'We will launch new products for the domestic market'

With foreign holidays and weekend breaks becoming an integral part of Indian lifestyle, the travel industry is at a gallop. Thomas Cook India Ltd���s 68% growth in profit after tax for the calendar year 2007 reflects the boom in the industry. Thomas Cook India managing director Madhavan Menon spoke about company���s growth, trends in the travel market, the impact of the global economic slowdown and much else. Excerpts

Thomas Cook India recently witnessed change in its shareholders, with Dubai Financial Group exiting the board and Thomas Cook UK (TCUK) buying back 54.42% stake in the company. What does this mean for your business?

While Dubai Financial Group was a financial investor, TCUK is a strategic investor. Thomas Cook India will now be gradually integrated in their network. The parent company (TCUK) will give us know how, which will go a long way in improving standards. We will be expanding from 14 to 40 branches in the next one year. At present, we have 25 franchisee outlets and are looking at (upping it to) 40 by the end of the year.

Your positioning has been little blurred ��� how do you want to be perceived, as a foreign exchange player or a tour operator?

(Laughs) Older generation perceives us as a forex player and younger generation as a travel player. If you look at the mix of our profit before tax, 60% comes from foreign exchange and around 40% from travel-related services. The holiday segment, though, is registering a faster growth and we see this mix changing. Of our travel pie, 40% is corporate and 60% is leisure travel (inbound, outbound and domestic). Outbound tourism is growing at 25% per annum in the country, we want to achieve growth rate higher than that.

And how do you plan to punch above industry average growth?

To register a healthy growth two things are very important. First is the product offering. We have realised that it is very important to be present at all price points. Therefore, one should offer budget and mid-market packages, too, and not just premium products. Secondly, we focus a lot on service quality. Ours is a business dependent on word-of-mouth. In fact, word of mouth is so important that we have a head of service quality who looks into all the complaints and makes sure that all consumer complaints are responded. Also, we are investing in training staff so that they can communicate effectively with customers. Advertising alone doesn���t help in our business if the right message is not communicated through word of mouth.

Travel business is dependent on employees who represent your brand. We hear a lot about (competitor���s) Kuoni Travel Academy. What is Thomas Cook doing to train freshers?

We have Thomas Cook Centre for Learning. We train people only to improve quality of manpower and create a pipeline for us. It is not a branding initiative at all, the way other travel majors are doing it.

How do you want to position yourself in the holiday segment?

At present, our revenue that comes from selling domestic holiday packages is negligible. When we acquired TCI last year, we realised there is a huge market for domestic tourism. Thomas Cook is perceived by most travellers as an expensive travel operator, mainly dealing in foreign holidays. We want to change that perception. We will be focusing on domestic tourism, launching many new domestic products. Last one year has seen many changes in the domestic tourism segment. As more hotel rooms are being built and low-cost airlines are connecting many new smaller cities, domestic tourism sector is registering a strong growth. Regional airlines will further boost domestic tourism. There has been a gradual shift from VFIR (visiting friends and relatives) and pilgrimage tourism towards short-weekend trips.

Travel industry in India is largely unorganised. Do you see mom-and-pop shops disappearing and consolidation happening in the near future?

There are no entry barriers in this business. Therefore, the unorganised sector is growing as rapidly as the organised. Indian consumer doesn���t realise that organised players give better deals, as there are less intermediaries involved in organised travel business as compared to the unorganised. However, the division is becoming increasingly stark between neighbourhood agents, regional players and national majors. And I must add that awareness regarding brands is increasing as India is opening up. I would love to see consolidation happening in the industry, but I don���t think major acquisitions will happen soon. If good opportunity comes our way, then we might look at acquiring a smaller player. Though, at present, we are still busy integrating LKP Forex and TCI with our travel company.

Offline travel portals are eyeing the online space too, just like online opened offline channels last year. What are Thomas Cook���s plans?

We will be initially launching a B2B portal, which our franchisees, agents and employees can use. This will help reduce cost per transaction. We will be doing a soft launch of the portal, without much advertising, soon. In India everything is a mix of online and offline. Due to RBI regulations forex can���t be sold online. Travel portals are grappling with an important question ��� whether they be a pure online player? Many travel portals have already started opening shops. We will see more of that happening.

Many travel operators, including travel portals, are opening shops in malls.

In malls rents are very high. Therefore, it doesn���t really make economic sense. But if some correction in real estate prices happens, then, yes, a great opportunity lies in the retail sector.

Do you think the US recession will slowdown the Indian travel industry?

We haven���t seen any signs of slowdown yet. It will be difficult at this point of time to say whether this is a short-term recession or a slowdown. Till now, our holiday business or forex business has not been impacted. Also, our projection for growth this fiscal remains intact.

Travel is quite susceptible to global phenomenon and even money markets. Last year, rupee appreciation spoiled the party.

Yes, last year rupee appreciation impacted us. Volumes decreased by around 15%. Thomas Cook India was not hit very badly as we did hedging. But we also saw an opportunity in rupee appreciation. We imported currency last year to meet shortages. There are 23 other currencies which one can import, depending on the demand and supply. We are creating currency chests, making currency available at places where there is shortage (on the lines of RBI and SBI).