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The collapse of Thomas Cook Group is having ripple effects in Asia, where the British company was a pioneer in tourism.
Even though it shares the name, Thomas Cook India immediately issued a statement reiterating that it is a completely separate entity from Thomas Cook Group following its acquisition by Canada-based Fairfax Financial Holdings in August 2012.
Over in China, Fosun Tourism Group’s spokesperson, Bo Chen, told Skift that its China business “is to be maintained.” Fosun holds the majority stake in Thomas Cook China, a joint venture with Thomas Cook Group, and the word it wants to put out now is the China outfit has been operating independently of the UK-based partner.
“Thomas Cook China, which is majority owned by Fosun Tourism Group, notes with regret that Thomas Cook Group plc has been placed into insolvency in the UK,” according to a statement from Thomas Cook China. “Thomas Cook China has a strong financial position and is unaffected by today’s events. We wish to stress that all our business and operations continue as normal. Thomas Cook China continues to benefit from the longterm commitment of the Fosun Tourism Group.”
Chen, however, did not comment on Skift’s question about the impact on an agreement between Fosun and Thomas Cook Group to build a Casa Cook hotel at its upcoming Lijiang Albion International Resort, and a Sunwing in its other new resort project in Taicang.
Both partners were eyeing a goal of 10 to 15 Thomas Cook-branded hotels in China in the next three to five years. Apart from Casa Cook and Sunwing, Thomas Cook Group also owns the Cooks Club millennial brand.
Keeping Hopes Afloat
As Asia tries to come to terms with the idea that an institution that sends thousands of tourists to the Far East has gone under, hopes are being buoyed that it might not be all over after all.
A big question is what exactly has gone under? Internal communications obtained by Skift from Peter Fankhauser, Thomas Cook Group CEO, indicated the insolvency process does not include the Central Europe and Nordic business — only the UK business. Fankhauser could not be reached for comment at press time.
On September 24, the Nordics unit confirmed in a press statement that it would remain in business and invest further in it, but it is still unclear if the continental European business will continue.
Asian Trails Group is one company that wishes for the Nordics and Central Europe units will keep afloat. In June last year, it signed a joint venture with Thomas Cook Group to handle upwards of 100,000 Thomas Cook customers visiting Thailand annually.
The joint venture, Thomas Cook In Destination Management Thailand, is part of Thomas Cook Group’s belief it should operate its own inbound agencies in destinations it sends travelers to, saying this will give it greater control and consistency of service for its customers in destination, and profit from the business rather than outsourcing it.
The tour operator also has such joint ventures with inbound agencies in Spain, Portugal, the United States and the Caribbean, all of which are likely to be impacted by the closure.
“I don’t want to comment much at this stage; the situation needs to be clarified first. But it’s very sad that such a historical business, such an iconic brand, the pioneers of package tours, is in such trouble. I still have hope that most of its businesses are or will be rescued,” Asian Trails Group CEO Laurent Kuenzle told Skift.
Despite Thomas Cook India Chairman and Managing Director Madhavan Menon saying that Thomas Cook Group’s closure “has no impact” on Thomas Cook India, the fact is, it does.
That’s because Thomas Cook India owns Asian Trails Group, which it acquired from EQT in May 2017.
Both Asian Trails Group and Thomas Cook India are hoping the damage will be small. A closure of only the UK business will be less damaging, since more than half of Thomas Cook’s clients to Thailand are from Continental Europe, one-third from the Nordics, then “small programs out of the UK and France,” according to Michael Scheidler, Thomas Cook Group director of destination management, in an earlier interview.
But Thomas Cook India’s Menon pointed out the company is in a strong financial position no matter what.
“We believe that it is important that we clarify for the record that Thomas Cook India is financially strong, profitable and maintains a positive outlook in the travel and tourism sector and continues to witness strong growth,” said Menon. The group’s cash and bank deposits balances stand at $196 million (13,890 million Indian Rupees) as of June 30, 2019, he said. On a standalone basis, Thomas Cook India is debt-free upon pre-payment of $9.4 million (Rs. 670 million) debenture obligations ahead of schedule. This has been made possible using stable and strong cash flows that the Thomas Cook India Group is generating year over year, he added. The group generates an average annual free cash flow of around $35.3 million (Rs. 2,500 million), he said.
Thomas Cook India operates across 29 countries, making it one of the largest travel companies in Asia-Pacific. It offers a broad spectrum of services including foreign exchange, corporate travel, meetings and incentives, leisure travel, insurance, visa and passport services and e-business.
Aside from Thomas Cook and Asian Trails, it owns the brands SOTC, Sterling Holidays, TCI, SITA, Allied T. Pro, Australian Tours Management, Desert Adventures, Travel Circle International, Travel Junkie Ithaca, Digiphoto Entertainment Imaging, and Private Safaris East & South Africa.
Meanwhile, Fosun Tourism Group, which says it has a minority share with no board representation on Thomas Cook Group, issued a statement saying it is “disappointed” that Thomas Cook Group has not been able to find a viable solution for its proposed recapitalization.
“Fosun confirms that our position remained unchanged throughout the process, but unfortunately other factors have changed. We extend our deepest sympathy to all those affected by this outcome.”
This story has been updated to include that on September 24, the Nordics unit said that it would remain in business and invest further in it. However, there is still no word whether the continental European business will continue.