Young travellers are just the ticket for profits

School trips, gap years and overseas volunteering are sheltering the growing education division of TUI from global storms. Mary Novakovich meets Ian Finlay

While large parts of the travel industry have been reeling from the effects of natural disasters, revolutions and recessions, one section of it has been quietly making money at a fairly rapid rate. School trips might not be the sexiest side of the trade, but they have been bringing impressive profits to the market leader, the education division of travel giant TUI, owners of First Choice and Thomson.

"Both on an organic level and through acquisitions, we're growing far faster than anybody else in the company," says Ian Finlay, the 37-year-old managing director of the education division. "In terms of our growth, in 2006, our profit in the UK was £2m; in 2010, our profit was £21m." Globally that’s £27m EBIT and £228m revenue.

It's an impressive growth rate in the midst of a recession, and particularly in an area of travel that requires stringent health and safety procedures. But in spite of the cutbacks faced by many families, Finlay does not believe the school trip is an automatic casualty. It helps that his division's portfolio is immensely diverse and international, covering everything from ski trips and sports tours in France to residential activity centres in the UK and the lucrative spring break market in the United States.

"While I wouldn't go as far as to say we're recession proof, certainly parents try to maintain the school trip, and that tends to be one of the last things to get cancelled," he says.

"People will often sacrifice weekend city breaks or even their own family holiday rather than cancel a curriculum-linked trip for one of their children."

Finlay adds that the economic climate, far from being a hindrance, is helping its university travel sector grow even further. With more students than ever taking a year out before university, and many taking part in volunteer projects around the world, the division's gap-year companies, such as Real Gap and World Challenge, have been benefiting.

"Employers are looking for something other than just academic qualifications," he says. "The recruitment market for graduates is really tough at the moment. For people with volunteering experience or who have worked with local communities, to have that on your CV as well has played to our strengths. I'm not being blasé about it, but we're still in good shape."

Finlay acknowledges that many teachers and parents can be put off by the complicated risk-assessment forms that are an unavoidable part of education travel. But he points out the advantages of teachers and parents working with such a major global player in the travel industry, even if they're not aware that their tour operator comes out of the same stable as First Choice and Thomson.

"What we've been striving to do is to make the whole process that much easier for teachers. We can help with the risk assessment documentation," he says. "We can provide whatever support and back-up are needed. We can allow teachers to recognise that, because we're a reputable provider with the backing of a FTSE 100 behind us, they're mitigating the risk by booking through us rather than – with no disrespect – the small mom-and-pop operators that don't have the same level of resources that we have to be able to go out and check every hotel and make sure that everything is exactly as it should be.

"By and large, the provider is invisible to parents. They get the letter from the school advertising the school trip – it could be skiing in Tignes or a residential activity centre in Brixham or wherever it might be – but often the provider is unknown. I'm not sure how many of the 465,000 people we took on holiday last year recognised it was us doing it. Actually, if they did, I think it would give them a significant more comfort and security."

It's a bit of a marketing conundrum, though, as mainstream tour operators and niche educational travel companies are worlds apart.

Finlay agrees. "Package holidays and summer sun are very different from our very specialist model where, for example, our Ski Bound business has been operating for 26 years. We don't want to associate that with a mainstream tour operating model. We need to maintain the strength and autonomy of the individual brands in their marketplaces."

Finlay is better placed than many to understand his business thoroughly because his background encompasses pretty much everything that the education division is involved in. Back in the days before the term "gap year" became common, Finlay had taken a year out after his A-levels and spent some time working on a kibbutz in Israel. He caught the travel bug and carried on around the world, stopping in Holland and the US, earning his keep by picking fruit and doing factory work.

"I spent three months in Honolulu on the north beach where I realised I can't surf, and never tried since," he says with a wry smile.

"I don't think that what we're doing is drastically different from what was happening 20 years ago, albeit with a much bigger product range now," he says. "I didn't have a choice 20 years ago, or I certainly wasn't aware of being able to work on a lion reserve in South Africa or in an orphanage in Romania or whatever it might be. Now there's a much bigger world that we're able to offer people."

When Finlay returned from his travels and was in need of cash before he started university, he answered an advert for a kitchen porter in a residential activity centre. He didn't spend long in the kitchen, though, because he was soon working with the children who came to the centre for some respite from their difficult home lives. Even during university he would spend his holidays working at the centre. Management roles soon followed within companies that have since become TUI's competitors.

His rise was rapid, joining the school adventure travel company Travel Class in 2001 as operations director, and buying the company within four years. In 2006, he sold Travel Class to First Choice. By the time First Choice merged with TUI in 2007, Finlay had already started on the acquisition programme that so far has brought 40 brands in 11 countries into the fold.

One of the keys to the division's success, Finlay says, is constant innovation and keeping a close eye on changes in the market. He cites the example of Mexico, whose recent problems have had an impact on the US spring break companies that had been sending college students to Cancun for a hedonistic week in the sun. Instead, emphasis shifted to volunteer projects in Costa Rica or cultural breaks in Europe.

"If we sat there and watched the Mexico market shrinking, we'd be in a pretty poor place now and some of our competitors did that."