee against the Swiss Franc. By contrast there was a pleasing increase in operating earnings (EBIT) despite the financial and economic crisis and the effects of the pandemic in Asia. VFs global once again recorded particularly good growth. Kuoni group bought a stake of around 32 % in et-china. this is one of southern China’s most important tour operators, offering products including group package tours within China and to other countries.

2005 20072006 2008 2009

2005 20072006 2008 2009

350

300

250

200

150

100

50

0

30

25

20

15

10

5

0

25

20

15

10

5

0

2005 20072006 2008 2009

turnoVer

chF Million

EBIT

chF Million

roic (%)

48

Kuoni Scandinavia, UTE Megapolus (Russia) and the sports and family resort Playitas generated total turnover of CHF 1 012 million in 2009 (2008: CHF1 193 million). This represents a year-on-year decrease of 15.1 %. Earnings before interest and taxes (EBIT) fell to CHF 5.3 million (2008: CHF 29 million). Although the Swedish and Norwegian markets achieved record turnover once again in local currency terms, the de-valuation of the Swedish Krona and Norwegian Krona against the Swiss Franc resulted in lower turnover. The greater margin pressure produced by last-minute offers also ate into the EBIT figure. The restructuring measures carried out in Russia continued in 2009.

Scandinavia: record turnover in Sweden and Norway

During the year under review, Kuoni Scandinavia (Sweden, Norway, Denmark) recorded turnover of CHF 945 million (2008: CHF 1 075 million). Despite the global financial and economic crisis and the effects of swine flu, the Swedish and Norwegian markets once again posted record turnover in local currency terms. This excellent improvement was clouded only by the steep fall in the value of the Swedish Krona and Norwegian Krona (– 13.6 % and – 10.3 % respectively) against the Swiss Franc. The Apollo brand is number three in the Swedish market and was able to win further market share in 2009. In Norway Apollo is the second biggest travel company, and it too was able to increase its share of the market. Of all the Scandinavian markets, Denmark was hit hardest by the financial and economic crisis. Apollo Denmark, including Falk Lauritsen, is the number two provider in this market. Following the record figures recorded in the previous year, the fall in operating earnings (EBIT) was due mainly to the fall in value of the Swedish Krona and to the lower gross profit margin. Margins were tighter because of the tough competitive environment and the discounts offered on last-minute bookings.

During the year under review Kuoni in Sweden continued to build up its online partnership with the country’s biggest retail chain, Coop. This sells Apollo Sweden’s holidays over the internet.

In 2009 all the Apollo-brand websites in Scandinavia were modernised and adapted to match the Kuoni Group technical platform. This led to a further im- provement in user-friendliness and visual appeal.

The proportion of holidays sold over the internet rose again in 2009. 43 % of customers in Scandinavia booked their holidays online during the year under review.

During the Scandinavian summer the most popular destinations were the Greek islands of Crete and Rhodes, as well as Southern Turkey, Cyprus, Bulgaria and Mallorca. In winter the Canary Islands, Egypt and Thailand topped the list.

During the year under review, Novair, the airline operated by Kuoni Scandinavia with a fleet of three Airbus A321s, was the first charter airline to practice “green landings”: an exact landing time is agreed well in advance with local flight controllers at Stockholm-Arlanda airport, which enables pilots to reduce airspeed and altitude early in the descent and thus substantially reduce emissions.

Apollo received the Grand Travel Award for Best Tour Operator in Norway. “Stopover”, Novair’s flight magazine, was awarded the Swedish Designer Prize for best customer magazine.

In 2009, Kuoni Scandinavia managed the conversion of the Playitas holiday resort into a modern sports and family holiday centre. This included the construc-tion of a state-of-the-art cycling centre, an 18-hole golf course, an Olympic swimming pool and modernised fitness and wellness facilities. Playitas is now the leading sports resort on Fuerteventura. During the year under review Playitas entered into a strategic partnership with the well-known international cycling team “Saxo Bank”. The team used the new infrastructure at Playitas for training and pre- paration work.

ute Megapolus (russia): successful restructuring

Russian subsidiary UTE Megapolus was restructured in 2009. The company was transformed from a tradi-tional Russian tour operator into a functional, mod-ern company with professional procurement and production, marketing and sales. At the same time, risks relating to flight capacities were significantly reduced. These measures were supported by online booking and a streamlining of the retail network. UTE Megapolus introduced Spain and Thailand as new destinations.

Division Market Region NorthScandinavia

Increased market share in Sweden and Norway

playitas converted into sports and family resort

ute Megapolus restruc-tured in russia

49 Market report 2009reporting

At A glAnce – scAndinAViA

Kuoni Scandinavia saw turnover fall mainly because of the weakness of the Swedish Krona and Norwegian Krona against the Swiss Franc. The Swedish and Norwegian markets once again posted record turnover in local currency terms. The greater margin pressure produced by the fall of the Swedish Krona and last-minute offers also resulted in lower operating earnings (eBit). the playitas holiday resort was converted under Scandinavian management into a state-of-the-art sports and family holiday centre. The number of scandinavian guests at the resort rose significantly. russian subsidiary ute Megapolus was further restructured in 2009.

2005 20072006 2008 2009

2005 20072006 2008 2009

2005 20072006 2008 2009

1 400

1 200

1 000

800

600

400

200

0

30

25

20

15

10

5

0

45

40

35

30

25

20

15

10

5

0

turnoVer

chF Million

EBIT

chF Million

roic (%)

50

Within the Division Market Region North, the UK and Benelux markets posted turnover of CHF 652 million for 2009 (– 20.9 %) (2008: CHF 824 million). Earnings before interest and taxes (EBIT) fell to CHF 9.2 mil-lion (2008: CHF 32.2 million). A big fall in the British Pound against the Swiss Franc (– 14.8 %) and the ongo-ing financial and economic crisis had a particularly negative impact on the result. The effects of swine flu also put a damper on consumer sentiment.

uK: successful last-minute travel offers

Kuoni UK reported turnover of CHF 524 million for the year under review (2008: CHF 661 million). The United Kingdom was one of the first Kuoni markets to be hit by serous recession, and the UK’s economic figures continued to worsen in 2009. Despite the negative external influences, Kuoni UK experienced a much smaller drop in turnover in local currency terms than other Kuoni markets. This was largely due to various efforts involving direct customer contact.

Owing to changing consumer behaviour and stronger demand for late-booked holidays, in late 2008 Kuoni UK launched a new team to focus on the negotiation and marketing of last-minute travel offers. In January 2009 the “Kuoni Sale” was launched successfully for the first time and was repeated in May 2009. Adjust-ing products to more value-sensitive customers, espe-cially in the premium market, proved to be an astute and successful move.

Following the opening of the first Kuoni Flagship Stores in Kensington (London) and Manchester in 2008, new Kuoni Stores were opened in Bristol, Milton Keynes and Bluewater in 2009. Newly refur-bished stores were opened in the City of London and in Knightsbridge.

Based on direct feedback from Kuoni customers, the company’s internet presence was further modern-ised and made even more user-friendly. The website was given a clearer structure and introduced a new technologies such as the dynamic price calendar and clearer special offers.

Following the global rebranding of 2008, partner-ships with luxury brands, other consumer goods and exclusive events were expanded in the UK.

At the start of this year Kuoni UK published its Long Haul Report on Britons’ favourite holiday destina-tions. As in the previous year, the Maldives were at the top of the list, followed by Thailand and the USA.

Kuoni UK once again received numerous awards dur-ing the year under review. British consumers chose Kuoni for several awards, including the Telegraph’s Ultra Travel Award for the Best Large Tour Operator and the Sunday Times Travel Readers’ Award as Favourite Tour Operator for Family Holidays. Kuoni UK was also honoured with the industry’s most presti-gious Travel Weekly Globe Award for Best Long-Haul Tour Operator, Best Specialist for the Far East, the Pacific, Australia and New Zealand and Best Specialist Operator Middle East. Our UK-based specialists also won numerous awards. These include CV Travel, cho-sen as best tour operator in the “Best Villas” category of the Condé Nast Traveller Readers’ Travel Awards. Kirker and Carrier were also honoured for their out-standing service.

