Home >companies >Thomas Cook to consolidate Kuoni Group’s travel business

Mumbai: Tour operator Thomas Cook (India) Ltd is consolidating the travel business of Kuoni Group in India six months after acquiring it.

Under the new structure, Kuoni India Ltd will be renamed SOTC Travels (India) Ltd while the brand Kuoni will cease to exist by December.

Thomas Cook acquired Kuoni Travel (India) Pvt. Ltd, a travel operator in India, and Kuoni Travel (China) Ltd, a premium travel operator in Hong Kong, last year.

As part of the consolidation, Kuoni’s inbound travel businesses SITA Travels and destination management business Domestic Frontiers will be de-merged from Kuoni India and merged into Thomas Cook’s unit Travel Corp. (India) Ltd.

The third and main travel business—Thomas Cook (India)—will continue to compete with SOTC in the market.

Madhavan Menon, chairman and managing director of Thomas Cook, said the company has decided not to integrate the SOTC with itself even though the licence of using the brand Thomas Cook will expire by 2025.

“We are choosing a safer bet by not integrating two brands. However, we will be sharing non-customer facing services such as human resources, IT, legal, administration, media buying and airline buying with Kuoni to derive synergies," Menon said.

He said Thomas Cook and Kuoni will compete in product development, pricing, sales and other aspects as two separate entities.

Kuoni Travel Group India managing director Vishal Suri said the company is in the process of de-risking the business and transitioning into a new SOTC brand.

Suri said the brand Kuoni will cease to exist from December.

“An independent board would be running SOTC and it will continue to run its business independently. The pricing and products would be different from Thomas Cook," Suri said.

Menon acknowledged that the licence to use the brand Thomas Cook will expire by 2025 and that the firm has not decided whether it should renew the same or use the SOTC brand.

“Nine years is a long time to decide on branding. The Kuoni acquisition has allowed us to use the brand SOTC in perpetuity. However, nothing has been decided as of now," Menon said.

A total of 103,617 tourists arrived in India on e-tourist visas in December, compared with 14,083 during December 2014, registering a growth of 635.8%, the ministry of tourism said on 14 January. The UK continues to occupy top slot followed by the US and the Russian Federation among countries using the e-tourist visa facility.

Menon said the outlook for the travel industry for both domestic and international is positive despite slowing economies across the world.

Thomas Cook is promoted by Fairfax Financial Holdings Ltd through its wholly-owned subsidiary, Fairbridge Capital (Mauritius) Ltd and its controlled affiliates.

A travel consultant requesting anonymity said Thomas Cook is nurturing a new brand SOTC as it facing the expiry of its brand by 2025.

“However, it is not a wise decision not to integrate SOTC with Thomas Cook for the simple reason that a customer will get similar travel products from both Thomas Cook and SOTC. It will lead to cannibalization," he said.

He added that while companies are buying rivals to grow and integrate, in this case customers are being given more options, which may lead to undercutting of prices.

Thomas Cook’s Menon said any business decision is fraught with risk and it up to the management to take risk-mitigation measures.

In 2014, Thomas Cook acquired vacation ownership firm Sterling Holiday Resorts (India) Ltd in a 870 crore part-equity, part-cash deal structured as a multi-stage process.

However, it maintained Sterling as an independent entity.

Menon said Fairfax Financial is giving Thomas Cook a free hand to run its business and that Thomas Cook in turn will allow SOTC to be run independently.

He said the necessary management changes have been made to run all three businesses independently.

Deepak Deva has given charge of Travel Corp. (India) and Suri was given the charge of SOTC this month.

Since 1 January, Menon was redesignated by Fairfax as chairman and managing director.

Menon said Thomas Cook has only around 200 crore debt post the acquisition of Kuoni.

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