A man stands inside a holiday villa. (Photographer: Adeel Halim/Bloomberg)

Thomas Cook Says Sterling Holiday Will Turn Profitable Next Quarter

Travel firm Thomas Cook India Ltd. expects its subsidiary Sterling Holiday Resorts to turn profitable next quarter.

Sterling Holiday has adopted a new business model where it is “now looking at revenue shares with owners of the property,” instead of leasing the property, Madhavan Menon, chairman and managing director, Thomas Cook India, told BloombergQuint in a post earnings interaction. “That will reduce their cost significantly” and help the company turn profitable, he said.

Thomas Cook reported a revenue growth of 18 percent to Rs 2,573 quarter-on-quarter on account of several one-time events, giving an exceptional gain of Rs 5,825. Operating margin, however, fell 1 percent in the same March-ended quarter.

Here are the key highlights from the conversation:

  • One-off event of Rs 5,800 crore impacted the quarter. If that is left out, revenue has grown 10 percent despite it being an investment quarter.
  • Growth in average room rate driven by demand-supply forces.
  • Focused on occupancy over average room rate.
  • Intend to take occupancy to 70 percent from 64 percent for Sterling Holiday Resorts. Will add a few resorts during the current financial year.
  • Earnings before interest and tax will continue to grow sequentially. Sterling Holiday Resorts will turn EBIT-positive next quarter.
  • It will take time for Sterling Holiday Resorts to see significant profit growth.
  • Holiday demand has increased for Sterling while vacation ownership has de-grown.
  • Saw 34 percent growth in forward bookings for Thomas Cook, SOTC.
  • Saw a muted quarter for wholesale business; corporate retail and remittance business has done very well.
  • Ebitda margin in financial services business has improved. Have invested nearly Rs 1,000 crore in making acquisitions over the last six years.
  • Primary objective is to weed out all borrowing across subsidiaries.
  • Have no acquisitions in sight right now; acquisition opportunities may come at any stage in next 12-24 months.

Watch the full interview here.