The introduction of a new Group structure also brought a change in the management of Kuoni UK in October 2009. Joanna Edmunds, an experienced tourism pro-fessional, is now in charge of the UK market.

Benelux: smaller demand for long-haul destinations

Kuoni Benelux posted turnover of CHF 129 million for the year under review (2008: CHF 164 million). This fall is due mainly to the global financial and economic crisis and the swine flu pandemic.

As a long-haul specialist, Kuoni in the Netherlands and Belgium was affected by the low demand for overseas destinations. The successful introduction of last-minute holiday offers was not enough to compensate for this. The most popular destinations at Kuoni Benelux in 2009 were the USA, Africa, China, the Maldives, the Netherlands Antilles and cruises in the Caribbean.

In the Netherlands, Kuoni continues to be the leading travel specialist for long-haul destinations. In the travel market as a whole, Kuoni reasserted its position as the fifth-largest provider. Kuoni once again received numerous awards during the year. These included Best Tour Operator to North America, Africa, Australia and New Zealand, as well as Best Specialist Operator.

Division Market Region North United Kingdom and Benelux

New Kuoni Stores opened in the uK

Successful expansion of last-minute holiday offers

direct sales further strengthened

51 Market report 2009reporting

At A glAnce – uK And BeneluX

Kuoni suffered particularly badly from the widespread recession in the uK in 2009. in addition, the substantial fall in the value of the British pound against the swiss franc resulted in lower turnover. operating (eBit) also fell sharply owing to these negative external influences. nevertheless, new direct sales teams offering last-minute holidays were successfully positioned in the market. The opening of various new travel agencies also increased the rate of direct customer contact.Kuoni Benelux, as a long-haul specialist, was affected by the decline in demand for overseas travel. The successful introduction of last-minute offers was not enough to compensate for this.

2005 20072006 2008 2009

2005 20072006 2008 2009

2005 20072006 2008 2009

1 200

1 000

800

600

400

200

0

60

50

40

30

20

10

0

45

40

35

30

25

20

15

10

5

0

turnoVer

chF Million

EBIT

chF Million

roic (%)

52

The Division Destinations generated turnover of CHF 894 million (2008: CHF 1 101 million). This 18.8 % fall is due to the global financial and economic crisis and the effects of the swine flu pandemic. In Asia especially, consumers were greatly unsettled by the spread of swine flu, leading to significantly reduced demand. The Division’s results were also hurt by negative currency influences. EBIT fell to CHF 15.5 million (2008: CHF 38.5 million).

Kuoni Destination Management continues to be the market leader in the USA, India and East Africa. In Europe, South Africa, Southeast Asia and the United Arab Emirates, Kuoni Destination Management is one of the major providers.

destination Management europe: expansion of online links with hotels and service providers

Destination Management Europe posted turnover of CHF 413 million for the year under review. (2008: CHF 601 million). The previous year’s results included turnover of CHF 60 million and EBIT of CHF 3 million from the successful organisation of hotels for the 2008 European Football Champion-ships.

The main destinations in Europe for travellers from Asia were France, Italy and Switzerland, followed by the Netherlands, Austria, Germany and the UK. The large cities in particular were very popular in 2009. Demand for short, cost-effective holidays with few extra services also rose as a result of the financial

and economic crisis. Kuoni maintained its leading position in organising large groups of travellers from Asia.

Kuoni Connect was developed further and launched worldwide at the World Travel Market (WTM) in November 2009 in London. This web-based platform allows business partners, travel agents and direct customers to access Kuoni Destination Management’s portfolio of hotels and make bookings. Meanwhile, the hotels themselves can go onto Kuoni Connect at any time to update their room prices.

Kuoni Connect had already been integrated into the strategic partnership with Swiss International Air Lines earlier in the year. Kuoni started using the system to offer hotels on Swiss’s website in March 2009. This has provided access to new customers in new markets. Bookings via this channel have met expectations.

The online link to providers of group services was also expanded. This allows hotels to make offers to groups of travellers online. destination Management usA: new product lines launched in top segment

In 2009 AlliedTPro (Destination Management USA) generated turnover of CHF 189 million (2008: CHF 243 million). This fall is due on the one hand to the global financial and economic crisis, and on the other to the effects of the swine flu pandemic, which hit the USA hard. Despite healthy demand from

Division Destinations Destination Management

online link for hotels keeps offers right up to

date

Greater demand for travel to East and

Southern Africa

Expansion of activities in Arabic countries

53 Market report 2009reporting

Europe, the continuing cheapness of the dollar was not enough to compensate for the decline. The trend towards late booking also led to lower prices.

Favourite destinations were New York, Las Vegas and Orlando. Hawaii, Las Vegas and certain national parks enjoyed the biggest growth.

A new “lifestyles” programme was launched in 2009. This offers customers in the luxury segment high- quality services and unique experiences. The newly launched “VIP Concierge” also helps selected guests meet their personalised, tailor-made holiday require-ments.

destination Management india and south Asia: market leader despite negative external influences

The financial and economic crisis and a very strong outbreak of swine flu in India’s big cities resulted in a significant fall in demand. In addition, the bomb attacks of 2008 continued to hamper business in 2009. The fall in the value of the rupee against the Swiss franc also had a negative impact. These external influences led to a reduction in turnover at the Indian destination management unit with its SITA and Dis-tant Frontiers brands. Turnover fell to CHF 58 million (2008: CHF 80 million).

In 2009 the most popular destinations were Kerala, Rajasthan and Goa. Luxury trains were also in fashion. A new line of adventure products was launched for journeys to Nepal.

Destination Management India and South Asia again received some major awards in 2009, including its sixth consecutive Galileo Express Travel World Award for Best Inbound Tour Operator, and an award from the Indian Ministry of Tourism for Kuoni’s excep-tional contribution to the growth of tourism in India. This is the first time a travel company has received such an award in India.

destination Management Africa: significant rise in turnover

Demand for holidays in East and Southern Africa suffered a steep decline following political unrest in Kenya and South Africa. Private Safaris (Destina-tion Management Africa) generated turnover of CHF 56 million in 2009 (2008: CHF 42 million), a pleasing increase of a third.

The office in Namibia that opened for business at the end of 2007 was already able to post a positive operating result in 2009.

Cape Town, Kruger National Park and the winegrow-ing region were the most popular Southern African destinations in 2009. Holidays to South Africa were increasingly combined with visits to Namibia and Botswana. In East Africa, tourists favoured the Masai Mara Nature Reserve and Samburu National Park. In Kenya and Southern Africa, Private Safaris intro-duced the Kuoni Concierge Service for select guests.

54

In 2009, the Kuoni Mara Bushtops Camp in Kenya was once again chosen as the most beautiful and modern camp of its kind in East Africa.South Africa is hosting the FIFA World Cup in 2010. Early signs show a greater demand for safaris, which tourists are looking to combine with attending foot-ball matches.

destination Management Asia / pacific: Thailand hit by external influences

The year under review was strongly affected by the cri-ses and the swine flu pandemic. Demand for holidays in Thailand fell particularly sharply. This was also due to the political unrest in that country at the end of 2008. Turnover recorded by Asian Trails and Austra-lian Tours Management (Destination Management Asia/Pacific) was down to CHF 88 million (2008: CHF 98 million) as a result of these external factors.

Favourite destinations included Vietnam, Indonesia, Malaysia, Laos, Cambodia, Myanmar and, to a certain extent, Thailand. The trend towards late booking was evident in 2009, too.

In 2009, the trade press awarded Asian Trails the major Best Travel Agency award for Indochina.

destination Management Arabia: strong growth after acquisition

Thanks to the acquisition of Dubai-based Desert Adventures Tourism (DAT) in 2008, Destination Man-

agement Arabia enjoyed strong growth. Turnover rose by 72 % to CHF 95 million (2008: CHF 55 million).Desert Adventures Tourism (DAT) is one of the top three destination management companies in the United Arab Emirates and is market leader in the tours sector. In 2009, DAT was given a rebranding and a new logo that emphasises its place within the Destinations Division.

The product and service area was greatly expanded. New programmes (“Once in a Lifetime”, “Secrets of Arabia”) give holidaymakers some out-of-the- ordinary experiences and help Kuoni differentiate its products from those of its competitors.

