British tour operator Thomas Cook has outlined a plan for global expansion with deals in the growing markets of Russia and China.
In Russia the operator agreed to create a joint venture with Intourist, taking a 50.1 per cent stake and paying £29m in cash and shares.
Founded by Joseph Stalin in 1929, Intourist was a monopolist in the Soviet travel market. It was privatised in the early 1990s and has grown during the travel boom which has characterised the Russian market over the past decade.
Beach holidays in countries like Turkey and Egypt are in big demand among Russians, and Thomas Cook said it hoped to capitalise on this.
“The joint venture will include Intourist’s outbound, domestic and inbound tour operating operations, as well as its retail travel network, and will focus on expansion in Russia and the other CIS countries,” Thomas Cook said in a statement.
The deal does not include Intourist’s hotels division.
Thomas Cook added: “Over six million Russians went on overseas, packaged holidays last year, and the market is expected to grow by a double-digit percentage in the coming years”
Intourist, which was restructured in 2005, had been owned by billionaire Vladimir Evtushenkov’s JSFC Sistema.
Thomas Cook will have an option to purchase the remaining shares in the joint venture over the next five years.
“The joint venture is conditional upon anti-trust clearance in Russia and certain other conditions, and is expected to complete in or before February 2011,”Thomas Cook said.
Following the Intourist deal Thomas Cook chief executive Manny Fontenla-Novoa said the firm was now seeking to form a joint venture with a Chinese travel company to further its emerging markets strategy.
In 2008, the group bought back the Indian travel business it had sold to the Dubai Financial Group two years earlier.
China represents the third stage of the programme.
Analysts expect Wednesday’s full-year results for Thomas Cook to show pre-tax profits down nearly ten per cent at £278 million after a challenging year.