‘We’ll continue to have travel brands under a common board’

Thomas Cook India recently expanded its international footprint by acquiring tourism firm Kuoni’s global network of destination-management specialists in 17 countries. Having bought out Kuoni’s travel business in India in 2015, this was an additional buy for the Fairfax-owned travel company, which now has a global footprint, giving it an incremental revenue of $200 million from the overseas markets.

In a free-wheeling interaction post the announcement of the recent deal, Madhavan Menon, Chairman and Managing Director, Thomas Cook India, describes his company as a global one which is listed in India, and talks about the strategy forward. Excerpts:

Why did Thomas Cook India decide to go in for another acquisition of Kuoni’s destination-management specialist business across 17 countries?

A year-and-a-half ago, we had entered into an agreement with Kuoni to acquire their operations in India and Hong Kong.

Subsequent to that, they decided to divest their destination-management business. Ever since we made the acquisition, we had a potential appetite to look at companies within Asia since we believe Asia will be a destination of choice all over the world and travel from Europe and the US will get restored to its pre-2015 levels.

Therefore, it was important to be present in the incoming business in Asia. With this acquisition, we will now haveincoming business in 17 countries across the world, ranging from Australia, South-East Asia, China, West Asia to the US and Canada.

In India, we are already the largest in the incoming business under TCI Sita, and will now consolidate this division with a global footprint.

How will you integrate the Kuoni global and domestic business of Thomas Cook?

We do not wish to integrate the operations since each of these countries have their own set of rules and regulations. But having said that, we will have a sales force that will go out and source business, bring tourists and interact with local travel agents so that they can send tourists to their respective countries. The objective is to use the sales force and technology to essentially drive synergies.

By expanding your global footprint, what kind of incremental revenues will Thomas Cook India get from overseas markets?

From an accounting standard, we will be consolidating; and the acquisition will accrue profits and bring in $200 million in incremental revenues.

In fact, with this acquisition, we will no longer be an Indian company despite being listed here. It is time to stop calling ourselves as Thomas Cook India since now our business is spread across 20 countries.

Post the acquisition of Kuoni India in 2015, how have you differentiated among all your acquired travel companies in the domestic market?

Thomas Cook India has now been divided into three companies. The first is Thomas Cook and the second is Kuoni India, which has two brands — Sita and SOTC; the third company is the merged entity of TCI and Sita.

How will you position and manage the multiple travel brands under your portfolio?

Both SOTC and Thomas Cook are retail brands, and will compete with each other in the holiday space.

Each has a huge brand loyalty; so there is no need to disrupt them. Just like HUL has several brands of soaps which compete with each other, we will continue to have travel brands that are part of a common board.

Did demonetisation impact your travel business?

Demonetisation did not impact us, and by January this year, we saw bookings back to normal and on par with 2014. In the West, travellers make bookings 11-12 months in advance and such bookings are not spot transactions. These are travellers who come from cashless economies and carry credit cards. The cancellations were marginal in our case.

What kind of business are you expecting from your online platform?

Today, 16 per cent of our sales come from the online platform, which is growing 36-40 per cent annually. For a brick-and-mortar player like us, it is a significant amount.

We only sell our packaged holidays online, and going ahead, we expect equal amount of business between the online and offline spaces.

Since 2012, Thomas Cook India has been on an acquisition spree. What has been the experience of buying out timeshare companies such as Sterling Holiday Resorts?

Sterling Resorts had been going through a traumatic period for 18 years. Since our investment, it has renovated its properties. Last year, it turned profitable at a cash level and should get EBITDA positive this year.

Would you consider investing in some of the travel start-ups since they seem to have innovative products?

Yes, there are some interesting things happening in the start-up space. We will keep looking, and invest if there is an opportunity.

How are you viewing the GST roll-out and its impact on your operations?

We are in an advanced state of readiness with our internal accounting and software.

It is going to be an evolutionary process. While there may be an immediate change in the pricing for our packages, in the medium and short term, it will average out.