The most popular holiday destinations in 2009 were Dubai, Abu Dhabi, Fujairah and Oman. China, India and South America are all new source markets with growth opportunities.

55 Market report 2009reporting

At A glAnce – destinAtions

the globally active division destinations was hit hard by the financial and economic crisis and the effects of swine flu. In Asia especially, consumers were greatly unsettled by the pandemic, which had a negative effect on travel patterns. These external influences led to lower turnover. Successful price renegotiations and higher margins were not enough to compensate for this, resulting in lower operating earnings (EBIT). destination Management Africa saw a welcome increase in turnover. Arabia also posted higher turnover thanks to acquisitions. Kuoni Connect, a web-based platform, was launched all over the world. This allows hoteliers to offer customers the very latest hotel prices.

2005 20072006 2008 2009

2005 20072006 2008 2009

2005 20072006 2008 2009

1 200

1 000

800

600

400

200

0

30

25

20

15

10

5

0

45

40

35

30

25

20

15

10

5

0

turnoVer

chF Million

EBIT

chF Million

roic (%)

58 Corporate&Business Development60 InformationTechnology62 CorporateResponsibility66 HumanResources68 Addresses

70 Kuoniglossary72 Agenda2010

58

NoSwisscompanycansurviveandthrivefor104yearsasKuonihasunlessitkeepsaclearandconstanteyeonitsvision,onitsstrategyandonsocialandeco­nomicchange.Thetouristindustryhasseenparticu­larlystrongupheavalsinrecenttimes,drivenbynewtechnologies,almostlimitlessinformationpossibilitiesandseachangesinconsumerbehaviour;andallthesedevelopmentsdemandconsistent,alertandprofes­sionalanalysisofthemarkets,thecompetitiveenvi­ronmentandthecompany’sownsituation.Identifyingtrends,appreciatinginnovations,breakingnewground:theKuonistoryboastsmanymilestonesofthecompanysuccessfullypositioningitselfbyusingitsskill,itsvisionandthepersonalcommitmentofitspeopletocraftandcontourthenewandleavetheoldbehind.

WithintheKuoniGroup,theCorporate&BusinessDevelopmentunit(CBD)playstheprimeroleinpreparingthecorporatepathahead.ItisCBDthatguidestheannualstrategicplanningprocessandthecompany’sstrategicinitiatives.Indoingso,CBDsupportstheBoardofDirectorsandtheGroupExe­cutiveBoardintheirdecision­makingprocesses,byaskingsuchapparentlysimplequestionsas:Whatdowestandfor(ourvision)?Howdoweachievethis(ourstrategy)?Whatprojectsandothermeasureswill

thisrequire(ouractions)?Whatearningsimprove­mentscanweexpectthistodeliver?(ourresults).CBDalsoshowsthecompany’stopdecision­makingbodieswhatexternalandinternalinfluencesmightimpactonearningsperformance,andwhatperson­nelandfinancialresourcesareneeded(orwhatmajorrepercussions–positiveornegative–canbeexpectedinpersonnelandfinancialterms).Indoingallthis,CBDcandrawonanumberofprofessionalinfor­mationtools,networksandexternalspecialiststhatprovideitwithacomprehensiveoverviewandwithalltheinformationthecompany’stopbodiesneedtomaketherightkeydecisionsonitsfurtherdevelopment.

TheKuoniGroupreappraisesandmodifiesorcon­firmsitscorporatevisionandstrategyonanannualbasis.Thecorrespondingstronglyfact­basedpro­cessculminateseachyearinthetwojointworkshopswhichCBDholdswiththemembersoftheBoardofDirectorsandtheGroupExecutiveBoard.CBDthenfleshesoutwhateverdecisionsaretakenhere,andmanagesandmonitorstheirimplementation.

Corporate&BusinessDevelopmentlaidtheground­workforanumberofdecisionsin2009thatshoulden­suretheKuoniGroup’ssuccessfulfurtherdevelopment:

Corporate&BusinessDevelopment–preparingthepathahead

59

Anexceptionalinvestmentandcost­reductionpro­grammewaslaunchedinJanuary2009thatwillseetotalcapitalspendingofCHF106millionoverathree­yearperiod.Keyinvestmentshavealreadybeenmadeinthecompany’selectronicdistributionchannels,inglobalbrandingandmarketing,andinmeasurestoenhanceemployeecompetenciesandefficiency.AtotalofCHF30millionhadbeeninvestedintheseareasbyyear­end.

September2009sawtheannouncementofareorga­nisationoftheentireKuoniGroup,infavourofamorecustomer­focusedstructure.ThechangeswilltransformKuonifromadecentralisedtoafunctionalglobalorganisation.Therestructuringwillbecom­pletedbymid­2010.

Thisradicalreorganisation,whichisthefirsttheKuoniGrouphasconductedforsometime,callsforaprecisely­coordinatedapproachinvolvingnotonlythefrontlineunitsconcernedinthevariouscountriesofKuoni’soperations,butalsothesupportingHRandcommunicationsunits.CBDissteeringandmoni­toringtheentirechangeprocess,andisalsoservingasthelinkbetweentheimplementationofthenewstructureandtheKuoniGroup’stwotopdecision­makingbodies,theBoardofDirectorsandtheGroup

ExecutiveBoard.Corporate&BusinessDevelop­menthadalsobeencloselyandactivelyinvolvedinshapingvariousstrategiccorporatedecisionsthepreviousyear.Theseincludedthestrategicpartner­shipwithSwissInternationalAirLinesLtd.whichwasembarkedoninthecourseof2008,aspartofwhichtheaircraftofEdelweissAirweresoldtoKuoni’snewairlinepartner.

CBDalsooversawtherealignmentandexpansioninvariouskeymarketsofKuoni’slocaldistributionorganisationindirectcustomercontact.Thecreationof“flagship”and“highstreet”storesintheUKmarketwasaparticularhighlightoftheseactivities.

CBDhasfurtherbeeninchargeofcoordinatingandsupervisingallgroupprojectssinceautumn2009.ThenewbriefshouldenableKuonitoimplementkeyprojectsinallareasofthecompanyanditsoperationsfaster,moreefficientlyandthussuccessfully.

Marketreport2009

60

TheKuoniGroupdistributesitsproductsandservicesviathesaleschannelsthatitscustomersdemandandexpect.Amongthese,theinternetplaysanimportantrole.Kuonialreadyearns16%ofitsturnoverfromtheinternet.Scandinaviacontinuedtoleadthewayherein2009,withinternetsalesaccountingfor43%ofallsuchbookings.Withtheirround­the­clockavailabilityandtheireaseofuse,onlinesaleschan­nelswillcontinuetoenjoyabove­averagegrowth.Forsimplerproductsinparticularwhichdemandlittleassistanceoradvice,theinternetisanattractivebook­ingtool.Inthepremiumandspecialistsegment,theonlineoptionwillnotreplacetheestablisheddistri­butionchannelssuchasretailofficesandcallcentres,butcanusefullycomplementthem.Inthissegment,theinternetisseeinggrowinguseasasourceofinformationandinspirationinpreparationforaper­sonaldiscussionataretailofficeorviaacallcentre.Toensurethefurtherdevelopmentofitselectronicsaleschannels,Kuonihasnowplaceditse­businessactivitiesinanewglobally­active“Distribution”unit.

ThewebsitesoftheKuonibrandinSwitzerland(includingHelveticTours)andtheUKandofvariousspecialistbrandsweretotallyredesignedin2009.InScandinavia,theApollobrandwebsitewasgivenitsownrelaunch.Thenewsitefeaturesupdatedstructuresthatarealignedtothelatestfindingsonuserhabitsandbehaviour.Thedestination,flight,hotelandservicessearchfunctionshavebeenex­panded;andthehomepageshavebeengivenafresh

newlookanddesignwithimagesandvideoclipstofurtherinspirevisitorsintheirvacationplans.ThewebsitesofKuoniSwitzerlandandUKhavealsobeenexpandedtoincorporatetheindependent“TripAdvisor”hotelassessments,enablingvisitorstoreadthecommentsofpreviousresidentsbeforeselectingtheirhotel.KuoniusesthesameContentManage­mentSystem(CMS)forthedesignandthecontentofallitswebsitesGroup­wide.

