What are your business survival strategies to tide over the highly competitive market?
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Peter Kerkar
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India is quite an interesting market and in spite of the challenging economic environment that we are in, Cox & Kings has demonstrated through its last quarter results that business for us has been quite robust and that’s something that I have been reiterating for the past three years that business for us has been encouraging and we have met expectations. We are the number one outbound tour operator from India. Our industry is highly fragmented and the Indian travel agency landscape is dotted with a large number of small travel agents for whom survival is getting difficult especially with the new BSP settlement kicking in. This has led to consolidation in the market place and we have capitalised on it and expanded our reach. Secondly our network of franchisees, especially in Tier II and Tier III cities, is aggressively contributing to our topline growth. We believe that consolidation exercise will continue and we are looking at double digit growth in our outbound sector going forward. So I think that in spite of there being tough conditions out there, we will continue to benefit by capturing market share.
The company’s consolidated revenues have gone up in the quarter ended on December 2013 results. What would you attribute this to?
The company has demonstrated growth across business segments in FY13. Our leisure business in India and other international geographies, education and camping businesses have all seen robust trading. Specifically, our international businesses have done well in the third quarter with Dubai, UK and US businesses showing positive trading patterns.
Cox and Kings is looking at getting education brand PGL into India? Your comments?
I have always maintained that it is our intention to roll out the education brand in India. Recently, we opened our centre in Australia comprising of 350 beds spread over 200 acres in January 2014. We are actively looking for opportunities in India because the market is huge here, but land acquisition is not an easy task and until I am satisfied that the land acquisition is safe, we will be cautious about a roll out. However, we are pursuing opportunities for our education products both in the UK and Australia.
What is contribution of domestic, inbound and outbound travel ? How much do you expect the domestic market to grow?
For India business, outbound is around 65 per cent and is the key growth driver for the India business. At a group level, India contributes 25 per cent of the profits and is a critical contributor for the group’s growth plans. As India business continues to grow in healthy double digits each year, its contribution to overall group profits will only increase. In my view, the potential of the Indian holiday market is immense and as an industry we see tremendous opportunities for the next 10 years.
What is the company’s business expansion plans in future?
Cox & Kings has a strong growth strategy in its two key travel segments – leisure travel and education travel. We hope to continue pushing our boundaries and grow strongly in what is still a very nascent Indian travel market. In India, we along with Ezeego1.com recently formed an alliance with G Adventures, the largest small group adventure travel company in the world that offers socially and environmentally sensitive travel. We will expand our market share in the outbound adventure space. We have also launched MasterChef holidays in the Indian market wherein all tours feature local culinary experts and many also include time with popular contestants who have appeared on MasterChef programmes across the world. The on-tour experiences would include a combination of a meal along with a cooking demonstration and visits to attractions in the region covering food and wine.
We also have some well-recognised brands in our international geographies, offering premium outbound holiday experience to a niche customer segment in US, UK, Australia, Japan and Dubai. We have two market dominating student travel brands in PGL and NST, operating in the UK, with a steady growth profile. Our student and youth hotel brand ‘Meininger’ is a unique proposition, currently operating 7000 beds across 16 hotels in Europe. We have an exciting expansion strategy in this business, which would unravel over the next 12-18 months.
What are the new trends, locations, expectations from travellers?
The outbound travel business is on an upward growth curve and we believe that this trend will continue at least for the next 10 years. As per our observations, the market is going regional and there is a demand for community specific holidays. There has been a rise in people opting for short breaks. The adventurous are constantly looking for newer experiences and tented holidays are now catching on. We are promoting mobile luxury camps, TUTC, ‘The Ultimate Travelling Camp’ which covers a calendar of destinations and festivals.
What is the company’s business growth expectations from the upcoming FY 2014-15?
UK is predicted to be the fastest growing economy in the developed world and with over 50 per cent of our revenues coming from this area we expect our growth to be strong. We are seeing a healthy forward booking position in education with over 60 per cent of our revenues already booked for the coming year which gives us a great deal of comfort in terms of going forward.
Similarly, in the camping business over 60 per cent of our FY 15 target has already been achieved. We have also adopted a one-brand strategy in camping by combining our Keycamp and Eurocamp. So, overall these two divisions are looking buoyant and these account for nearly 70 per cent of our total EBITDA and as a result we are very positive for the coming year. In India, for the upcoming summer season, we had already pre-launched our holiday packages in the second quarter and we see an uplift of around 15-18 per cent as compared to what we had done in the last year in terms of bookings.
