The financial performance of Thomas Cook during the first nine months of FY24 surpassed that during the whole of FY23. The phenomenon of YOLO or you only live once drove business for all travel and airline companies. In an exclusive interaction, Madhavan Menon, executive chairman, Thomas Cook, tells Swaraj Baggonkar that 2024 could be sober in comparison.
There was a threefold rise in consolidated net profit in Q3. Would you attribute this solely to the revenue jump?
All the companies of the group came back to being profitable during the current year. Our 270-basis-point jump in margins was because of high airfares and other factors. During Covid, we reengineered our costs and productivity and that’s how we have been able to keep costs low.
But are there apprehensions about slower growth in the West?
North America business is obstructed because of visa issues. We have seen IT companies, who are our major customers, struggling to send people back because of the slowdown. Since visas in Europe have been easier to get, I see a greater contribution to the top line. I don’t see costs coming down significantly.
FY24 has been a great year for travel; what about FY25?
The FY24 nine-month numbers have already beaten those of the entire FY23. This has been an exceptional year. Next year will be a little more sober. The only reason demand could be a problem in India is if the geopolitical situation closer to India aggravates.
Airlines are frequently offering discounts. Does this indicate a slackness in demand?
These are old marketing techniques. The reality is that the number of seats that is available on such discounted fares are very limited. A lot of domestic purchases are done at the last minute. The bulk of the plane will still carry the higher airfares.
Many countries now have visa-on-arrival for Indians. Will this affect domestic destinations?
Many customers are comparing costs and value between holidays in India and holidays abroad. We will see the full year of visa-on-arrival this year. Thailand, Malaysia, Central Asian countries, eastern Africa are places offering this. The UAE has made the visa process easier. But traditional Indian destinations like Kerala, Rajasthan, Goa, will continue to get good traction.
Do you see the market of YOLO (you only live once) clients dying down in 2024?
Many people view short haul, which is the Indian Ocean periphery and India, as one. People are comparing holiday costs in Kerala with that of Dubai, Abu Dhabi and Bangkok. People are spending money on such holidays two-three times a year, though the cost is generally much higher if done closer to the actual holiday date.
What percentage of Thomas Cook’s revenues comes from corporate clients?
We expect the US market to take off this year and business to come back. Corporate travel makes up 25% of our total business and it is set to grow significantly in 2024.
Sterling Resorts completes 10 years under Thomas Cook. What is the way forward?
There are 44 properties under Sterling Resorts and by March the count will go up to 45, and it will grow significantly because we will add more management contracts. We are going the asset light way. It is the second most profitable company in the group with Ebit margins of 30%. We expect the room capacity to grow by 15%.