 "With Kuoni, we'll explore opportunities in China: Madhavan Menon")
Thomas Cook India will explore opportunities to enter China and other Asian markets, managing director Madhavan Menon tells Aneesh Phadnis in an e-mail interview. On Friday, Thomas Cook announced the acquisition of Swiss tour operator Kuoni's business in India and Hong Kong for Rs 535 crore. Kuoni India's inbound travel arm, Sita Travels, is said to be the top company in the space in India. Edited excerpts:
Would Thomas Cook have acquired Kuoni's business in India had the Switzerland-based group stuck to its initial plan to not sell the destination management business?
Kuoni offered us their India travel businesses as a combined entity and this included their inbound, outbound, business travel, meeting-incentive segment and domestic verticals. These are valuable segments for us and offer strong synergies and benefits. In addition, the SOTC brand (Kuoni's outbound tour brand) has a strong customer connect with the Indian consumer and this, too, was an important consideration for us. We are allowed to use our Thomas Cook brand till 2025 and, hence, SOTC gives us significant opportunity in our brand transition strategy as well.
Kuoni's inbound business was a key element in our acquisition and certainly of strong value, given our focus on this sector via our inbound subsidiary Travel Corporation (India). Prime Minister Narendra Modi's pro-tourism intent and delivery, electronic visas and its extension to include greater catchments of inbound source markets, augurs very well for us and will certainly give a much needed fillip to this yet underleveraged sector. We are very bullish about Incredible India and the inbound segment.
How significant is the acquisition of Kuoni's business in Hong Kong? Are you exploring the China opportunity?
Kuoni Hong Kong is a profitable business already and is predominantly in the premium packaged holidays outbound business. It holds strong significance and opportune potential for us as it is positioned at the door step of China and we will certainly explore (opportunities). We have just acquired Luxe Asia that operates in the Sri Lankan market. This reiterates our interest in the bigger Asian market potential and we will certainly pursue opportunities as and when they come our way.
How would you drive synergies between tour operating divisions of both the companies, as there would be a product overlap and both will compete for the same pie of travel traffic?
We have strong business synergies that we plan to leverage for both Kuoni and Thomas Cook India. Our customer portfolio will also see entry of viable new industry sectors, courtesy Kuoni's business and meeting and incentive tour segments.
What will be the governance structure at Kuoni after acquisition?
Kuoni India and Hong Kong will be a wholly-owned subsidiary of Thomas Cook. The Fairfax philosophy (Thomas Cook is owned by Fairfax) gives strong focus to independent management structures for the companies that it acquires. All our companies are board-run structures from a governance perspective and this will continue. So, the driving factors for us will be governance, ethics and integrity and running a good business.
By when do you expect to conclude the transaction? Regulatory approvals are required from which authorities?
We hope to see completion of the transaction by the end of this year, post all regulatory requirements being concluded.
Would Thomas Cook have acquired Kuoni's business in India had the Switzerland-based group stuck to its initial plan to not sell the destination management business?
Kuoni offered us their India travel businesses as a combined entity and this included their inbound, outbound, business travel, meeting-incentive segment and domestic verticals. These are valuable segments for us and offer strong synergies and benefits. In addition, the SOTC brand (Kuoni's outbound tour brand) has a strong customer connect with the Indian consumer and this, too, was an important consideration for us. We are allowed to use our Thomas Cook brand till 2025 and, hence, SOTC gives us significant opportunity in our brand transition strategy as well.
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Was the acquisition of Sita Travels the main driver behind Thomas Cook's decision to purchase the India business of Kuoni?
Kuoni's inbound business was a key element in our acquisition and certainly of strong value, given our focus on this sector via our inbound subsidiary Travel Corporation (India). Prime Minister Narendra Modi's pro-tourism intent and delivery, electronic visas and its extension to include greater catchments of inbound source markets, augurs very well for us and will certainly give a much needed fillip to this yet underleveraged sector. We are very bullish about Incredible India and the inbound segment.
How significant is the acquisition of Kuoni's business in Hong Kong? Are you exploring the China opportunity?
Kuoni Hong Kong is a profitable business already and is predominantly in the premium packaged holidays outbound business. It holds strong significance and opportune potential for us as it is positioned at the door step of China and we will certainly explore (opportunities). We have just acquired Luxe Asia that operates in the Sri Lankan market. This reiterates our interest in the bigger Asian market potential and we will certainly pursue opportunities as and when they come our way.
How would you drive synergies between tour operating divisions of both the companies, as there would be a product overlap and both will compete for the same pie of travel traffic?
We have strong business synergies that we plan to leverage for both Kuoni and Thomas Cook India. Our customer portfolio will also see entry of viable new industry sectors, courtesy Kuoni's business and meeting and incentive tour segments.
What will be the governance structure at Kuoni after acquisition?
Kuoni India and Hong Kong will be a wholly-owned subsidiary of Thomas Cook. The Fairfax philosophy (Thomas Cook is owned by Fairfax) gives strong focus to independent management structures for the companies that it acquires. All our companies are board-run structures from a governance perspective and this will continue. So, the driving factors for us will be governance, ethics and integrity and running a good business.
By when do you expect to conclude the transaction? Regulatory approvals are required from which authorities?
We hope to see completion of the transaction by the end of this year, post all regulatory requirements being concluded.