Thomas Cook India expects at least $5m boost after acquisition of Dubai-based DEI

Travel company acquired 51% stake in Digiphoto Entertainment Imaging to grow Middle East travel

KS Ramakrishnan, President and CEO of Digiphoto Entertainment Imaging, and Mahesh Iyer, CEO Thomas Cook India Ltd. Courtesy Thomas Cook India

Thomas Cook India expects a boost of at least $5 million to its bottom line after acquiring a  51 per cent stake in Dubai-based Digiphoto Entertainment Imaging for an enterprise value of $40.6 million (Dh149m), its chief executive said.

The acquisition could generate $5m to $8m a year for Thomas Cook India over three years, Mahesh Iyer told The National on Monday following the signing of the agreement. The travel company's investment in DEI, which has agreements for photography in about 40 attractions in the UAE, comes as it seeks to boost the number of visitors from India to the Middle East.

"DEI runs end-to-end photography solutions for Burj Khalifa and Ski Dubai and we send a lot of travellers from India and the world to Dubai, so we can bundle these experiences," Mr Iyer said. "Travel has moved from becoming a commodity to being an experience and we believe this will enhance travellers' experiences."

DEI, established in 2004, operates in 14 countries and has more than 150 photography partnerships in 250 attractions, according to its website. With a 3,700-strong staff, it has offices in Orlando, Kuala Lumpur, Singapore, Bali, Hong Kong, and Mumbai. Thomas Cook India is targeting growth in annual visitors from India to Middle East and expects its investment in DEI to boost tourist flows.

Thomas Cook India flies approximately 25,000 visitors from India to the Middle East every year and is targeting compounded annual visitor growth of 12 to 13 per cent over the next three to five years, Mr Iyer said.

"Dubai is a growing market and its proximity to India makes it attractive for short haul breaks," he said.

The company's acquisition of DEI, its second deal in the Middle East since 2016, will be earnings accretive immediately as DEI is a profitable company with earnings before interest, tax, depreciation and amortization of $6.1m in 2018, according to Mr Iyer.

Thomas Cook India could make more acquisitions in the Middle East of travel and travel-related companies if it finds the right opportunity at the right price but is not currently in negotiations.

"We’re very opportunistic. If we find a great fit at an attractive valuation, then we could do it," he said. "There's no target in mind, only when an opportunity comes our way."

Thomas Cook India will have two representatives on the board of DEI but the Dubai-based company's management will continue to run the business, he said.

"It's a great buy for us in the adjacent travel space," Mr Iyer said. "Growth in travel from India to the MIddle East will double in the next three to five years."

The deal is expected to be completed within four to six weeks pending regulatory approvals, he said.

The company is targeting business travelers from India going to Dubai for short trips and attracting them to stay longer for leisure, he said.

"I'm selling travel packages to visitors who can walk into DEI for tickets to the attractions," he said.

Dubai hosted 15.92 million visitors in 2018, up 0.8 per cent from a year earlier, and India retained its spot as the top source market with more than 2 million travellers, according to government data.

Thomas Cook India is majority owned by private equity firm Fairfax Financial Holdings and operates independently of the UK's Thomas Cook. Its operations span 25 countries, with more than 8,000 employees and combined revenue of more than $1.75 billion.