In the ever-evolving landscape of the business world, resilience becomes an indispensable trait for thriving organizations. At Thomas Cook (India) Ltd. we have adapted, learned, and bounced back from challenges, to not only survive, but emerge stronger than ever. In our Cover Story, we show you how we defied the odds, and not only ‘bounced back’, but soared to success.
It enabled us to deliver record operating profits for FY23, driven by robust recovery across all our businesses.
Join us on this transformative journey, as we uncover the invaluable lessons and strategies that have empowered us, not only to bounce back, but also inspired us to look forward to a future brimming with possibilities.
Back from the Brink
The crisis of the pandemic represented both a challenge and an opportunity for the Company. Our significant recovery in the FY 2022-23 has been an incredible journey that brought the Company ‘Back from the Brink’.
We saw results reflecting as early as Q2 FY23, culminating in a record performance for the year ended March 31, 2023. This transformed the Company from Zero to Hero!
Highlights of our FY 2022-23 performance:
- Thomas Cook India delivered highest operating profit in a decade: Operating EBITDA at Rs.1Bn for FY23; Operating PBT at Rs.560 Mn Vs a loss of Rs.1.14 Bn in FY22.
- At a Group level, Operating EBITDA grew significantly to Rs. 2.7 Bn for FY23 against a loss of Rs.1.2 Bn in FY22
- The growth drivers were the Foreign Exchange & Travel Businesses (Thomas Cook); Hospitality (Sterling Holidays)
- Sterling Holidays registered its highest EBITDA & PBT since inception: EBITDA at Rs.1.1 Bn for FY23; PBT at Rs.659 Mn Vs Rs.436 Mn in FY22
Cost Optimization and Productivity
As we emerged from the pandemic and scaled up businesses and resultant costs, our continued focus on cost optimization delivered a significant annualized savings of Rs.3.71 Bn for FY23 – a 30% reduction in costs Vs FY20 (pre-pandemic). As a result of restructuring, cost optimization and digitization, the Company continued to witness significant productivity gains across each line of business.
Re-structuring the Enterprise
Travel Services: To drive economies of scale by joint contracting and bulk buying, we integrated the backend of our holidays business at Thomas Cook and SOTC Travel, creating a consolidated product-contracting-operations unit. This equipped us with a unique competitive advantage, of operating combined group tours, an increase in profitability, with improved margins and efficiencies.
At the front-end, we took a strategic decision to operate as distinct entities for marketing, sales and distribution. This created healthy competition between our brands, while simultaneously enhancing our visibility, market share and leadership.
We replicated this for our Corporate Travel units across Thomas Cook India & SOTC: integrating to form a leaner consolidated back end, while keeping individual customer facing teams intact, ensuring better contracting, and a fungible team able to serve more customers.
Foreign Exchange: We re-imagined our Foreign Exchange business by setting up a central team for lead capture to sale, with a seamless handover to the closest retail outlets for last mile delivery of #GharpeForex – within 2 hours! The ease/convenience for customers, coupled with speed and efficiencies of a consolidated team continues to give our Company a compelling advantage.
Sterling Holidays also restructured its business model by pivoting away from its time-share business, towards its more asset-light, profitable hotel & resort business, accordingly, merging the vacations ownership team with their existing network. To capitalize on the strong and growing domestic demand, Sterling embarked on aggressive expansion, adding 184 rooms and 6 new resorts, and is set to add a resort a month for the second half of the year!
Accelerated Digital First Strategy
The Company maximized on the downtime to accelerate its digital transformation. This was done to elevate customer experience and increase productivity by reducing processing time, minimizing costs and eliminating errors.
In addition to our self-booking and servicing apps, we introduced an innovative dynamic holiday bundler to help customers choose their air and land components, on the basis of their preferences. To empower its Partner/Agent, our teams developed digital tools for our Holidays and Foreign Exchange businesses, providing seamless access to our products/services, booking and payment systems, to help Partners serve their customers better. Over 1600 partners have been on boarded with business of Rs.1000 crores generated since its launch.
For today’s business traveller, we have deployed and enhanced corporate self-booking tools for both our Business Travel and Foreign Exchange segments, customized on the basis of respective corporate requirements/ policies. The high adoption by over 50% of corporates highlights the success of the model. A state-of-the-art Vendor Management System was introduced across businesses to streamline processes from procurement to settlement. For improved customer experience, our enhanced CRM integration and a common UI for sellers & customers alike – also significantly simplify the user & seller experience.
“Sterling One” a self-help booking platform, for Sterling Holidays’ Partners and customers was launched to significantly enhance customer experience while expanding/scaling the distribution of resort inventory and room rates.
Outlook/Trends and our Strategy:
The pandemic has accelerated some major shifts in the Indian market, and here are 4 of them:
- Shift from Savers to Spenders: The Indian consumer has shifted from being a Saver to a Spender, and this changed mindset will continue to have cascading impact on holidays. We are already seeing higher travel spends and frequency, and have launched a portfolio of short breaks with attractive new holiday options. Our focus on the domestic cruise potential has seen the Company book over 8000 customers – achieving top seller status with Cordelia Cruises.
- Rise of young India/Digital India: Youth power bodes well with India being the world’s youngest demography with 65% of its population under 35 years. Our digital focus has resulted in a drop in our average consumer age by a significant 10 years. With this segment being passionate about travel, our specially designed Gen Z tours offer experiences like sky diving, deep sea diving; exploring local cuisine and nightlife; also unbeatable offers including best price guarantee and No Cost EMIs.
- Rise of Bharat/Regional Markets: Given increased disposable incomes, increased connectivity due to new flights/regional airports, and a highly aspirational market, the Company’s network expansion into Tier 2-4 towns, and regional marketing, we intend to capitalize on this sizeable opportunity.
- Demand for Experiential Travel: The pandemic has given rise to the ‘YOLO – You Only Live Once’ outlook, with an increased desire to tick off bucket-list experiences. Our pivot to personalized programs has resulted in a 40-50% increase in our customized holidays business, even compared to pre-pandemic times, with an accelerated demand for unique, shareable experiences versus only exploring popular tourist locales and regular sightseeing tours.
Innovation, adaptation and reinvention has indeed led to the remarkable resurgence, navigating the path to bouncing back in business.