Kuoniknowsalltheworld’sbestspots.Anditistopassonthisexpertisetoitscustomersinaformthatbestmeetstheirneedsthatthecompanyhasdevel­opeditsCustomerRelationshipManagement(CRM)andintroducedthistoitsSwissandScandinavianmarkets.CRMenablesKuonitofurtherenhancethequalityoftheassistanceandadviceitprovidesforitscustomersbefore,duringandaftertheirtrip,notonlythroughpersonalface­to­facecontactbutalsothroughtheuseofthelatesttechnologies,includingtheinternetandmobilephone.CRMisgraduallybeingextendedtomoreandmoreKuonimarkets.

TheCross­MediaPublishingSystem(CMP)project,whichwaslaunchedbackin2007withtheaimofestablishingasinglestandarddatapoolforproducingpublications(brochures,promotionalmaterialandsimilar),hasnowseenthesystementerintofulloperation.CMPnotonlyallowsthesepublicationstobeproducedmoreflexiblyandinexpensively;italsohelpsstrengthenthepresenceoftheglobalKuoni

InformationTechnology–majorinvestmentsfortomorrow

61Marketreport2009

travelbrandinallmarkets,byensuringboththequalityofitscontentanditsconsistentvisualappeal.

KuoniConnectwaslaunchedworldwideinthecourseof2009.Theweb­basedplatformenablesbusinesspartners,travelagenciesandend­usercustomerstoaccessKuoniDestinationManagement’shotelport­folioandbooktheirhotel(s)ofchoice.Thehotels,fortheirpart,canupdatetheirroomratesthemselvesonlineanytimetheywish.

KuonihasalsobeenofferingitshotelproductsontheSwissInternationalAirLineswebsitesinceMarch2009,providingaccesstonewcustomersinnewmarkets.OnlineconnectionshavealsobeenexpandedwiththeserviceproviderswithinDestina­tionManagementforKuoni’sgroup­travelbusiness,enablingthehotelsconcernedtoelectronicallyentertheirgroupbookingrates.

New systems for more efficieNcy iN 2010

TheKuoniGroupBoardofDirectorsapprovedanexceptionalthree­yearinvestmentprogrammeatthebeginningof2009.AlargepartoftheCHF106mil­lionspendingapprovedwillbedevotedtoITprojects.2009sawfurtherprogressachievedinstandardisingtheGroup’svariousreservationsystems.Thisshouldbothfacilitatethemanagementofthehotelcapaci­tiesandfurtherservicesconcernedandimprovethesystems’usabilityforsellingtravelproductsin

Kuoni’svariousmarkets.Thisisturnshouldresultinhigherturnoverlevelsandsubstantialreductionsinoperatingcosts.Thenewglobalreservationsystemwasintroducedinitsfirstmarket–Spain–inNovember2009.Itwillnowbegraduallyexten­dedtofurtherKuonimarkets.

Anewglobalfinancesystemhasalsobeenintro­ducedin2010(initiallyatKuoniUKandFrance),ashasthefirst­everglobalintranet(K­Net),whichshouldpermitandpromotetheexchangeofinfor­mationamongalltheGroup’semployees.Inaddition,allourEuropeanemployeeswillbeconnectedtoasystemthatenablesthemtoeasilycommunicateandexchangetheirdestinationknowledgeforthebenefitofthecustomers.Morethen2500employeesinsixcountriesarealreadylinkedin.

Allthesemajorinvestmentsintomorrowstechnolo­gieswillsupportKuoni’snewfunctionalglobalorganisation.ThisinturnwillbenefitKuoni’scustomers–notonlyinchoosingtheirvacationandbeingadvisedthereon,butalsothroughthedirectcontacttheycanenjoywithKuonibothduringandaftertheirvacation.Forthecompany’semployees,meanwhile,thenewsystemsofferanefficientandeffectivemeansofpositioningKuoniasa21st­cen­turycompanyandensuringitscontinuedfurtherdevelopment.

62

Particularlyindifficulttimes,companiesthatgoabouttheirbusinesssustainablyandactresponsi­blyaretheonesthatachievelonger­lastingsuccess.Kuoniisawarethatenduringsuccessisnotpossi­bleunlesswetreattheenvironmentandsocietyingeneralwithcare.Asagloballyactivetourismbusi­ness,wehavearesponsibilitytowardsthepeopleandtheenvironmentinthedestinationswegoto,andintheplacesourcustomerscomefrom.ForKuoni,sustainablebusinessmeanscombiningeconomicsuccesswitharesponsibilityfortheenvironmentandsociety.Theaimofthesustainabilitystrategyistominimisetherisksandthenegativeimpactofourbusinesswhilealsotappingintonewbusinessopportunities.

mANAGemeNt strUctUres for sUstAiNABiLity

Kuoni’ssustainabilityworkiscoordinatedcentrallybytheCorporateResponsibilityunit.TheCorporateResponsibilityunitistheinternalcoordinationandcontrolcentreforimplementationinthecompany’sday­to­daylife.Itisalsothecontactpointforexternalstakeholders.

Overthelastyear,theKuoniGrouphasbuiltupandconsolidateditsCorporateResponsibilitynetwork.Byestablishinga“virtualCRteam”KuonihastakenanotherstepintheintegrationofCRintoallofitsactivities.Thisnetworkconsistsof12peoplefromop­erationalandfunctionalareas,ensuringthatsustain­abilityissuesareintegratedintobusinessprocessesandthatregionalprioritiesareidentified.

TheCorporateResponsibilityStrategyisfurtherintegratedintobusinessprocessesandday­to­daybusinessbymeansofspecifictrainingandworkshops.TheCRunithas,forexample,heldworkshopsforKuoniDestinationManagement,usedtheCRnews­lettertoinformallemployeesaboutthelatestprojectsandinitiatives,andorganisedaGroup­wide“CRpaperlessday”.

Kuoni’s code of conductIfacompanywantslong­termsuccess,ithastooper­atefromclearlydefinedprinciples.Wehavebroughtourcorporatevalues,principlesandguidelinesto­

getherintheKuoniCodeofConduct,whichisbindingforeveryemployeeoftheKuoniGroup.

Moreinformationisavailableathttp://www.kuoni­group.com/Corporate+Responsibility/Strategy.htm

cr strategyWearekeentoidentifykeyissuesrelatingtosustain­abledevelopmentasearlyaspossible.Usingamatrixapproach,Kuoniworkswithexternalstakeholderstoassesswhichissuescouldbecomeabusinessriskoropportunitynoworinthenearfuture.

Moreinformationisavailableathttp://www.kuoni­group.com/Corporate+Responsibility/Strategy

sUstAiNABLe VALUe cHAiNs At KUoNi

Living up to our responsibilitiesAsaninternationalcompanyKuonihasasignificantinfluenceonthesustainabledevelopmentoftour­ismatitsdestinations.Kuoni’svaluechainsincludeanetworkofseveralthousandserviceprovidersinwelloverahundredcountries.However,thecompany’sinfluenceisnotjustlimitedtoitsownemployeesandtodirectproviderslikehotels,excursionfirmsandtransportcompanies.Ourproductmanagers’purchasingstrategies,thepowerrelationshipsatplaywithinournegotiations,andoureconomiesofscaleallhaveaninfluenceonthebusinessprocessesusedinthewholesector,inthedifferentnationalmarketsandinthenetworksofothertourismcompanies.

