Bookings higher by 20%; focus on UK, US: Thomas Cook

This package, which is fetching Thomas cook almost 100 bookings a day is likely to grow business by 15-16 percent, he said.

Below is the edited transcript of Madhavan Menon’s interview with Reema Tendulkar and Sumaira Abidi on CNBC-TV18.

Reema: How has the summer season panned out for Thomas Cook? April, May, June, how will the numbers look? Has it been better than what you were expecting?

A: If I look at the holiday season, honestly, it has been a good season. If we look at our forward bookings, we are about 20 percent up over last year in terms of the passengers that we are shipping out and a lot of the focus is around Europe and the United States, both of which have shown 26 and 19 percent growth.

If I look at the customised travel we are actually seeing a spurt in growth there. We are seeing a 32 percent growth there too. So, the holiday season overall has been good. This is of course balanced with some defects that we have seen in terms of the pricing, the weakening of the euro has seen the average transaction value of each transaction into Europe decline by nearly 20 percent because euro became cheaper and we passed that on down to the customer.

So, absolute numbers may not look as good as this, but we are still looking at positive growth.

Sumaira: You recently acquired Quess Corp which in turn has acquired two companies in Qatar. I think one of them is to cater to HR services. Normally, it has been found that this quarter is very strong in terms of people flying out for new jobs. Can you tell us what was the consideration for this and what might you expect in terms of a revenue contribution from here?

A: Quess came into the Fairfax family two years ago and they have been on an acquisition spree over the last two years to be precise. Over the last year itself they have acquired four companies – Hofincons and three other companies.

The Transfield transaction essentially is buying an existing service in Qatar with the American Company exiting that market. Now, I am not at liberty to share the consideration numbers, but, I can mention that it came at an extremely attractive valuation to us. And essentially what we are doing is extending the services that we provide in India to a variety of industries into the oil and gas industry in Qatar.

Transfield provides people into Qatar gas and other infrastructure projects that the Qatar government has in the pipeline.

Reema: Quess previously has grown by close to about 80 percent. Is that kind of growth sustainable and you told us that the subsidiaries of Quess are likely to turn profitable in this quarter. Is that on track, the profitability of the subsidiaries of Quess?

A: Quess continues to grow in its core businesses and the acquisitions are beginning to turn. So, if you look at Hofincons, it started contributing on day one. Aramark, which is the acquisition that they made in the last quarter, will also start contributing from this quarter.

There are two other subsidiaries, one is MFX, and another operational in Canada which are being turned around as we talk. And both those will start contributing closer towards the end of the third quarter. But I am confident that all these entities will contribute to the profitability this year. I might add that they crossed 100,000 people in the last quarter and their expectations are to continue growing.

Reema: So, Quess will be profitable in this quarter – in this April to June or a little later?

A: Yes. Quess is already profitable and their profits will continue to grow in the current quarter. Some of the acquisitions that they made were profitable at the time of acquisition and have started contributing. There are two subsidiaries, both of which are on the American continent. And I expect that both of them will start contributing later this year.

Sumaira: You also recently launched this service where one can customise short-haul holidays. How does this actually differ from what some of the other competitors might be offering and how does this system work? Is it a fee based system?

A: There are two things that we launched earlier this year. The first one is what we call the ‘Simply Series’ which are to destinations in the Indian Ocean periphery and into South-east Asia where we choose an airline and provide a hotel and we send people out at the lowest possible price.

The other one that we launched is called the holiday savings product where we have joined hands with IndusInd bank and ICICI bank where we allow people to save from their earnings for a 12 months period in the form of a recurring deposit and then we contribute towards 13th installment and at the end of 12 months send them on a holiday. Now, this is something that we innovated and we are currently taking in about 100 bookings a day and we have already crossed the 5,000 packs mark. And my expectation is that in the current year, we will cross something close to about 18,000-20,000 packs just from this business which will grow our business by another 15-16 percent.

Reema: You indicated that despite the forward bookings being robust, because of the euro depreciation, the full impact of that will not be reflected in your financials. So, what will be the impact of currency on the company’s financials?

A: If you look at the euro depreciation at the time it was nearly about 20 percent, things have improved from there but I have been looking at the numbers, and year-to-date, we are seeing our revenues growing at about 19 odd percent. My expectation is that some of that will work itself, some of the costs will continue to work itself as we go forward. In reality, the passenger numbers will grow faster than the absolute values. But I am not too worried. It is not going to go down to signal digit or anything like that. Our values will continue to grow in double digits.