FCm Travel Solutions in buyout talks with regional players

NEW DELHI: After leisure travel, it’s the corporate travel industry that is set to enter the consolidation phase. Corporate travel major FCm Travel Solutions is scouting for a regional player.

Meanwhile, as per industry sources, corporate travel biggies, such as Carlson Wagonlit and Amex, are busy bidding for Hogg Robinson Sita (HRG Sita), a business travel subsidiary of Kuoni India, which was put on the block last month.

FCm Travel Solutions, a wholly-owned Indian subsidiary of Flight Centre, is looking at acquiring a regional business travel company.

“We are in talks with five corporate travel players with a turnover in the range of Rs 700-800 crore. The deal will be funded by the parent company, Flight Centre,” Rahul Nath, managing director (India and Middle East), FCm Travel Solutions told ET.

He added that the turnover projected for the company for the year ending this fiscal is Rs 1,600 crore, a 40% growth over last fiscal. It has 900 corporate clients in India. Flight Centre, listed on the Australian Stock Exchange, had a turnover of $11 billion in year ended June 2007.

With margins squeezing and pressure from the airlines to cut commissions, which currently hover around 5%, corporate travel will become a ‘business of volume’ leading to the consolidation of the industry. “In 12 months, corporate travel industry will consolidate,” says Nath.

Carlson Wagonlit director of sales (global accounts) Sumit Singh Bisht adds, “With margins squeezing, it will become a numbers game. Consolidation and restructuring of the industry is bound to happen.” Carlson Wagonlit is open to acquisitions in the Indian market. Carlson Wagonlit India had a turnover of Rs 1,200 crore last year.

The market is also abuzz with the news of sale of Hogg Robinson Sita, which had a turnover of Rs 500 crore last fiscal. The business travel arm of Kuoni India, the country’s biggest tour company, was put on the block last month.

Kuoni India had rebranded the travel division as Hogg Robinson Sita, earlier in 2007, after the $12-billion global business travel company Hogg Robinson bought out Kuoni’s earlier business travel partner BTI. Indian travel companies and global players present in India have bid for the company, according to sources.

The corporate travel industry in India is highly unorganised, like leisure travel industry, with many small and medium size players either servicing very few corporates or SME’s. Though an exact fix on the industry is not available, according to experts, the corporate travel industry is worth Rs 10,000 crore and is registering a 30% YoY growth. Size does matter. And in this space it’s the big and tough ones that will survive.