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Globe trotters and jet setters

Samyukta Bhowmick | April 23, 2005

The merger between European destination management house TUI AG and our own Le Passage to India, in which TUI has bought a 50 per cent stake, is all set to create waves.

Le Passage, a relatively young company (it was founded in 2002), has had a great run, growing at a rate of 382 per cent in their first year, and 100 per cent the next, according to managing director and chairman Arjun Sharma.

"We are already one of the top three destination management companies in India," says Sharma. "And this merger will mean that we can branch out into areas that we could not have looked at before, for example the cruise market, domestic travel and MICE." (Which he hastily explains is "meetings, incentives, conventions and exhibitions", as everyone in the room looks slightly alarmed).

Le Passage will also look at Indian tourists going abroad: "Over the next six months, as a joint undertaking, TUI and Le Passage are looking at buying an Indian outbound company. Indian tourists, like the Indian travel industry, are coming of age, and are finally beginning to branch out in terms of their travel, and I think this is a market that cannot be ignored."

But the merger will not just mean good things for Le Passage. All of the straggling Indian tourism industry will look to benefit by the know-how (and perhaps also the cold hard cash) of the European giant, which is not only a destination management company, but also owns hotels, aircraft, boats and so on.

"The one thing we need in India is infrastructure," says Sharma. "India gets only 3 million tourists annually, despite the fact that it's becoming more and more an attractive tourist destination, thanks to the Incredible India campaign. This is largely due to the fact that we simply haven't pulled up our socks in terms of infrastructure to accommodate these people, and to make sure that they have a good time here."

However, the number of tourists that come to India is growing, and 65-70 per cent are Europeans -- just two of the reasons this joint venture makes so much sense.

TUI has a huge presence in Europe and have always had an eye for growing markets: two years ago they created a presence for themselves in China, last year they looked at Russia, and now they're looking at us.

And somehow this has not inspired as much hostility from competitors as one would expect. Thomas Cook, for instance, seems to welcome the competition, since it will drive the industry forward.

"Look," says a spokesperson, "why is TUI looking at India at all? Clearly because they think this is a fast-growing, lucrative market. Last year, we had 2.5 million tourists coming in, and this year we have over 3 million. This can only mean good things for travel agencies in this country -- the pie's going to get bigger, which means competition or no, we're all going to get bigger shares."

It's an argument that certainly seems to make sense, especially given the growth potential. But TUI's tie-up with Le Passage isn't without its share of controversy.

Promoted by chairman Ghulam Naqshband and a handful of former Sita Travels employees who had come together after Sita was bought over by another European giant, Kuoni Travels, it could end up as a clash between the two for a leadership stake in a market from which it had once appeared the former Sita family (Inder Sharma and son Arjun Sharma) had abdicated.

The fact that they had a role to play in Le Passage (Arjun Sharma became chief mentor at Le Passage last December solely to ensure the smooth completion of the venture), may not go down well with Kuoni's India boss, Ranjit Malkani -- who, unfortunately, remained unavailable for comment.

Meanwhile, Arjun Sharma is exulting. "Things are looking up for tourism in India. The government has started to look at tourism as an actual industry and not an elitist activity.

Stakeholders have realised that more tourism will feed the economy, create jobs and inspire growth," says Sharma. "And now, with state involvement, we're finally getting all the policy moves that we were waiting for, whether it's a question of tourism marketing, cleaning up public monuments, or more importantly, linking civil aviation with tourism."

This last is quite an important factor. With increasing disposable incomes and lower cost carriers, Indians are more set to fly now than ever before. Apart from the greater volumes that come with more airlines flying into the country, also more and more small cities are being put on the flight map with the opening up of the skies.

For instance, Singapore Airlines has started a flight from Amritsar to Singapore for Rs 10,000, making travel much easier for people who would otherwise have had to come all the way to Delhi to take a flight out.

It remains to be seen exactly what kind of effect the entry of TUI will have on the tourism industry, whether insiders are correct in counting on it to bring increased competition, increased efficiency and increased growth in an industry that has remained underestimated and under-exploited for too long.

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