'We have earmarked Rs 150 crore for acquisitions'

Q&A: Peter Kerkar, ED, Cox & Kings (India)

The last few months have been very busy for the Mumbai-based travel company, Cox & Kings. Its public issue, which was subscribed 6.31 times, raised Rs 610 crore last December. After that, in the same month, the company made a couple of acquisitions in the travel space in Australia. The 249-year-old travel company, now headquartered in India, continues to look at aggressive expansion through more acquisitions internationally. Cox & Kings (India) Executive Director Peter Kerkar speaks to Swaraj Baggonkar on future plans. Edited excerpts:

This was the first real peak season for the tourism and hospitality industry after it hit the trough last year. How did it pan out for your company?
While there was a meltdown globally, there was virtually no crippling effect of it on India. The outbound market has recorded a growth of nearly 20 per cent year-on-year. December, 2009, recorded a 21 per cent increase in inbound traffic. Historically, the growth is 8-9 per cent. We will see a double-digit growth moving forward too.

How do you see growth panning out in the coming period?
We should see the industry grow 20-25 per cent this year. That has been stated by the airline operators too. Besides, there is some consolidation happening in the industry already. So much so, that agents who were selling their own products are now selling products of the organised sector because of the higher commission.

The recent acquisition shows the company has an aggressive expansion plan. What else can be expected in this space?
Acquisitions are going to be very much a part of our strategy because, when we raised the capital, a large proportion of it was set aside for acquisitions. We have earmarked Rs 150 crore for acquisitions only. There are value plays worldwide and we will scout for value buys. We will look at English-speaking nations, including Canada, the US, England, New Zealand.

What would be the primary criteria for buy-outs?
Lets say that, in India, outbound travel starts in March and finishes in June, whereas, for the UK, the biggest outbound season is between September and March. It's similar for the US and Japan too. Australia is June-August. We have distributed the ups and downs in the market accordingly, which helps even out the highs and lows of the industry. So, our buy-outs will be done keeping this principle in mind.

What growth potential do you see in the Indian market, compared with some of the other countries?
We feel the Indian market is one of the most robust and burgeoning markets globally, in terms of both outbound and inbound. There is huge potential for the market to grow even further. There has been a consistent growth of 30 per cent within India over the last three years.

Where is the demand coming from?
The Indian middle-class, thanks to booming pay packets, is very eager to experience the world without getting too worried about the budget. This segment of travellers is booming in numbers, as against the traditional well-to-do family. Indians are very curious travellers.

What changes have you seen in travel patterns?
Earlier, travellers from Gujarat were the only set of people who were moving out of the country. But today, everybody across the country wants to travel, with a bunch of travellers coming from non-metro areas too.

What impact do travel guidances issued by the western countries have on your business?
Whenever there is a travel guidance, the impact is not big. But when there is a travel ban, our business goes down significantly. The perception about India is very different among travellers, especially when compared with some of the other nations which also face hostile activity. People want to come to India repeatedly, despite warnings. Inbound traffic may see a minor drop, but there will be a surge immediately in the next month.