Short haul and domestic tours to drive growth, says Thomas Cook India

Thomas Cook is witnessing a shift in business mix with domestic and short haul international segments contributing higher than long haul segments such as Europe or the US. The latest development comes against the backdrop of delays in processing of Schengen visas because of large volumes and staff shortages in embassies.

In calendar year 2019, long haul contributed to around 60 per cent, while short haul and domestic provided 40 per cent leisure segment revenue. In 2022 the trend is reversing with long haul contributing 40 per cent and short haul and domestic providing 60 per cent from year to date. This leisure segment includes individual, family or group tours and does not include corporate or MICE (meeting incentive conference exhibition) segments.

“Going forward we expect short haul and domestic tour segments to be growth drivers for us this year. Connectivity is increasing with more direct flights to Thailand and Vietnam. While demand for Europe remains robust we continue to see visa challenges. I think it would take another two months for the visa situation to normalise and hence long haul segment growth will be slower for us,” Thomas Cook India managing director Madhavan Menon said.

Thomas Cook’s focus on destinations like Bangkok or Bali also coincides with the region’s efforts to attract more Indian visitors. Indians replaced Chinese as the largest source of foreign tourists in Thailand with over 100,000 visiting the country between January-May. Increased air connectivity and relaxation in entry restrictions are seen as positive factors. VietJet and Vietnam Airlines have launched new flights to India providing non- stop service.

On the other hand, organising a European tour is becoming an issue. “European visas are a challenge due to limited availability of appointments and delays in processing time. Australia is currently not a challenge and continues to be popular with travellers. The US has announced a restart of visa appointments starting September. Our current focus is on short haul destinations that require no visa or issue visa on arrival,” he said.

Growth in the long haul segment now is being led by value rather than volume. Tour costs have actually increased 28-30 per cent compared to pre-pandemic. Volumes are actually lower compared to pre-pandemic, Menon added. As such the outbound business is still to fully recover.

The tour operator is seeing a strong recovery in other areas of business after the Omicron variant impacted its fourth quarter performance. “We are witnessing continued acceleration and as of May-end our foreign exchange business is at 63 per cent of pre-pandemic level, corporate travel is at 83 per cent and domestic holidays have surpassed pre-pandemic level,” Menon said. A few of the group entities such as Sterling Holidays in India and destination management companies overseas have already started clocking profit.

The group posted consolidated revenue of Rs 1888 crore in FY22 (72 per cent lower than FY20). It also reported a net loss of Rs 254 crore in FY22. In FY20 the reported net loss was Rs 17.7 crore.

Menon expects the company to turn profitable at pre-tax level on standalone and consolidated basis due to business recovery, cost control, increased focus on digitisation among others.