TheKuoniGroupusesvariousmeasurestopromoteandimposesustainabilityalongthewholevaluechain.WithinthevaluechainKuoniaimstominimisethenegativeeffectsonpeopleandtheenvironmentwhilereinforcingthepositiveeffects.Webelievethatthiscommitmentpaysdividendsforpeople,theenviron­mentandforthebusiness,intermsofbothshort­termgoalsandthelong­termdevelopmentoftourism.

implementing efficient measuresTheKuoniGroupusesawholerangeofmeasurestoachievesustainabilityinthevaluechain.Thepri­maryfocusatthemomentisonourmostimportantservicepartners,thehotels.WithitsCodeofConduct

CorporateResponsibility

63Marketreport2009

forSuppliers,Kuonihasestablishedalegalbasisforsustainabilityinthevaluechain.Itmonitorscompli­ancewiththesestandardsusingTravelife,asystemformeasuringsustainability.Kuonialsotriestohelphotelsintheireffortstoachievesustainability,aswellasfacilitatingknowledgetransferbetweenitsbusinesspartners,andstimulatingdialoguewithstakeholdersthroughtransparentcommunication.

supplier code of conductIn2007,asafirststepinmanagingthevaluechain,Kuoniincorporatedethicalclausesintoitsagree­mentswithsuppliers.Thesewererevisedin2009tocreatea“SupplierCodeofConduct”–apolicydocumentforoursuppliers’sustainabilitystandards.Kuonirequiresitspartnerstorespectlocallabourlawsandinternationalhumanrights,nottotoleratediscriminationbygenderorreligion,toensureworkplacesafetyandhygiene,topaywagesinaccor­dancewiththelaw,andtocomplywithenvironmentalstandards.Kuonialsoreservestherighttoinspectitssuppliers’businessactivitiesatanytime.

making sustainability indicators measurable with travelifeInasecondstepweusetheTravelifeSustainabilitySystemtomonitoroursuppliers’commitment.ATravelife­trainedinspectorfromKuoni,anothertouroperatororanindependentcompanysubjectsthehoteltoaTravelifechecklastingseveralhours,duringwhichaboutahundredcriteriaareanalysed.Thesecoverthehotel’sactivitiesrelatingtotheenvironmentanduseofresources(water,energy,waste),thehotel’srelationshipwiththelocalpopulationandthewayittreatsitsownemployees.

In2009,theKuoniGrouptrained15ofitsownem­ployeestobeTravelifeinspectors.Theyhavealreadycarriedout120TravelifechecksatkeypartnerhotelsinvariousdestinationsfromEgypttoThailand.Ofthese120hotels,32receivedaTravelifeGold(12),Silver(11)orBronze(9)Award,demonstratingthattheyaremakingarealefforttobesustainable.TheTravelifeSustainabilitySystemhasalreadyinspected1300hotels,240ofwhichhavewonanaward.

Initsefforttofostersustainability,Kuoniistargetingitsresourcesasefficientlyaspossiblebyevaluating

the300mostimportanthotelsin12destinations.Theyhappentobelocatedindestinationswheretherelevantlawsarenotalwaysadequatelyenforced.Consequently,theactivecommitmentofKuonianditspartnerhotelscanhavealargepositiveinfluenceontheemployees,theenvironmentand,notleast,thewholetourismindustryintheseplaces.

Kuoni helps its suppliers to develop as sustainably as possibleKuonirunsregularworkshopsatvariousdestinationsforitshotelpartners.In2009,threechildprotec­tionworkshopswereheldinThailandandthreeinIndia.Workingwithlocalexpertsandorganisations,Kuonisensitisedmorethan140hotelmanagersandemployeestothissubject.IncollaborationwiththeUnitedNationsIndustrialDevelopmentOrganisation(UNIDO)anditslocalpartnerorganisation,30hotelmanagersinBulgariawerealsogiventrainingthisyearonpersonnelmanagementandsustainableresourcesmanagement.

transparent communication enables open debate with stakeholdersAswellasintensifyingitscommitmenttoasustain­ablevaluechain,Kuoniwantstocontributemoretoanopendebateaboutthisaspectintourism.Spe­cifically,lastyearwelookedtostartadialoguewithothertourismcompanies,usingTravelifeasaregularplatformfordiscussingachievementsandchallengesrelatingtosustainabilityintourism.

imPLemeNtAtioN of tHe coDe of coNDUct for tHe ProtectioN of cHiLDreN from seXUAL eXPLoitAtioN

SwissTelevisionlastAprilshowedhowareporterhadnotroubleprocuringanunder­ageprostitutesimplybyaskinghotelstaff–includingathotelswhichhavecontractswithKuoni.

KuonirespondedimmediatelyandstruckfivehotelsinPattayafromitslist.Discussionswereheldinper­sonwiththehotelmanagers,andspecificmeasuresweredefinedthatmustbeimplementedbysummer2010ifthesehotelsaretobereinstatedintoKuoni’sprogramme.Additionally,Kuoniranworkshopsfor

64

allitspartnerhotelsinPattaya,PhuketandKrabitoreinforceourzero­tolerancepolicy,butalsotoofferthehotelssupportinthefightagainstchildsextour­ism.FurtherworkshopswereheldinKeralaandGoainIndia.FormoreonKuoni’scommitmenttochildprotection:

http://www.kuoni­group.com/Corporate+Responsibility/Child+Protection/

cLimAte cHANGe

Climatechangeremainsoneofthecentralchallengesintourism.AccordingtotheUNWorldTourismOrganisation(UNWTO),tourismisresponsibleforabout5%ofglobalCO2emissions.75%oftourism­drivenCO2emissionsarecausedbypassengertrans­port,21%byaccommodationand4%byactivitiesattheholidaydestinations.

Often,theplacesthatattracttourists–fragilecoastalzones,islandsandmountains–arealsotheonesun­dermostthreatfromclimatechange.AstheexampleoftheMaldivesshows,agreateffortisrequiredtoprotectthem.

ForKuoni,lookingaftertheclimateisanintegralpartofourcorporatesocialresponsibility.Ouraimistoreduceourowndirectemissionsandemissionsinthevaluechain.

InJune,Novair,thecharterairlineoperatedbyKuoniScandinavia,wasthefirstinEuropetotesta“greencurvedapproach”landingwithanAirbususingGPSnavigation.Thisnewtechniqueisdesignedtotrimkeroseneconsumptionevenfurther,cutharmfulemissionsandreduceaircraftnoise.ThetestwaspartoftheMINTproject(MinimumCO2inTerminalManoeuvringArea)andtheSESAR­AIREinitiativeinwhichairlines,airports,airtrafficcontrolcentresandaircraftmanufacturersworktogetheronvari­ousteststoassesshowairtrafficmanagementcanbeimprovedtoproduceenvironmentalbenefits.Firstresultsproved,thatover500kgofCO2canbesavedperapproach.Throughvariousenvironmentallyfriendlymeasures,thatthecompanyestablishedin2007,Novairsaved300kgofkeroseneperflight,or

1000tonnesayear.ThisisequivalenttoaCO2reduc­tionof3%.

FormoreaboutKuoni’sworkonclimatechange:http://www.kuoni­group.com/Corporate+Responsibility/Climate+Change/

supporting the Ganges exhibitionLastautumnaninternationalteamofspecialiststravelledtheentirelengthoftheGangesbyboatin35daysinordertodrawattentiontotheenvironmentalproblemsinandaroundIndia’snationalriver,aswellastohighlightsustainablesolutions.Kuoni’spartici­pationinthisunprecedentedprojectunderlineditscommitmenttocorporateresponsibilityintheareasofclimatechangeandwaterscarcity.ItalsowantedtoincreaseawarenessofIndia’sdiversequalitiesasatraveldestinationandtohighlighttheimportanceofsustainabletourismtotheregion.

Youcanreadmoreabouttheexpeditionandtheparticipants’uniqueexperiencesintheKuoniBrandReport.

sociAL resPoNsiBiLity

Kuoni’seconomicsuccessdependsonthetrustandsocialacceptancegiventothecompanybythepeopleandinstitutionsaroundit.Beyonditseconomicactiv­ity,thecompanyisalsocommittedtowidersocialissues.Weareencouragedinthisregardbythesup­portofourshareholder,theKuoniandHugentoblerFoundation.Itsaimasacharitablefoundationistoprotecttheenvironmentandmaintainitsbalanceasthebasisforsustainabletourism.Particularattentionispaidtosupportingdisadvantagedchildrenintour­istregionsinSwitzerlandandabroad,andtofosteringunderstandingbetweendifferentcultures.

