'India is a unique market for us'
Fidelity is certainly a strong suit with Manny Fontenla-Novoa, global CEO of Thomas Cook plc. The 54-year old Fontenla is an out and out Cook’s man, having joined the company at the age of 18 as an accountant.
By Cuckoo Paul, |
| Manny Fontenla-Novoa, global CEO of Thomas Cook plc |
Fidelity is certainly a strong suit with Manny Fontenla-Novoa, global CEO of Thomas Cook plc. The 54-year old Fontenla is an out and out Cook���s man, having joined the company at the age of 18 as an accountant. The travel major has made a comeback of sorts after its merger with MyTravel group, almost a year ago. The deal catapulted it on to the European travel hustings, giving it the much needed scale and size. One fallout was felt in India, where Thomas Cook plc did a volte face in March to buy back Thomas Cook India (TCIL) from the Dubai Financial Group. In an interview Fontenla-Novoa outlines the new frontiers for the brand that began its journey over 125 years ago.
Can you explain why Thomas Cook plc has bought back the Indian venture from the Dubai Financial Group, after selling it two years ago.
Things changed in the two years. It was almost like meeting all over again. We have turned around the UK company and are now much bigger. There were four similar-sized players earlier with the same market share, now we are down to two. We are a different organisation now, our balance sheet is much stronger. Margins are almost double that of last year.
Our strategy was to enter three large emerging markets in India, Russia and China. TCIL was an obvious choice for us, we knew the brand and the company. As far as the selling price ($254 million) and the reacquisition is concerned ($320-$383 million), it is not really very different, because the multiples were almost the same. If they weren���t the city (London) would have never forgiven me.
The Indian economy too has also grown substantially since we sold out and TCIL has changed substantially. What are your plans for Thomas Cook India?
What are the really big challenges to the travel industry now? Will environmental consciousness, especially of carbon emissions by airlines, inhibit growth?
The biggest question mark now is about the global recession - how deep will it be and how long will it last? The other issue is that of oil prices. With a barrel of crude oil now selling at $120, which was around $70 a year ago and $50 the year before. This and the food crisis are the real issues.
The impact of the airline industry on greenhouse gases has been grossly exaggerated. The air transport business accounts for less than 1% of carbon output in the world. But it is being used to levy carbon taxes. Not one government that is collecting money in the name of these taxes is using the money for green measures.
Do you see a slowdown in travel demand?
In the UK, summer ���09 is already on sale and we are 25% up on last year. Of course we don���t have a major presence in the United States where most of the problems seem to be. But we are big in Canada and the market there is simply booming.
What about the forex market, how core is that to your business now?
Foreign exchange is still a very large business for us and we have been in it for about a hundred years now. We have a 50% market in forex in India and about 20% in the UK. We plan to expand to other regions using these two footholds. The airport business is key to this, though margins are thin we can make good money on volumes. Our infrastructure costs are very low and we can gear up quickly.
But the forex market is changing rapidly. Traditional products like travellers cheques are being replaced slowly by others like pre-paid cards, which can be loaded with foreign currency. The dynamics of different markets are completely different. Some have more government control and strict licences. We have to vary our model depending on the market.
After the UK-based Thomas Cook Group sold its Indian arm Thomas Cook India to Dubai Financial Group (DFG) in 2006, it���s now buying back the same. The UK entity is acquiring up to 74.9% of the public-listed Thomas Cook India would make an aggregate profit of a maximum of Rs 538 crore or $135 million.
Can you explain why Thomas Cook plc has bought back the Indian venture from the Dubai Financial Group, after selling it two years ago.
Things changed in the two years. It was almost like meeting all over again. We have turned around the UK company and are now much bigger. There were four similar-sized players earlier with the same market share, now we are down to two. We are a different organisation now, our balance sheet is much stronger. Margins are almost double that of last year.
Our strategy was to enter three large emerging markets in India, Russia and China. TCIL was an obvious choice for us, we knew the brand and the company. As far as the selling price ($254 million) and the reacquisition is concerned ($320-$383 million), it is not really very different, because the multiples were almost the same. If they weren���t the city (London) would have never forgiven me.
The Indian economy too has also grown substantially since we sold out and TCIL has changed substantially. What are your plans for Thomas Cook India?
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We operate in about 13 countries, yet India is a unique market for us. We want to use the talent in this country to expand to other regions like Pakistan and other Commonwealth countries. We cannot expand to these places from the UK, it���s too far away. Most of our growth will now be organic, we are not planning any more acquisitions. In India it���s the staking stock period. We���ve got to digest all these deals that we did.What are the really big challenges to the travel industry now? Will environmental consciousness, especially of carbon emissions by airlines, inhibit growth?
The biggest question mark now is about the global recession - how deep will it be and how long will it last? The other issue is that of oil prices. With a barrel of crude oil now selling at $120, which was around $70 a year ago and $50 the year before. This and the food crisis are the real issues.
The impact of the airline industry on greenhouse gases has been grossly exaggerated. The air transport business accounts for less than 1% of carbon output in the world. But it is being used to levy carbon taxes. Not one government that is collecting money in the name of these taxes is using the money for green measures.
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We are a responsible company and are cutting down emissions and encourage recycling and other measures. But we need to differentiate between emotion and fact on this one. Fortunately, we are not aware of a single customer who has been influenced by the greens on holiday destinations.Do you see a slowdown in travel demand?
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There has been absolutely no fall in travel spend across the markets we operate in. We are present in 19 countries and we are either up or on the same level as last year in all of them. In fact, we have lesser stock to sell than last year. In the UK, summer ���09 is already on sale and we are 25% up on last year. Of course we don���t have a major presence in the United States where most of the problems seem to be. But we are big in Canada and the market there is simply booming.
What about the forex market, how core is that to your business now?
Foreign exchange is still a very large business for us and we have been in it for about a hundred years now. We have a 50% market in forex in India and about 20% in the UK. We plan to expand to other regions using these two footholds. The airport business is key to this, though margins are thin we can make good money on volumes. Our infrastructure costs are very low and we can gear up quickly.
But the forex market is changing rapidly. Traditional products like travellers cheques are being replaced slowly by others like pre-paid cards, which can be loaded with foreign currency. The dynamics of different markets are completely different. Some have more government control and strict licences. We have to vary our model depending on the market.
After the UK-based Thomas Cook Group sold its Indian arm Thomas Cook India to Dubai Financial Group (DFG) in 2006, it���s now buying back the same. The UK entity is acquiring up to 74.9% of the public-listed Thomas Cook India would make an aggregate profit of a maximum of Rs 538 crore or $135 million.
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