Travel Cos Ready War Chest for Buys

Cos look at inorganic growth for bigger market share and faster expansion

MEENAKSHI VERMA AMBWANI & SOBIA KHAN
NEW DELHI

    Travel firms in India are preparing their war chests in anticipation of growing business out of the Indian market. While Cox & Kings has announced it is acquiring UK-based adventure and camping firm HolidayBreak for . 2,300 crore, several other firms, including Indian arms of international travel firms, are scouting for possible acquisition targets.
In a market that is largely fragmented, inorganic growth strategy will help companies grab a bigger marketshare and expand faster. As per industry estimates, nearly 85% of the Indian travel market is still controlled by small, unorganised or regional players.
Kuoni India, which owns travel companies SOTC and HRG Sita, is in talks to acquire travel companies in India and plans to close the deals in a few months. The company is learnt to be doing due diligence on three companies. “The Indian travel and tourism industry is expected to grow at a high, doubledigit growth in the next five years and Kuoni India wants to capture a share of this growing market. We are looking at specialist travel companies that bring value to our business,” Rajiv Duggal, managing director Kuoni India told ET. He said the company is keen to acquire a mid-scale company specializing in meetings, incentives and conference travel, individual travellers and outbound travel. Mr Duggal believes inorganic growth at this stage will help Kuoni gain market share and earn higher profits.
Analysts said inorganic acquisitions could help a travel industry firm gain consumer base, technology and talent . Le Passage to India, in which European firm TUI is a JV partner, has been looking for acquisitions for some time. “We are exploring several options at this stage for buy outs. But high valuations demanded by some players could be a deal breaker,” said Arjun Sharma, managing director, Le Passage to India.
Ashwini Kakkar, executive vice chairperson, Mercury Travels, said, there are several challenges for mergers & acquisitions in the travel industry. “There are very few independent mid-sized travel companies in India with a large chunk of market being controlled by regional and smaller players,” he said. He said an acquisition of smaller players is an extremely difficult task and could bring little value for the prospective buyer.
Mercury Travels, in which EIH owns 25%, is one of the leading, home-grown players. Others players like Bangalore-based Travel Tours Group have been successful in acquisitions here. It acquired Goabased Splendour Holidays, a charter and inbound tour operator besides adventure tourism firm Get off Your Ass. “We are open to more acquisition if it mixes well with our current portfolio ,” said Ashwini Narayanan COO TravelTours.