Interview: Madhavan Menon, MD, Thomas Cook India

‘Domestic tourism will be a major growth driver’

Thomas Cook at a standalone level had broken even.
By the end of FY23, we expect to be profitable at a reported level (profit before tax) both at the standalone and group level.

The travel and tourism industry is looking at its best year since the pandemic hit, though high jet fuel prices and vaccine-related curbs continue to rankle. Here, Madhavan Menon, managing director, Thomas Cook India, talks to Christina Moniz about the rebound in travel and tourism, the factors driving growth and how the company is adapting to the new normal. Excerpts:

Given the strong rebound in Thomas Cook’s financial results for the quarter ended March 31, 2022, how long will it take for the company to reach pre-Covid levels?

We became profitable at an operating level by the fourth quarter of FY22. In fact, in the third quarter of FY22 itself, the Group’s operating EBIDTA was `20.1 crore and Thomas Cook at a standalone level had broken even. By the end of FY23, we expect to be profitable at a reported level (profit before tax) both at the standalone and group level. The tourism industry too will follow the same trajectory. Our foreign exchange business is already profitable, despite having reached only 63% of the pre-Covid levels. Corporate travel is at 104% of pre-Covid numbers and it is already profitable. The third business, which is domestic holidays, is running at 119% over pre-Covid numbers and has been profitable for some time now. The two laggards are international holidays (since international borders have only been recently opened) and the incentive business. By the end of the September quarter, we will be profitable in both of these.

The pandemic years have undoubtedly been challenging for the sector and your company, too. What were some of the shifts you made to adapt during this time?

One of the key learnings during the pandemic years was that you can run organisations fairly slim in size, provided you have enough adoption of technology. We clearly had to right-size the organisation, from a survival standpoint. We reduced the organisation’s size by 33%, and therefore had to upgrade our technology across the board to compensate for the vacuum in staff. During the pandemic, the profile and expectations of our consumers had changed. Our products, therefore, had to become flexible, and we created an omnichannel environment for the consumer. We had to enable easy cancellations, and ensure high standards of hygiene and safety. In the past, when customers came to us, we sold them what we thought was correct. We are far more customer focussed today than we ever were in the past, and customised offerings form the bulk of our business.

Given the restrictions around international travel during the pandemic, how big a contributor is domestic travel to your business currently?

As of March 2022, the bulk of our business was domestic and the other part, which is 20%-30%, came from travel to the Maldives. We never sold the Maldives as a destination before Covid-19, but when it opened up last year, we became the largest seller of Maldives in India between SOTC and Thomas Cook. We also became the largest bookings provider for Cordelia Cruises. We capitalised on domestic travel during these past two years, especially on locations like Kashmir, Ladakh, the Andamans, Goa and Kerala. Before the pandemic, international travel contributed the bulk of our revenues, but now domestic travel will continue to be a major contributor to our sales and revenues. In sheer passenger terms, I expect the numbers to even out and become 50-50 for both domestic and international travel. Revenue volumes from international travel of course are higher since air fares are higher.

What kind of business do you see coming from non-metro cities and tier-II, III and IV markets?

We have seen a lot of interest from tier-II, III and IV markets and the fact that we have call centres and online booking options available now has helped us in making an impact in these regions. Prior to the pandemic, we advertised only in English and occasionally in Hindi. We have begun to advertise in multiple languages and while I don’t have market-specific data, the number of travellers from these markets has definitely increased dramatically. The fact that consumers haven’t travelled for these two years also means that they now have higher savings and are willing to spend on travel. My expectation is that though the costs of travel will be higher this year, pricing will stabilise by next year and demand will exceed supply.

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