Category Archives: Agents

Leading travel agency JTB Corporation is set to acquire Kuoni Global Travel Services. This was revealed in an official statement by Kuoni Group Travel Services. The transaction will create opportunities to increase business in the growing markets across the world through extension of local product offerings and expanding the complementary global MICE services. The statement said that the parties have agreed not to disclose further details regarding the purchase price or their contract. The acquisition is subject to approval by the relevant competition authorities and compliance with any other local legal requirements. The parties are contemplating to complete the transaction once all such approvals have been obtained and all local requirements have been complied with. There will be no imminent changes to the current company structure, and the company entities will continue to operate their businesses independently during the transition period. Reto Wilhelm, CEO, Kuoni Global Travel Services, informed, “JTB is one of the biggest and most respected market players in our industry. Joining JTB provides our company with the best positioned owner, which will help realize the full potential of Kuoni Global Travel Services. We will be able to further enhance our service and products for customers, while creating scale and efficiency.” Eijiro Yamakita, President and CEO of the European Regional Headquarters, JTB added, “Kuoni Global Travel Services is one of the world’s leading travel companies with an important presence especially in Asian leisure and corporate groups visiting Europe. The acquisition offers an excellent opportunity to be a unique operator by gathering the network and knowledge. It enables the provision of detailed services to meet each customer’s needs with high added-value and the expansion of the inbound business.”

The board of Cox & Kings Ltd. has approved the demerger of its foreign exchange division into a separate financial services company to be named Cox & Kings Financial Service Ltd. (CKFSL). The demerger is effective April 1, 2017, and is subject to High Court and other regulatory approvals. Whilst the Tours & Travels and Foreign Exchange (‘Forex’) businesses are complementary in nature, the businesses operate quite distinctly from each other. The Forex business has 125 licenses across India to provide foreign exchange to captive customers as well as to third-party customers. Peter Kerkar, Chief Executive Officer, Cox & Kings Group, said, “Strong macro drivers coupled with a strategic brand presence will enable CKFSL to flourish. There are abundant, large-sized avenues for natural product diversification and the timing of this demerger is most opportune.” The working capital needs of the Forex Business are quite different from those of the Tours & Travels business. With a view to enable the Forex business to capitalize on growth opportunities in an independent manner it has been decided to demerge the business into a separate company. The demerged entity has the potential to grow substantially as a standalone business with separate financing and operations and focused leadership and management attention. The opportunities as well as risks and competitive environment within the Forex Business are distinct and the said business is capable of attracting its own set of investors and strategic partners, lenders and other stakeholders. It is proposed that the Forex Business of the Company be demerged and transferred to the Resulting Company, a wholly owned subsidiary company of the Company, so as to maximize value for all the stakeholders of the Company. In …

Expedia Travel Agent Affiliate Program (TAAP), the largest global travel agency affiliation program, has appointed Dex Group as its GSA in India with effect from May 21, 2017. This association will increase the number of travel agents in the TAAP by up to 20%. Dex Group, with a history of 50 years in India’s travel industry including representation of various international airlines in India, will henceforth be responsible to promote and manage sales distribution of Expedia TAAP in India. With Expedia TAAP, travel agents can search and book competitive rates at over 321,000 hotels, 400 airlines, plus thousands of rental car companies, dynamic packages, and attractions worldwide.

Various national travel trade associations in the country are rushing to conduct workshops on GST for their members and inform them on how the tax structure will impact their business. The Indian Association of Tour Operators (IATO) has organised a seminar with noted Service Tax expert, Manish Gadia, Partner, GMJ & Co to talk on Service Tax and GST and to reply to member queries. The Travel Agents Federation of India (TAFI) has also conducted a speaker session on GST. Following close on its heels will be the Travel Agents Association of India (TAAI). Revealing this is Jay Bhatia, National Treasurer and Chairman (Tourism Council), TAAI, who said that the association will be doing a series of workshops on Service Tax and GST along with consultant Manish Gadia across the country.

