Demand softness temporary, travel sector will grow by 15% in FY 26: Thomas Cook India CEO & MD, Mahesh Iyer

Thomas Cook India’s consolidated pre-tax profit grew on a quarterly and annual basis in FY25. What were the main growth drivers?

All our business units had a great year, barring our digital imaging solutions business. We had strong growth in our forex business in terms of revenue and profitability, with a 45 per cent EBIT (earning before interest and tax) margin. We expect to have a similar EBIT margin in forex in FY26. In the forex business, our focus has been to address various segments through the pre-paid route. The pre-paid borderless cards have enabled us to grow faster than the market within that segment. On the travel side, the destination management business and National Games (Thomas Cook was travel partner) contributed to growth. The long-haul business also saw higher growth compared to the first quarter of 2024, and it continues to play out in summer as well.

But the long-haul business is still to recover compared to 2019 ?

 We operate in the outbound travel space in Hong Kong and India. In India, the long-haul segment has recovered to 80-85 per cent, but the overall rate is only 68-72 per cent, due to slower recovery in Hong Kong. Visa challenges have been a handicap on the long-haul side. We continue to have challenges, but the situation is better than in 2024. 

What impact do you see on travel demand post the Pahalgam terror attack? What is the growth guidance for FY26?

There has been demand softness for the last two weeks, but I would qualify it as temporary. With the de-escalation and opening of airports, some amount of recovery will happen. We believe there is a booking cycle available to us and there will be some amount of elongation of the travel period from June to July-August. My belief is that the travel industry should grow at 12-15 per cent, and I think we will mirror the industry growth. Multiple destinations have opened up, including Japan, Vietnam and other easy visa destinations, and all these add to our product portfolio.

Some travel companies are suspending trips to Turkey and Azerbaijan. What is your view ?

I will not comment on (other companies). There are no cancellation requests, but inquiries have gone down for sure. Today, from a market perspective, there are so many more destinations for people to travel, and as a travel company our job is to make people travel.

How are you controlling costs.

We had targeted to keep our costs at 40 per cent below the pre-pandemic level for four years and I am happy to report that we have still not reached the 2019 cost base. Benefits from automation, productivity enhancements and common buying (by Thomas Cook and SOTC) are playing out. We follow a cost-to-revenue matrix. Our cost increase will be proportionate to revenue growth. Pre-pandemic our cost-to-revenue ratio used to be closer to 85 per cent. We are now operating at 62-63 per cent. We continue to take tactical and strategic calls regarding marketing, and investments like the recent appointment of actor Kartik Aryan as brand ambassador for our borderless prepaid card. 

Are you looking at any acquisitions ?

Our balance sheet is strong. We are generating around Rs 200 crore every year, but we are not looking at any acquisitions now.