In2009theKuoniandHugentoblerFoundationmadedonationstoseveralorganisationsincludingthefollowing:

Pestalozzi children’s VillageNorthernThailandishometovariousethnicminori­ties,manyofwhomspeaknoThai.Parentsoftenseenopointinsendingtheirchildrentoschool,so

65Marketreport2009

illiteracyratesinthisregionareveryhigh.Theprojectinvolveseducatingchildrenintheirnativelanguagesinordertoimprovetheirjobopportunities.www.pestalozzi.ch/

Biovision – stop malariaEachyearseesuptotwomillionpeopledieasaresultofcontractingmalaria.Mostofthesedeathsareinsub­SaharanAfrica.Biovision’spilotprojectshaveshownthatenvironmentally­friendly,cost­effectivemethodssupportedbylocalpopulationsprovideaneffectivemeansofcombatingthisdeadlytropicaldisease.www.biovision.ch

salvation Army – Kenya wAsH ProjectKenya’sgovernmentsetitselfthegoalofconnectingallKenyanhouseholdsuptothewaterandsewagenetworkbytheyear2000.Itfailedtoachievethisandpassedtheresponsibilitybacktoprivateindividu­als.However,mostofthesepeople,especiallyinruralareas,continuetolivebelowthepovertyline.TheSalvationArmywantstohelpandhasproposedbuild­ingpropersanitaryfacilitiesin40schoolsitalreadysponsors,orbringingexistingfacilitiesuptoanacceptablestandard.Itsultimateaimistoreducethespreadofdiseasesspreadbydirtywater.Italsowantstoreducetheincidenceofdiarrhoeaamongschoolchildrenandcreateabetterenvironmentforlearning.

fairunterwegs.orgTheinnovativetravelwebsiterunbytheArbeitskreisTourismus&Entwicklungofferssomethingthatpeopleincreasinglywantthesedays:solidinforma­tionaboutthecountriesthatpeoplevisitandconcreterecommendationsforresponsibletravel.Fairunter­wegs.orgoffersuserscountry­specificinformationaboutenvironmentalissues,humanrightsandenergyconsumption.Thesitealsooffersotherinterestinginformation,including“fairnesstips”thatcanbeappliedbeforeandduringaholiday,andarticlesonspecifictravel­relatedissues.

GoALs for 2010

Kuoniintendstostepupitscommitmenttoasustain­ablevaluechainin2010andisconstantlyrefiningits

activitiestothisend.Inthewakeofitsrestructuring,theKuoniGroup’sinternalfocusandtrainingwillbeintegratedintotheprocess.

supplier code of conduct In2010thenewlyrevisedSupplierCodeofConductshouldbeincorporatedintotheremainingcontractswithworldwidesuppliers.

travelife certificationWithinthenexttwoyears,Kuoniwantstoensurethatthe300mostimportanthotelsaresubjectedtoaself­evaluationandaTravelifesustainabilitycheck.KuoniandTravelifewillthencarryoutreviewseverytwoyears.ThiswillhelptheKuoniGroupstrengthenitslong­termrelationshipwiththehotels,reviewtheirprogressonsustainabilityissuesandsupportthemwithtargetedhelp.

support and knowledge transferIn2010Kuoniwillintensifyknowledgetransferanduseexamplesofbest­practicetoalertitsmostimpor­tanthotelpartnerstonewopportunitiesforsustain­ableaction.Kuoniwilloffersupporttoitssuppliersthroughworkshopsaswellasthroughweb­basedknowledgetransfer.

internal focus and trainingTherestructuringoftheKuoniGroupprovidesnewopportunitiesforinternalcooperation.Thenewprocurementandproductionunitisbecomingakeypartnerforoursuppliers,enablingKuonitocontinuedevelopingitscommitmenttosustainability.Inaddi­tion,internaltrainingisbeingincreasedandinternalproductionprocessesarebeingscrutinised.

ThecentralchallengeforKuoniwillbetofosteradebateaboutthefutureofvaluechainsintourism.In­ternationaltravelcompanies,hoteliersandexcursionproviders,butalsocivilsocietyorganisations,localpopulations,governmentsandcustomers,havetobemadeawareofhowincreasinglysustainablevaluechainsbenefiteveryone.Ifeveryinstitutionandeveryindividualshowstherightcommitment,sustainabil­ityintourismcanbecomethemostnaturalthingintheworld.

66

We all have longings and desires. As an established premium and specialist service provider, Kuoni’s goal has always been to explore travellers’ individual aspirations and turn them into unique experiences. To do this, the company needs passionately commit-ted employees who can also keep up with constantly changing customer requirements and the latest trends. Because even in times of economic difficulty, people still have dreams.

Kuoni operates all over the world, and in 2009 it employed an average total of 9 070 people (full-time equivalents). This is 7.4 % lower than in the previous year (2008: 9 797).

Brand identification

Rebranding and brand development are lengthy and continuous processes. Employees need to engage with the brand values and help shape the changes. Only if they do this with conviction can they live up to the values and fully understand the company’s new prod-ucts and services. The Kuoni Brand Campus contin-ued its work in 2009, teaching employees about all the innovations involved in Kuoni’s rebranding. Various supporting measures were also introduced to anchor our corporate values even more firmly. In Switzerland, for example, a Brand Campus was run for Market Management (formerly Tour Operating). In various workshops, employees, and sometimes external ser-vice providers, explored Kuoni’s core values (passion, authenticity and reliability).

code of conduct

The Board of Directors and Executive Board approved the Code of Conduct (CoC) for Group-wide use at the start of 2007. It has since been introduced throughout the company, serving as a binding guide to ethically correct conduct by employees, and forming a funda-mental element of Corporate Governance. The CoC information is given to all employees when they join the company. As well as rules on how to behave, it includes a list of people who can help if anything is unclear or if difficult situations occur in the work-place. A presentation covering all the most important points is available to employees on Kuoni’s intranet. The Head of Group Human Resources meets regularly with individual Managing Directors in the markets to discuss issues and additional measures relating to the CoC.

training

Continuous learning and development is vital for employees if Kuoni is to remain competitive in the future.

The company offers suitable candidates various spe-cially tailored development centres, training options and management courses. Middle and senior manag-ers can attend the Kuoni Corporate University, run in collaboration with the internationally renowned Ashridge Business School in the United Kingdom. Its programmes are tailor-made for Kuoni; they give

Human Resources – employees help shape the future

67Marketreport2009

managersthebusinessknow­how,transformationtoolsandstrategicexecutionskillstheyneedtode­ployefficient,localmeasuresflexiblyinresponsetothechallengesfacingthetravelindustry.

TheIndividualPotentialDiscussion(IPD)processwasintroducedduringtheyearunderreview.Thisisaninternal,Group­wide,facts­basedprocessthatdeliversconcreteimprovementmeasuresforallmanagersandhighpotentials.TheIPDisusedtoassessemployees’skillsandperformance,andtodetermineverypre­ciselywhetherGroupstrategyisbeingfollowed.Everymanagerinthecompanyisratedbyhigherrankedmanagers.ExecutiveBoardmembersareassessedbytheBoardofDirectors.

mANAGemeNt comPeNsAtioN system

In2008,Kuoniintroducedanew,uniformcompensa­tionmodelforseniormanagementthroughouttheGroup.ItfocusesonvaluecreationandthesuccessoftheGroupasawhole,anditincentivisesmanagerstothinkandactsustainably.Thecompensationmodelisdesignedtoalignmanagers’personalgoalswiththoseofthecompanyandtheinterestsofitsshareholders.ItisbasedontheperformanceofKuoni’sshares,whilealsorecognisingindividualcontributionstooperationalvaluecreation.Followingitsintroduc­tioninthepreviousyear,thecompensationsystemcontinuedtohaveapositiveimpactduringtheyearunderreviewanditfurtherstrengthenedglobalcollaboration.

emPLoyee cocKPit

In2008theprocessofreorganisingthewholeKuoniGroupintoafunctionalglobalstructurebegan.Evenbeforethis,theHumanResourcesdepartmentwasworkingtoestablishabetterinternationalnetworkandmakeitselfmoreefficientandcompetent.Uniform,Group­wideHRprocesseswereintroduced,thoughalwayswithaneyeonlocalconditions.AgoodexampleistheEmployeeCockpit.

