From the staid, laid back approach to an aggressive player in the forex travel market, Thomas Cook's conservative image has undergone a transformation in the past couple of years. Earlier the company was complacent as it was a dominant player in both the wholesale and retail foreign exchange (forex) market. However, with increase in competition with the entry of full fledged money changers in the early 90's this changed .
In the mid 90's Thomas Cook India Ltd (TCIL) took a relook at its business focus. As per the recommendations of its consultant Arthur D. Little, the company's operations were divided into separate SBUs: forex, corporate travel, leisure inbound and leisure outbound. They recommended that the main business should continue to be forex. However the company felt the need to become more aggressive on the leisure travel segment, due to growth potential of tourism from and to India.
The company's focussed entry into leisure market has made it a visible player on the inbound and outbound travel market. Earlier TCIL concentrated more on travel management services and took care of the travel needs of many top blue chip corporate clients. As a result the company's revenues from leisure travel business has gone up from 6 percent of turnover in 1996 to 11 percent in 1999.
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As part of this plan to become a large player on the leisure travel front, it has been spending aggressively on advertising and marketing to expand its clients base and reach. TCIL has definitely become more visible from its aggressive advertisement campaign. TCIL's expenditure on advertising and promotion has gone up from 9.1 percent of total operating costs in CY96 to 15.8 percent in CY2000.
As part of the same strategy the company has focussed on expanding its retail presence and has added five new branches in the past year taking its network to 49 branches in 15 cities currently. TCIL has been able to leverage on its presence and experience in the travel industry in introducing new products to cater to the needs of its customers. Some of the value added products of TCIL are Euro traveler's cheques, "Money Gram" which enables money to be transferred to India has been launched in the UAE, global services card for the outbound traveler, global credit card in tie up with Standard Chartered Bank.
Besides this the company has also spend large amounts on technology to keep pace with the need of providing efficient services to its customers. In 1999 it implemented SAP and was one of the first few travel services company in the world to do so. TCIL has its own website and through this customers will be able to make bookings online. This would lead to lower costs for the company in future as it aims to provide the entire gamut of travel related services in the most efficient manner.
The share of the forex business as a percentage of the company's sales has come down due to higher competition and the company's focus towards leisure travel. One of the reason's for this aggressive stance by the top management as it aims to convert the company into a "international standard one stop travel shop".
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In its leisure travel business, the company's stance has changed and it no longer caters only to the premium end of the market. It now provides "value" tours with the aim of expanding its client reach, as it realises that the growth lies in tapping the growing Indian middle class consumer. Commissions in this segment vary between 10 - 15 percent. Though TCIL was a late entrant in the tours market and faced competition from SOTC, TCI and Sita, it managed to find a place for itself through its competitive pricing strategy. TCIL's advantage as compared to smaller travel agencies is that it takes care of both travel needs as well as forex needs of its customers though at a higher price.
As part of its growth strategy, Thomas Cook has been on the acquisition prowl for quite sometime as it wants to strengthen its presence in the inbound travel market. In future it plans to grow its business by continuously introducing new products and by geographic expansion. Its other plans include areas like global services and tele-direct, insurance, e-commerce, call centres and credit cards.
Its parent Thomas Cook Holdings Ltd's shareholding structure has changed and it currently has three shareholders. These are Preussag AG holding with a 51 percent stake, Westdeutsche Landesbank with a 27.9 percent and Carlson Companies Inc. holding 22 percent. Preussag a large European tourism player and Carlson Companies a leader in hospitality services will provide a platform for growth to TCIL's tourism business like expanding its presence to the SAARC region. This will be done through investments by TCIL in Mauritius and it will benefit from tourism opportunities here as well as tax incentives.
The future looks bright for TCIL, as the tourism industry is a fast growing one. With an aggressive and professional management at the forefront, strong support from its international parent, sound financials, aggressive business plans, strong business franchise, widespread network and the right experience it is well positioned to grab a lion's share of the growing travel and tourism industry in India.