Aided by acquisitions, Thomas Cook reported a good set of third quarter earnings with net profit of Rs 1.9 crore against a loss of Rs 4 crore in the same quarter last fiscal. Revenue increased 41.7 percent year-on-year (YoY) to Rs 1948 crore.
Speaking to CNBC-TV18, Madhavan Menon, MD, Thomas Cook said the company was affected by demonetisation for a short period and bookings for 2017 summer season is back to normal.
He said there is huge demand for Europe, South-East Asia and Australia while US travel bookings remain weak due to visa concerns.
Below is the verbatim transcript of Madhavan Menon’s interview to Reema Tendulkar and Sonia Shenoy on CNBC-TV18.
Reema: First if you could tell us if there was any impact on account of demonetisation? We understand that perhaps winter bookings that may not have been affected so much because you would have pre-booked it prior to November 8, but what about summer bookings, is that going to be impacted, will the coming quarters look a bit subdued, take us through the impact of demonetisation?
A: Let me answer the various questions you have asked me starting with demonetisation. Like everybody else, we were affected by demonetisation for a short period of time. However, as you very rightly said, a lot of people had booked their holidays for the December quarter in advance of November 8. I will also mention that as we got closer to December, we saw some of these bookings return especially into Asia.
Essentially, we did see some recalibration of the effect as far as bookings were concerned. Now, how did we manage? We did manage the profitability from two point of views -- one, through acquisitions and number two the performance of Quess was outstanding.
Number three was the fact that at Thomas Cook, post demonetisation we actually clamped down on cost in a big way during the two months, November and December. So, we were able to manage our cost significantly even though there was a down turn in revenue which admittedly was only about 6-7 percent. So, we weren’t affected too badly.
As far as summer 2017 is concerned, I must mention the fact that bookings have come back to normalcy. We are now ahead of last year in terms of the number of passengers booked, we are beginning to see a lot of demand for Europe, US still is a question mark given all the scares around visas and immigration, etc.
However, we are seeing a lot of demand in Australia, South East Asia and other market. So, my expectation is that summer, there will be a rebound and that we should expect growth over last year. Now, do I expect 30-40 percent as we would normally report? I don’t think so because people are still adjusting to the process.
Sonia: Can you tell me more about your resort segment itself, what was the kind of member addition that you saw this quarter and what is the expectation?
A: We saw a slowdown in member additions in the October to December period and this was primarily driven post demonetisation. However, what we did see was a growth in our hotel usage in our resorts, so, in terms of occupancy, we moved from about 61 percent to about 67 percent during the quarter.
So, in reality I think that was very good trend that we witnessed and I think that trend continues. We did take some charges, used the quarter to take some charges in sterling to further cleanup that balance sheet. However, I think from a cash point of view, the resort business is making profit.
Reema: Let me come back to the point about summer bookings. You said there will be growth but not at the 30-40 percent that we have gotten used to from Thomas Cook. So, what would be a reasonable growth rate we should expect just this year for your summer bookings?
A: I think given by current trends, our bookings are at about 8 percent over last year, but my expectation is that bookings will pick up over the next two months. We should be in the 12-15 percent range which I think is very reasonable given the uncertainties that prevail -- one, the terrorism issues that Europe faced last year, the visa issues that the US is talking about.
I don’t think it will impact the Indian market, but still the constant flow of stories about immigration, stopping different people, has actually frightened a lot of potential travelers going to the US.