Theroll­outofthisnewpersonnelmanagementsystem–Kuoni’sfirstGroup­wideHRsystem–wascompletedduringtheyearunderreview.EmployeeCockpitencouragesglobalcooperation,quickdecision­making,agoodflowofinformation,andemployeemanagementacrossnationalborders.Itoffersauniformsolutionthatalsoaccommodatestheneedsofindividualcountries.Thenewsystemiseasytouseandincludesfunctionsforemployeeappraisals,training,andmanagementofjobapplica­tions.Employeescanmanagesomeoftheirprofileinformationthemselves.HRandlinemanagerscanuseEmployeeCockpittofindsuitableemployees–perhapsforaproject–quicklyandefficiently.

EmployeeCockpithasbeenimplementedin38coun­tries.Around100HRspecialistsandmorethan1000managersnowactivelyusethesystemforHRmanagement.

68

Addresses–aworldwidepresence

Kuoni travel Holding Ltd.

Kuoni Travel Holding Ltd. NeueHard7CH­8010ZurichP +41442774444F +41442715282communications@kuoni.comwww.kuoni­group.com

countries and the companies based in them are listed alphabetically.

Australia

Australian Tours Management Kuoni Destination ManagementLevel1,28VictoriaStreetCarlton3053,VictoriaP +61396621599F +61396632427bee@atmtravel.com.auwww.atmtravel.com.au

Belgium

Kuoni Travel Belgium B.V.B.A.KoninginElisabethlaan45B­9000GentP +3292692010F +3292335255info@kuoni.bewww.kuoni.be

china

Kuoni Travel (China) Ltd.30/FOneLandmarkEast100HowMingStreetKwunTongKowloonHK­HongKongP +85229566888F +85229566789mgt@kuonitravel.com.hkwww.kuonitravel.com.hk

Kuoni Destination Management ChinaRoom1001,SciTechTower22JianguomenwaiAvenueChaoyangDistrict100004BeijingP +861065159259F +861065159293dmc.pek@cn.kuoni.comwww.kuoni­dmc.com

Denmark

Apollo / Kuoni DenmarkNørrebrogade10,VedSøerneDK­2200KopenhagenP +4535201000F +4535201009salg@kuoni.dkwww.kuoni.dk

france

Voyages Kuoni SA22,rueDieumegardF­93407Saint­OuenP +33155878000F +33155878286infocenter@kuoni.frwww.kuoni.fr

Germany

Conference & Touring C & T GmbHKaiserdamm110D­14057BerlinP +4930301280F +493030128128berlin@dmcgermany.dewww.dmcgermany.de

india

Kuoni Travel Group, IndiaKuoniHouseColabaIN­Mumbai400001P +912266562064F +912266562069communications@kuoniindia.comwww.kuoniindia.com

Kuoni Destination Management IndiaTowerB,DeltaSquareM.G.Road,Sector25IN­Gurgaon122001P +911244563000F +911244563100corporate@kdm.inwww.kuoni­dmc.com

VFS GlobalKuoniHouse,ColabaIN­Mumbai400001P +912266562064F +912266562069zubink@kuoniindia.comwww.vfsglobal.com

italy

Kuoni Italia S.p.A.MuradiSantaChiara1I­16128GenoaP +3901059681F +390105968818infotours@kuoni.itwww.kuoni.it

Japan

Kuoni Travel (Japan) Ltd.OsakiTakagiBldg.1F1­20­18,Osaki,Shinagawa­kuJP­Tokyo141­0032P +81(3)57594500F +81(3)57594501dmc.tyo@jp.kuoni.comwww.kuoni­dmc.com

Kenya

Private Safaris East Africa Ltd. Destination Management AfricaTwinstarBldg.MombasaRoadP.O.Box45205KE­Nairobi00100P +25420530601F +25420533854info@privatesafaris.co.kewww.privatesafaris.co.ke

Nepal

SITA World Travel Nepal (Pvt.) Ltd.KathmanduPlaza,3rdfloor,YBlockP.O.Box2656Kathmandu,NepalP +97714233012F +97714233031info@sitanepal.comwww.sitanepal.com

Netherlands

Kuoni Travel Nederland B.V.Entrada211–214NL­1001ADAmsterdamP +31203989292F +31203989202info@kuoni.nlwww.kuoni.nl

69Marketreport2009

Norway

Apollo / Kuoni NorwayGrensen3N­0159OsloP +4723213000F +4723213001info@kuoni.nowww.kuoni.no

russia

UTE Megapolus group Kuoni Destination ManagementPokrovskiyblvd.8,bld.1RU­109028MoscowP +74957869763F +74957869764hr@mail.ute.ruwww.ute.ru

south Africa

Kuoni Private Safaris (Pty) Ltd. Destination Management Africa1stfloorWaterfordHouseWaterfordPlaceCenturyCity7446ZA­CapeTownP +27215282200F +27215282222info@privatesafaris.comwww.privatesafaris.com

spain

Viajes Kuoni SAPaseoInfantaIsabel,17ES­28014MadridP +34915382700F +34915382727kuoni@kuoni.eswww.kuoni.es

sweden

Apollo / Kuoni SwedenYnglingagatan2S­11347StockholmP +4686738400F +4686738403info@kuoni.sewww.apollo.se

switzerland

Kuoni Reisen AGNeueHard7CH­8010ZurichP +41442774444F +41442715282communications@kuoni.chwww.kuoni.ch

Kuoni Travel Ltd.Destination Management EuropeÜberlandstrasse360CH­8051ZurichP +41443252111F +41443211909dmc.info@ch.kuoni.comwww.kuoni­dmc.com

thailand

Asian Trails Ltd. (Thailand)Destination Management Asia9thFloor,SGTower161/1SoiMahadlekLuang3RajdamriRoadLumpini,PathumwanTH­Bangkok10330P +6626262000F +6626518111res@asiantrails.orgwww.asiantrails.info

United Arab emirates

Desert Adventures Tourism Destination Management Arabia7thFloorQatarAirwaysBuildingDohaCenterMaktoumRoadUAE­Dubai24488P +97142242800F +97142242900E­mail:info@desertadventures.aewww.desertadventures.com

United Kingdom

Kuoni Travel Ltd.KuoniHouseGB­Dorking,SurreyRH54AZP +441306740888F +441306744157information@kuoni.co.ukwww.kuoni.co.uk

UsA

AlliedTPro Inc. Destination Management US500,7thAvenue,9thFloorUS­NewYork,NY10018P +12125961000F +12123139800nyc@alliedtpro.comwww.alliedtpro.com

A full list of addresses is available on the www.kuoni-group.com website.

As at 1 march 2010

70

AcquisitionTakeoverofacompany(purchase).

Agent AnindependenttravelagencysellingKuoniproducts.ThetermisalsousedforcompaniesactingashandlingagentsatKuonidestinations.

Asset-light brand portfolioBrandsthatdon’townanyfixedassetssuchashotels,aircraftorships.

BondFixed­termcorporatedebttakenontoincreaseliquidity.Moneyisraisedfrominvestorsbyissuingbondsonthecapitalmarket.

Branding Establishingandcultivatingbrandnamestogiveabusinessaclearandunmistakableprofileandimageamongexistingandpotentialcustomers.

Brand campusAworldwideemployeetrainingprogrammefocusedonKuoni’snewcorporatevalues,visualimage,newproductlinesandserviceofferings,aswellasonthechangingexpectationsoftoday’scustomers.

charter flightAflightwithseatingcapacitypurchasedspecificallyforatouroperatorandtobefilledattheoperator’srisk.Typicallyusedwhenputtingtogetherapackageholiday(flight,transferandhotelaccommodation).

co2 offsettingFinancialpaymentmadetooffsettheCO2emissionsgeneratedbyaholiday.Availableontheinternet,aswellasinKuonitravelagenciesincertainmarkets.

concierge servicePersonaladviceandhelpaimedatfulfillingtravel­lers’individualrequests.Forcustomersintheluxurysegment.

consolidationThemergingandharmonisationofindividualcompanies’financialresultstoproduceasetofaccountsfortheGroupasawhole.

corporate responsibilityCorporateResponsibilityistheunifyingtermthatKuoniusestodescribeoverarchingthemesinthelong­standingpublicdebateonconsumergoodsandservices:environmentalawareness,fairness,socialresponsibilityandethics.

currency effectThechangeinthefinancialresultscausedbyconver­sionfromaforeigncurrencytoKuoni’scorporatecurrency,theSwissfranc(CHF).Theeffectmaybepositiveornegative,dependingonexchangeratemovements.

