Thomas Cook Group PLC has formed a joint venture with VAO Intourist, one of Russia’s most renowned travel companies. Thomas Cook will acquire a 50.1 percent stake in VAO Intourist. The joint venture will include Intourist’s outbound, domestic and inbound tour operating operations as well as its retail travel network. It will focus on expansion in Russia and the other CIS countries. The deal is valued at $45 million (U.S.) in cash and stock.
The move reflects Thomas Cook’s long-stated strategic objective to capture growth in emerging markets, the company said. The fast-growing Russian market includes strong demand for beach and family holidays, particularly to Turkey and Egypt. More than 6 million Russians went on overseas, packaged holidays last year and the market is expected to grow by a double-digit percentage. One reason for increased demand is increasing wealth in the Russia’s population of 142 million and strong economic growth driven by the natural resources sector, Cook says.
Founded in 1929 and privatized in the early 1990s, Intourist is Russia’s oldest travel business and one of the country’s leading travel brands. In 2009, Intourist carried more than 650,000 passengers. Volumes have grown strongly in 2010, rising by 30 percent in the past nine months. Intourist has a network of 144 stores covering large parts of the country and, together with Thomas Cook, sees an opportunity to grow sales by expanding controlled distribution in Moscow, St. Petersburg and other regions.
The joint venture will benefit from Thomas Cook’s scale in accommodation purchasing in key destinations, as well as its product know-how and IT systems, Cook said: “This, combined with the expertise of the Intourist management team, will enable the joint venture to improve its product offering and expand its destination portfolio which is expected to drive future sales growth and profitability.”
In 2009, Intourist had sales estimated at $324 million. The joint venture is conditional upon anti-trust clearance in Russia and certain other conditions and is expected to be completed by February 2011, Thomas Cook said.
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