Thomas Cook India paid Rs 14 cr for branding rights for India, Sri Lanka, Mauritius: Madhavan Menon

If we did not acquire the brand liquidators of Thomas Cook UK, somebody could try to enter this market post 2024 using that brand

BCCL
We paid Rs 14 crore to purchase the brand, the logos, the trademark and the domains of Thomas Cook in India, Mauritius and Sri Lanka in perpetuity, says Madhavan Menon, CMD, Thomas Cook India. Excerpts from an interview with ETNOW.

What is the update on Thomas Cook India?
Last night, we signed an agreement with the liquidators of Thomas Cook UK to purchase the brand, the logos, the trademark and the domains of Thomas Cook in India, Mauritius and Sri Lanka in perpetuity. Under a 2012 Agreement, when majority stake in Thomas Cook India was sold to Fairfax Financial Holdings, we had signed a brand licence agreement which essentially required us to pay Rs 2 crore a year till the end of 2024 when this brand licence agreement would cease to exist. Now, this new acquisition of rights will supersede that agreement and we will hold the rights to the brand in perpetuity.

In the liquidation process, you must have got a steal deal?
Well I would say that we got a good deal, the rationale of which was justifiable because between now and the end of 2024 we would have paid approximately Rs 10 crore as brand licence fees whereas we have now paid Rs 14 crore and we have got the use of the brand in perpetuity. In my opinion, this works out extremely well for two simple reasons; the awareness and recall of the Thomas Cook brand that existed in India for the last 138 years is very strong. It throws open many options for using the brand going forward.


Lastly, if we did not acquire the brand, somebody could try to enter this market post 2024 using that brand. So, this was essentially the rationale that we used in acquiring the rights to the brand.

Thomas Cook India customers have had no problems when Thomas Cook Global went bankrupt. but for your inbound tourists, Thomas Cook Global has not been a very pleasant experience. So would acquiring a brand which has gone bankrupt globally, help the inbound tourist business?
Firstly, the brand name Thomas Cook will only be used in our B2C business which is essentially the foreign exchange and outbound business that is domiciled within Thomas Cook India.

As far as the inbound business is concerned, both in India and other countries we use a variety of brands. For example, in India, we use a brand called Sita. In Asia, we use a brand called Asian Trails; in the Middle East, we use a brand called Desert Adventure. We do not use Thomas Cook brand in any of our inbound businesses and we do not intent to do so going forward.
ADVERTISEMENT

2019 has not been a great year for Thomas Cook. One-offs like Jet Airways failure, problems in Sri Lanka, slowdown in consumer spending, have impacted your business. How are things looking this holiday season?
2019 definitely has not been a great year and the biggest impact that we have felt, even more than the failure of Thomas Cook has been the collapse of Cox & Kings. This has resulted in a fair amount of distrust of the industry from the consumers and we have seen booking slowdown.

However, looking at the current season and going into 2020, we are seeing some amount of revival in the bookings. But very honestly, for Summer 2020, it is a bit too early to tell. January-February will be clear indicators of how the bookings will flow in, but we are confident that we will recoup some of the lost ground and strive to beat real numbers for last year.

When a large player in any market shuts down, the existing player always tends to gain market share. But you have lost growth because of the Cox & Kings problems. When do you expect to gain back what you have lost and also gain the market share of Cox & Kings?
We believe that we will witness both these trends in summer of 2020. We will see demand flow back into the market. We will also see the market share of Cox & Kings reappear in the market in some form or the other. My expectation is that summer of 2020 will be good and it is obviously based on early trends in our own bookings as well as the feedback that we are getting from customers. The trend we have seen so far is a short term trend and the timing of the collapse of Cox & Kings actually came in a low season. So, we would not have seen much of an impact as far as the Cox & Kings customers were concerned.

But what we did see the impact was the distrust of the industry because Cox & Kings customers who had paid were suddenly left without a holiday in their hands and that created a dissonance in the market.
ADVERTISEMENT

What will Thomas Cook look like in FY21? I am assuming restructuring would be done and Thomas Cook will be trading independently of Quess. Walk us through the process.
The NCLT approvals are in place and we have determined the record date for this transfer of shares from Thomas Cook to its shareholders as December 6th. The ratio is 18.89 share of Quess for every 100 shares of Thomas Cook. Once this process is complete, the structure of Thomas Cook will look a lot simpler because we have undertaken some restructuring within the Thomas Cook Group. We have moved all our fixed assets and brands from the subsidiary companies into Thomas Cook.

We have also moved the ownership of second level step down that we had created through various acquisitions. All that is being cleaned up. What you are now going to see is the Thomas Cook Group with a whole lot of subsidiary companies which are one step down and that is it. All the ownership will vest with Thomas Cook India. From a stock market point of view, this will clarify a lot of things. It will be far easier to decipher with the exit of Quess from our numbers.
ADVERTISEMENT

What is the right way of looking at Thomas Cook – a company which has incubated a lot of businesses or a company which has subsidiaries but is still a pure play on travel?
Thomas Cook is essentially a play on travel with a whole lot of outbound tour operating businesses, corporate related businesses like incentives as well as corporate travel management, foreign exchange related to travel and inbound business. Additionally, we have got two businesses which are adjoining and are related to the travel industry – one being Sterling Holiday Resorts and the other being DEI which essentially services photography in tourist locations around the world. I would now call us an integrated travel and travel services company with the excursion of Quess.

Globally travel companies have become platform companies and they are getting incubated by PE funding and cheap global liquidity. How do you plan to compete in this kind of an environment?
As far as the outbound businesses are concerned, nearly 30% of all the package holidays that we sell are online. We expect this to grow as we go forward. We are introducing a lot of technology that will enable us to compete with the so called platforms that you referred to. As far as our global businesses are concerned, they are in the B2B space and here also we are introducing new technology which will enable the aggregator based in source markets to directly source prices, packages, hotel rooms from our existing destination management companies seamlessly online.

We are gearing ourselves up to compete with all the various platforms that exist. What we have witnessed in the outbound business is that while the online tour operators are trying to sell some of the packaged holidays that we sell, it is our core strength and we are far better equipped to compete with them in that space.

Are you reasonably confident of a business revival in 2020 or are you cautiously optimistic?
My experience is in running businesses and I am optimistic. And this is based on several factors; I believe that the worst news on the slowdown is already over and people are beginning to see green shoots at the other end.

Secondly, the collapse of a large competitor is going to result in their businesses coming back into the market. My expectation is that 2020 will be a good year. FY21 will be better than FY20 and we are looking forward to it. We are gearing up in every possible form to ensure that our tour operating business out of India, under both SOTC and Thomas Cook, are ready for the season.

As far as our inbound businesses around the world are concerned, where it is a B2B business, I expect to see a stable environment in those businesses also. As far as DEI is concerned, they have several new contracts that are coming in during 2020-2021 and we could expect the revenues to increase. Lastly, I expect Sterling to continue improving as we go forward.
ADVERTISEMENT
READ MORE

READ MORE:

LOGIN & CLAIM

50 TIMESPOINTS

Related Companies

More from our Partners

Loading next story
Text Size:AAA
Success
This article has been saved

*

+