Which are the new focus areas for Kuoni India?
Kuoni is in leisure travel and handles B2C (groups and FIT) and B2B (MICE). Then we have business travel in which we are among the top three in terms of size. In B2B we are the largest in leisure, in B2C we are almost the top in groups and in FIT we have some way to go. We are trying to consolidate our position in the groups market – a lot of differentiated products, high quality hotels, etc. Our distribution width is being expanded, we are increasing our number of shops in India, adding new locations like Gurgaon, Jaipur, Surat, and appointing many franchisees. We have 250 points of sale. There is a lot of demand in tier II and tier III cities. We know that in 2012 there was an issue in terms of high cost (because of rupee depreciation, service tax, high airfare), but we believe that 2013 will be a lot better. We see the growth of the economy, the stock market being 25 per cent up, I think we will see a good 2013.
We are banking on the affordability plank for 2013 to capture the aspirations of all our clients, specially the first time traveller and also the more refined traveller, which is the FIT segment. We have put a lot of automation systems in place which will help us to take care of customers without too much back and forth between our head office and the frontline. The systems empower the person to actually handle the client on their own.
There is a lot of synergy between the divisions now and we expect this to roll out incremental business for us. We are trying to leverage the database of corporate travel (which is huge) for the leisure division.
You are talking about the tier II and tier III markets, while your tours are known to be premium, so are you planning to enter the mass market segment ?
We cater to all segments of the market. We have cost savers, budget tours and luxury tours. It all depends on what kind of buying power you have. We believe that at the price point we offer the products are such that we offer quality products at that price. For us any customer who comes is welcome. Our price points are such that a person can come at a very low rate but can upgrade himself to a higher category hotel or a more luxurious tour should he so want. Segmentation has been done very carefully to cover the breadth of the market.
For smaller towns and cities do you have a differentiated marketing strategy or more localised promotional activities?
We do a lot of roadshows with tourism organisations and popularise a destination jointly with them. The response has been encouraging. In addition, as I said, we have got 250 points of sale backed by advertisement, plus we do roadshows ourselves to create more awareness. Many times awareness creates demand of its own.
In the near future which segment do you foresee driving the growth in your company?
Business travel is a market segment which is bound and destined to grow as India is growing aggressively. There are new sectors / FDIs opening up, it is said that there is de-growth in the IT industry but our volumes are decent. There are many industries which will grow much faster than what we perceive. In corporate travel usually when you have a relationship with a client it is very sticky. You tend to grow with the client. In addition to the big corporates, making their presence felt are the SMEs, they account for almost 40-45 per cent of the GDP but they are not serviced as well as the big clients. We have certain self booking tools for them, automation that large corporates enjoy, and have made good success with them.
Have you invested substantially into technology processes and applications?
Investment in technology is very important in the business of travel, but a lot of that has come from our partners also. Abacus, for instance, became a partner with us, and has given us a powerful system to do end-to-end ticketing. That allows us to do things more efficiently, without error, and manage high volumes. The systems are integrated and there is seamless flow. We will start enjoying the benefits of this from 2013.
Are you looking at any new partnerships and alliances?
We are looking at partnership for Kuoni Academy. It was floated in 2003 and was intended to give to the travel industry trained professionals. We had some overseas affiliations also. Kuoni also had professors from inbound, outbound and business travel teaching there. It has some recognition in the industry and courses are from three months to three years. The unit has done well for itself, but it is a non-core business. Therefore, we are keen to partner with someone who is ideally in that business and can add value. It is similar to our partnership with Serco, back office processing is not our forte so we decided to go on a strategic alliance with the company which is a leader in back office processing. We will generate a lot of value from this partnership. So strategic partnerships will come in those areas where we are non-core and we feel that those alliances will drive our business to the next level.
Is there any other important factor you would like to highlight on?
The one thing that we are proud about is that we operate at a significant scale in all our divisions – business travel, leisure, inbound also, we are leaders in the space. However there are some segments within that space where we have not got leadership. It is my job that we become the leader and the most admired, integrated travel company. I believe that such a position for us is the way to go. This company initiated VFS – processing of visas and access arm of the consulate. It has become a world leader today and is an innovation from India. It is handling 15 million visas worldwide. That is something we feel very proud about, it is an innovation that is no longer India-based and a valuable jewel for the Kuoni world.