Business Standard

Thomas Cook fires with Kuoni power

With its recent acquisitions, Thomas Cook is positioning itself as a leading inbound travel brand and expanding its forex business

Thomas Cook fires with Kuoni power

Kalpana Pathak Mumbai
The country's oldest travel operator is rebuilding its brand. With two acquisitions over the past year and a half, an increasing focus on its digital business and a strategy to target emerging segments such as the elderly and school children in the country, Thomas Cook India is hoping to ride the great Indian travel juggernaut, which according to the World Tourism and Travel Council contributed over Rs 7 trillion to the Indian economy in 2014. Besides, the travel and tourism industry is expected to grow by 7.5 per cent in 2015, over the previous year.

Thomas Cook has been on a brand buying spree; it bought over Indian time-share and holiday resorts company Sterling Holidays in February last year and a few weeks ago, signed off on its purchase of Kuoni's India and Hong Kong businesses. This acquisition arms it with perpetual use of the SOTC brand (including SITA) in India; the Kuoni brand in India for a year, and in Hong Kong for five years. (The India and Hong Kong deals are pending regulatory approvals.)
 
PASSAGE TO INDIA
  • Purchased Kuoni’s  brands: SOTC and Sita  for packaged travel
  • Owns time-share firm Sterling Holidays’ India resorts
  • Strategy to target elderly, students and women travellers in the country

'These brands enjoy a high recall and strong consumer connect. Given that we have the Thomas Cook brand till 2025, SOTC gives us significant opportunity for our brand transition strategy,' says Madhavan Menon, managing director, Thomas Cook India. The company says that it does not plan to tinker with the Kuoni brand and will use it sans any change.

Gaining currency
Thomas Cook began its journey in India in 1881 as a forex company and, over the years, expanded into travel and tourism. The recent acquisition of Kuoni will not only cement its position in the travel market but is expected to strengthen its forex arm. Industry players said that Thomas Cook would gain close to Rs 1000-1500 crore a year on account of Kuoni.

'Foreign exchange is core to our identity and we've moved from the traditional forex player to a payment solutions provider,' says Menon. During 2014-15 forex volumes grew by 17 per cent. Foreign exchange earnings in rupee terms grew by 12 per cent in 2014 as against 14 per cent in 2013. The Kuoni buy will add significant value to both travel and forex businesses say competitors.

Packaged wanderlust For Thomas Cook inbound tourism grew by 10.6 per cent in 2014, as against 6 per cent in 2013 and 4 per cent in 2012. SOTC's stronghold in the inbound travel business will be a bonus as it expands the domestic pie.

'SOTC Kuoni brand will be a big help on all fronts. SOTC is a popular brand in group tours so Thomas Cook stands to gain directly from that segment. Kuoni is a high-end brand and post keeping it for a year, Thomas Cook will be able to acquire its customers,' says Ashwini Kakkar, executive vice chairman, Mercury Travels.

This is a segment where Thomas Cook already has a blue ocean strategy. Its focus is to tap strongly emerging segments like Middle India, Gen Y with the student segment and the woman traveller.

To cater to the student segment, it has branded its travel and learn business as a 'travel quest'. It offers this as a package to schools and adds on a travel quiz to the mix for those who are interested. The company is spending Rs 2-2.5 crore on media alone and around Rs 5 crore on organising the quiz programme. It expects to grow around 200-300 per cent in this segment going forward, albeit on a low base.

'We really had not focused on this segment in a big way, but we have seen that this business is booming and there are very few large organised players offering products in this space,' Abraham Alapatt, head marketing & customer service at Thomas Cook India had earlier told Business Standard. This year it also launched the concept of a holiday savings account with partners including Indus Ind, ICICI and Kotak Bank.

With Kuoni's SOTC traffic, the company's inbound business is bound to grow. According to Kakkar, 'it (Kuoni) will lead to direct acquisition of customers for Thomas Cook and also inbound has the highest margin (in double digits) among all travel segments.'

Riding the e-way
Thomas Cook is betting big on digital initiatives. To begin with it is focusing on its portal, which Menon says, "is a one-stop-online-shop and key to our hybrid clicks+bricks focus. The company also has a foreign exchange app, underway. Its 2014-15 annual report says that it is the only company in India and the first non-banking entity to have an online forex store. Also its online business volumes have increased by 296 per cent over last year.

In the works, is a concerted push into the Asian market. 'We've already taken the first step with Luxe Asia in Sri Lanka and now Kuoni Hong Kong is positioned at the door step of China,' says Menon. Thomas Cook India is getting ready to ride the big travel wave that seems to have engulfed Indians of all ages.

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First Published: Aug 31 2015 | 9:40 PM IST

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