Against the backdrop of a high growth potential in Indian Travel & Tourism market, an organized tax structure is vital, claims Anil Parashar, President and CEO, InterGlobe Technology Quotient. He adds, “The implementation of the unified tax structure is a huge step towards preparing the nation that is expected to grow at $160.2 billion by 2026. Although, the industry presently has mixed reactions towards the introduction, going forward, this step would attract more industry growth as the GST has been planned according to the tax player’s capability. For example, GST Council reduced service tax on economy class from 6 to 5 per cent while increasing business class to 12 per cent from the current 9 per cent.”

P. K. Anish Kumar, President, ATTOI, was quite disappointed with the GST announcement. “Most of the foreign travellers have concerns regarding safety, security, cleanliness in India and thus choose 4 or 5 star hotels to stay in. This does not mean they are rich but prefer safe, quality accommodation. Now with 28 per cent tax on hotels and 5 per cent GST to be paid by agents kills the industry as the effective tax to be paid will be 33 per cent. How will we compete with destinations like Hong Kong ,which has no tax on hospitality industry? Earlier tax in Kerala was 19 per cent even on 4 and 5 star hotels and now competitiveness of the industry is thrown off with direct 28 per cent. A houseboat in Kerala costs above Rs. 6000 and the tax will deter the USP of the destination. India will not be seen as a long haul destination any more as packages will become shorter due to the expenses to be incurred by the foreign tourists. Tourism has to be seen as an employment and revenue generator and government’s approach to penalise tourists and earn money from them will ruin the tourism industry overall,” he claimed.

Rajan Sehgal, Chairman–Northern Region, TAAI, claimed that there is not much difference in air travel apart from the taxes on economy and business class being separate. However, he said, “Since the hotels will be subjected to 28 per cent tax for over Rs 5000 room rate, this will be a huge blow to the industry. We were expecting about 18 per cent, which has been applied, but for hotels in the Rs 2500-5000 range. Our aim is to get more foreign tourists to India, and not just domestic tourists, and by hiking up the main part of travel will not benefit the industry in any way. Our price needs to be competitive in comparison to the European market or other markets in Asia where the rates for such services are much lower.”

Debjit Dutta, Chairman, IATO East Chapter, said that the announced tax slab on tour operators is satisfactory but because hotels are a major component of their business, the 28 per cent tax on hotels above Rs. 5000 will hit them in a bad way. “Most inbound tourists want to stay in properties that are well above the Rs. 5000 bracket. The business model for inbound is also different from that for domestic – we create our deals and packages about a year in advance and with the new tax rate for hotels, we will have to pay the 28 per cent and five per cent, in addition to the standard rate of the hotel room. This barely leaves us with any profit margin. The tax rate needs to be reconsidered since it will kill a lot of business where most of the hotels will benefit from direct booking. In addition, with neighbouring countries coming up in a big way such as Sri Lanka, the products and tax rates need to be competitive,” he added.

Claiming that applying of CENVAT credit with 9 per cent service tax was cumbersome, Pronab Sarkar, President, IATO, said, “ GST was awaited for a long time and we were demanding from the government that since there is a lot of multiplicity of taxes in the tourism sector, the taxes should be rationalised and reduced. Thus, we were hoping to be put under the lowest GST slab and get some relief. I am glad that the government has agreed to both of them and has given us the same status what we wanted with 5 per cent GST rate. Also, there is no CENVAT credit on that. We are only concerned about one aspect of hotels, as they have put 28 per cent GST on hotels over Rs. 5000 which should not be more than 18 per cent. However, the hotel industry should come out and take up this issue. The government should encourage more tourists to come and not only look for more taxes. Rather, it should look for more tourists and get a bigger chunk of foreign exchange, which will not only generate revenue but also a lot of employment opportunities in the hospitality industry.”

Chander Mansharamani, Vice Chairman, ICPB, shared that the GST slabs announced for hospitality industry will negatively affect inbound tourism immediately, deterring tourism especially when the country is in competition with neighbouring countries. “The MICE industry will be terribly hit as most of the convention facilities are only available in 5-star hotels which have room rates of Rs. 5000 or above. The high tax rate of 28 per cent will negatively impact conventions and conferences in the pipeline as well. I feel scope for manipulation has been left for the hotels where one can charge Rs. 4990 for a room and pay only 18 per cent instead of 28 per cent. Also there is confusion whether the tax will be charged on rack rate, published rate or on the negotiated rate. The whole purpose of one tax one India is defeated,” he added.