For the love of a holiday!

For the love of a holiday!

Over the next five years, Cox & Kings aims to maintain its growth in the leisure business and tap the potential that the tourism education business has thrown open



Considering the fast pace of life we all live in today, holiday is the one thing that most of us look forward to. While some of us plan a holiday on our own, many others seek guidance from professionals in the travel industry. Operating in such a space is Cox & Kings (C&K), one of the oldest (established in 1758) players in the travel and tourism industry in India. The company’s businesses can be categorised into leisure travel, corporate travel, meetings incentives, conferences and exhibitions (MICE), trade fairs, visa processing and foreign exchange. In December 2009, it came out with an initial public offering, where it raised over Rs. 600 crore to help with its acquisitions and other strategic initiatives, among other things. Accordingly, it acquired seven companies in Australia and the U.S over the last few years, which helped provide strong business synergies.  “Our aim was to expand our reach globally. Hence, we started identifying companies which would give us access to new markets and also help us expand our product portfolio,” declares Peter Kerkar, director of C&K.

According to Kerkar, these inorganic growth initiatives contributed significantly to C&K’s topline and bottomline. Its sales in last five years grew from Rs. 286 crore to Rs. 1, 808 crore, registering a compounded annual growth rate (CAGR) of 58 per cent. Similarly, its profits soared from Rs. 62 crore to Rs 248 crore, registering a CAGR of 41 per cent. For the first quarter of the current fiscal, the company’s revenues grew by about 10 per cent, while its EBIDTA grew by 16 per cent, on the back of strong growth in its retail leisure business and camping business.

We need to understand that the holidays market in India is an offline market and the customers prefer talking to a company representative to adequately address their various concerns before they make a booking. It is an emotional experience and a human interface is extremely critical.

“Our retail leisure business grew because of increased penetration and the formation of deeper distribution networks, in the form of franchisees, call centre networks, own stores and agency networks,  across Tier II cities and smaller towns,” states Kerkar.  In a way, the company’s large size also helped it drive a hard bargain with suppliers, thereby making it more competitive against the smaller players.

Currently, C&K has a presence across four continents and 25 countries, through its branch offices, subsidiaries and representatives. Domestically, it has 12 sales offices located in Mumbai, New Delhi, Chennai and Kolkata and has appointed over 150 franchisees across 20 states. Its international subsidiaries span across the U.K., Japan, Australia, New Zealand, UAE, USA, Singapore, Hong Kong, Greece and Germany.

Identifying new opportunities

In the early 90s, most of the travel agents including C&K were only commission agents, deriving income from airline commissions. At that time, the airlines were beginning to lose money and their business model was in trouble. “We did not want to be in a situation where we depended on them for our income, when their survival itself was at stake. So, we made a conscious decision to become a tour operator and a net aggregator of services,” says Kerkar. The company bundled services such as airline tickets, bus tickets, hotel rooms and entertainment options, and sold it to the end consumer. “Our suppliers also liked our model as we guaranteed them business and this applied even in their lean and shoulder seasons,” he recalls.  In fact, Kerkar believes that this model will be workable for the next ten years in India.

Similarly, Kerkar decided that, globally, the company will be an aggregator of leisure services and be in an area of business which is secure. To achieve this, in September 2011, Prometheon Holdings UK Ltd, a subsidiary of C&K, acquired Holiday break (an education and activity travel group with market leading positions in the UK and other major European markets) for 311.04 million pounds (Rs. 2,200 crore). “This acquisition helped us grow across geographies and expanded our product bouquet in the leisure business, to include education travel and camping holidays,” adds Kerkar.

The company also acquired the Tempo business in Australia and the U.S., which enabled it to consolidate its supplier purchases across its group company in Europe and Dubai. “It gave us the scale to negotiate better deals with suppliers, thereby expanding margins for business in both Australia and India,” recalls Kerkar. In addition to this, in both these regions, the company was able to drive growth for its business by introducing newer products from existing portfolios.

Lastly, the company works closely with international tourism boards and domestic tourism boards to gain insights on new products and services that are available at various destinations.  “We also do joint promotions with them in order to provide our customers with new holiday options,” adds Kerkar.

Industry dynamics

Today, the Indian tourism market is highly fragmented, with a handful of national and regional players. However, Kerkar indicates two important trends that are playing out over the last few years. First is the increased market share for organised tour operators, as customers increasingly move away from the unorganised market and, second, is the emergence of a large number of first time travelers.  As per the Ministry of Tourism (India) statistics, total outbound departures from India in 2011 was 14.2 million, with a significant percentage still being business travel or visiting friends and relatives (VFR). This figure is set to reach 50 million by 2020, which indicates that the organised packaged holiday segment will grow well over the next decade and beyond.

For C&K, this means, a tremendous growth potential, aided by its large product portfolio, wider distribution network, lower supplier costs and greater marketing efficiencies. “We need to understand that the holidays’ market in India is an offline market and the customers prefer talking to a company representative to adequately address their various concerns before they make a booking,” says Kerkar. He adds, “It is an emotional experience and a human interface is extremely critical.” Customers also need guidance during the visa and documentation process, apart from having constraints in making large online payments. “So, while C&K, like other large players, allows online holiday bookings, the Indian customers are far from ready for the same,” declares Kerkar.

Amidst such opportunities, Kerkar indicates that the big challenge for C&K will now lie in managing the growth in this fragmented environment. However, he has a few suggestions on how it can be tackled. He says, “International airfares can come down if the government allows more air seat capacity from here to overseas destinations. There is a pent up demand that can be fulfilled.” He adds, “Rationalisation of taxes in India can help further boost traffic to and from India.

Going forward

A larger product portfolio is a key differentiator that C&K offers its customers. This apart, the company aims to provide a high quality travel experience, which it believes will help it gain repeat business, an important trend to watch out for as several customers take multiple weekend breaks during the year, in addition to an annual holiday. However, there are some factors like political uncertainties, natural calamities, social disharmony, economic recession, large fluctuation in currency markets and any changes announced by government or regulatory authorities, which could change the demand pattern for C&K.

But, having said that, the company already has robust forward bookings, especially in the education business. It has booked 84 per cent for this fiscal and 42 per cent for FY15. Kerkar believes that the potential for education business in India is huge and over the next decade it could be as large as the leisure holidays business in India. “Five years from now, we will continue to maintain our leadership in the Indian holiday market and have a dominant position in the education business in Europe,” concludes Kerkar.


Cox & Kings Ltd

Year of incorporation: 1758

Headquarter: India

Present in: four continents and 25 countries

Turnover: Rs. 1,808 crore for FY 13 

What Next?

Tapping the potential from the education business

Indentifying new trends

Maintain its leadership in the holiday market

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