Destination management OrganisationallypartoftheDestinationDivision.DestinationManagementoffersprofessionaladviceandorganisationoflandarrangementsattraveldes­tinations.Thedivisionisdividedintofivebusinessareas:DestinationManagementEurope,USA,India/SouthAsia,Africa/ArabiaandAsiaPacific.

Direct sales / direct customer contactProductsalesdirecttoconsumersviaproprietarysaleschannels,withoutinvolvinganintermediary(third­partytravelagentorinternetportal).

DistributionAdviceon,andsaleofholidays.

Distribution channelsTheoutlets(virtualorreal)fromwhichproductsaresoldtocustomers.Thesecouldbetravelagencies,theinternetorcallcentres.AlsoincludesPersonalTravelConsultantswhovisitcustomersinpersontodiscusstravelplans.

employee cockpitAworldwideelectronicemployeemanagementsystemwithbuilt­infeaturesforemployeequalifica­tion,training,andvacancyapplications.

flagship storeAone­of­a­kindsalesofficelocatedataprimeretailsite.ReinforcesthecredibilityoftheKuonibrandinthepremiumsector.

inbound business DestinationManagement’scorebusiness:organisingexcursions,accommodation,transfers,congressesandsimilarforincomingcustomersatthedestination.

K-NetKuoniGroup’sfirstglobalintranet.Wentonlinein2010.Facilitatesandencouragescommunicationbetweenallemployeesworldwide.

Kuoni connectOnlineplatformthatallowscontractedpartnerstoaccessthehotelportfoliodirectlyinordertoupdateoffersorbookrooms.

Kuoniglossary

71Marketreport2009

Kuoni Getaway councilAdiscussionpanelcomprisedofexternalexpertsfromtheworldsofbusiness,science,art,fashionandculture.Panellistsconveneindifferingconstellationstoexchangeviewsonquestionsaboutthefutureoftravel.

mainstream segmentConsumerswhowanttobeabletobookholidayseas­ilyandgetgoodvalueformoney.

marketThenamegiventoanindividualcountryinwhichKuonimarketsandsellstravelproducts(e.g.Swissmarket,Italianmarket).

market management (formerly tour operating)AcorebusinessforKuoni.Itinvolvesselectingandbuyingproductsandservicesandcombiningthemintopackagetoursortailoredarrangements.

m.i.c.e. travel Theorganisationandprovisionoftravelproductsconnectedwithmeetings,incentives,conferencesandevents.

organic growthGrowthachievedthroughacompany’sownefforts,withoutacquisitions.

outbound business Foreigntravelorganisedbytheindividualbusinessunitsforcustomersintheirnationalmarkets.

Package holidayApackageofholidayproductsandservices(flights,hotel,transfers,localassistanceetc.)offeredatapre­determinedall­inprice.

PandemicRapidworldwideoutbreakofanillness,usuallyavirus,thatiseasilypassedonfrompersontoperson(e.g.swineflu).

Premium and specialist segment Individuallyarranged,high­endtravelandrelatedservices.Notableforfirst­ratelevelofcustomerserv­ice.Withinthespecialistsegment,highlycompetentnicheprovidersalsousetheirspecialistknowledgetoofferbespoketraveltospecificdestinations,orspecificstylesoftravel.

Procurement & ProductionNewunitthatbuyshotelrooms,servicesandlandarrangements,andpreparesthemforsaleinKuoni’sdifferentmarkets.Theunitisbasedinthreehubs:Zurich,Dorking(London)andStockholm.

restructuringThereshapingofoldbusinessprocessesandoperatingstructuresinordertoimprovethecost­benefitratio.

retailing Thedistributionandsaleofproductsandservices(e.g.throughtravelagencies).

service provider Anysupplierofservicesfortravellerssuchasanairline,ahotelorarestaurant.

source marketsThecountrieswheretravelandrelatedservicesaresold.Customerstravelfromthesemarketstotheirholidaydestinations.

synergiesThemutuallybeneficialeffectsone.g.efficiencyandfinancialresultsthataregeneratedwhendepart­ments,businessareas,companiesetc.startworkingwitheachother.

tour operating OneofKuoni’scorebusinesses,touroperatingin­volvesselectingandbuying­inproductsandservicesandcombiningthemintoinclusivetoursortailoredtravelarrangements.

travelifeAsustainabilitysystemwithinternationalstandardsforassessingtheenvironmentalcredentialsofhotels.Kuoniintroducedthesystemin2009.

Value chainThesystemofbusinessprocesses(purchasing,pro­duction,sale)thatextendsallthewaythroughfromsupplierstoendcustomers.

Vertical integration Expansionofacompany’sbusinessactivitiestocoverthewholeofitsindustry’svaluechain,e.g.atouroperatoracquiringitsownhotels,airlines,carrentalcompanies,etc.

72

KuoniglossaryBrands(selection)

ApolloKuoni’sall­inclusivetourbrandinScandinavia(Sweden,Norway,Denmark),offeringoutstandinglygoodvalueonlong­andshort­haulbeachholidays.

Australian tours managementAustralianToursManagementoperatesinthedesti­nationmanagementbusiness,whereitspecialisesinleisureandspecial­interesttravel,alongwithincen­tivesandeventswithinAustralia.

carrierCarrierisaleaderintheUnitedKingdomluxurysegment,specialisinginindividualandservice­orientedtraveltodestinationsworldwide.

cotravelCotravelisoneofSwitzerland’sleadingorganisersofstudytripsaccompaniedbyexpertguides.ThesearemainlyoperatedincollaborationwithprominentSwissnewspapersandmagazines.

Desert Adventures tourismThecompanyisamongtheforemostandbest­knowndestinationmanagementcompaniesoperatingintheUnitedArabEmiratesandOman.

et-chinaEt­chinaiswiththebrandspecialisedingroupinclusive­tourarrangementsbothwithinChinaandtodestinationsabroad.GZLisoneofSouthChina’sbest­knowntravelbrands,andalsoholdsalicencetoofferforeigntravelproducts.Et­chinaalsooperatesaleadinginternetplatforminChinaforairtickets,hotelreservationsandrentalcararrangementsforindividualtravellers.Andthecompanyfurthermain­tainsajointventurewithChinaSouthernAirlines,thecountry’sbiggestaircarrier,underwhichitisthe

soledistributoroftheairline’se­tickets.Withsome160travelagencies,itscallcentreanditswell­knowninternetportal,Et­chinaiswellpositionedwithintheChinesetravelmarket.

falk Lauritsen rejserThebrandisexcellentlyestablishedintheDanishtravelmarketasaproviderofinclusive­tourarrange­mentstodestinationsincludingSpain,Greece,Turkey,EgyptandtheCaribbean.Distributesitsproductssolelyviadirectsales.

Helvetic toursKuoniSwitzerland’sall­inclusivetourbrand,offer­ingoutstandinglygoodvalueonlong­andshort­haulbeachholidaysandcitytours.

Kuoni travel Holding Ltd. TheholdingcompanyoftheKuoniGroup.

Kuoni and Hugentobler foundation KuoniTravelHoldingLtd.’sprincipalshareholderintermsofvoting­rights(25%ofvotingrights,6.25%ofsharecapital).

Ute megapolus UTEMegapolusspecialisesintravelformiddle­classRussians.ItjoinedtheKuoniGroupattheendofAugust2007.

Vfs Global (Visa facilitation services)VFSGlobalispartofKuoniTravel(India)Pvt.Ltd.InpartnershipwithforeignembassiesandUKvisas,itprovidesservicesrelatingtotheissuanceofvisasandresidencepermitsaroundtheworld.VFSGlobaloperatesanetworkofmorethan337officesin45countries.

h AnnualGeneralMeetingofShareholders 20April2010

h Half­yearresults 19August2010

h Nine­monthresults 11November2010

Agenda2010