Travel is now a 12-month industry: Thomas Cook CMD Madhavan Menon

Interview with Madhavan Menon, Chairman and Managing Director, Thomas Cook

BSE-listed Thomas Cook has primarily been an offline travel player in a market that is now seeing an active user base transacting online. Things are changing now, says Madhavan Menon, chairman and managing director. In an interaction with Ajay Modi, Menon says the online space now brings 22 per cent of the travel revenue and there is a necessity to grow it further. Edited excerpts:

How is the Indian travel market changing? What triggers you see for growth?

The millennials are driving the domestic tourism market. Increasingly we find that a lot of domestic tourism is around long weekend while there is a seasonal element to travel when people take longer holidays. I think travel has become a 12-month industry, with huge growth rate as everyone today aspires to travel. Domestic tourism is not just driven by flights. It is driven by coaches and trains and people drive as well. Domestic tourism has exploded. The millennials will now get married and will have a family. So travel will continue to grow and grow. Internet barriers have been broken and access is no longer an issue. 

Thomas Cook is mostly seen as an offline player in travel. What is your online presence? 

Just four years ago, we never booked anything online. We are in the online space now and 22 per cent of all our package holidays get sold online. We started putting technologies together for online bookings. We understand there are different kinds of customers. Some millennials are comfortable transacting online and on phone but some also walk into our shop to buy a holiday and want physical contact. So we will always build a hybrid model to drive our business. Technology will be an enabler. 

As a recent entrant in online travel space, how do you see the competition from online travel companies (OTAs)? 

OTAs like MakeMyTrip and Yatra have been around for long years now. Each of us have an area of specialisation. I have huge respect for what they have done. But honestly when they came and started booking flights, one of the first decisions we took was that we won’t book flights. There is no money to be made. I have got shareholders to whom I need to give returns. I am not allowed to burn money. They are burning money; we are earning money. I am not questioning what they do. But our objectives are completely different. 

How is Thomas Cook preparing to cater to markets outside cities and urban areas?

We have gone into Tier-I, -II and -III markets. We increasingly advertise in more and more languages. We know that the four metros are not the limit of our existence. Where I go the OTAs will come, where OTAs come we will go. It doesn’t necessarily mean that we compete. We are in package tours and they are there in a small way. They are big in hotels and flights and I can’t compete with them there. Three years ago, we decided to get into hotels and put in place a team and soon a price war started between the OTAs. We decided to stop that business in early stage. 

Your FY17 annual report shows that the company has 53 subsidiaries. What purpose they serve?

There are many shell companies which we did not close at different levels. But over the next 18 months, you will see that getting cleaned up. If I need a subsidiary to buy something, we will do it. The number is already down from 53. When you acquire companies, you inherit their subsidiaries and then you need to clean it up. Quess, for example, has cleaned up since we acquired it. SITA merging into TCI a lot of subsidiaries have gone. We are doing it. The laws in India are so complicated that just to go through this process, we need shareholders’ approval. 

Corporate travel is attracting a lot of attention. How is Thomas Cook approaching this segment? 

The success in running a corporate travel business comes from getting the product and efficiency benefits driven through your back-end. We are not going to change the way a corporate behaves. If you can drive efficiencies, you will make money in this business. We are focusing on building a global network. We recently acquired Kuoni and we now have companies in places like New York, Las Vegas and Miami. We will position people in corporate travel business in these locations not to build new business for us but to handle Indian corporates that are sending more and more people abroad.