Thomas Cook and TUI to target Russian Tourists

U.K. travel companies Thomas Cook Group PLC (TCG.LN) and TUI Travel PLC (TT.LN) are targeting Russia for expansion. Thomas Cook sees the Russian tour market as a big growth opportunity. Egypt and Turkey are popular destinations for Russian tourists.

Thomas Cook Group continues to review acquisition opportunities, with the focus on emerging markets and independent travel. “In emerging markets, tourism is growing at a faster rate than in our traditional markets. We are particularly encouraged by the opportunities in Russia and China, which are expected to become two of the largest travel markets within the next few years,” stated the company.

“We are looking at limited investment in partnership and joint venture structures in these markets to manage risks, but with an opportunity to take majority or full control over time. In Russia, we seek to establish a strong presence early on and would expect to leverage our destination strengths, particularly in Turkey.

Reporting higher revenue and earnings for its latest fiscal year, Thomas Cook Monday said it expects to enter the Russian tourism market with a bolt-on acquisition by the first quarter of 2010. Chief Executive Manny Fontenla-Novoa said the company is currently undertaking due diligence on an unnamed Russian company, which also has retail operations. It is looking at the books of a Russian tour operator and intends to buy it for ‘tens of millions of pounds’ soon, said Fontenla-Novoa.

Thomas Cook’s focus on Russia comes after rival TUI Travel said earlier this year it was targeting Russia for expansion. In April, it announced a joint venture with S-Group Capital Management Ltd. to develop its Russian and Commonwealth of Independent States leisure tourism presence, and in September said it was looking for acquisitions in emerging markets with a focus on Russia and CIS.

The Russian Federation outbound tourism market was worth $24.9 billion in 2008, according to the United Nations World Tourism Organization.

The Russian outbound and domestic tourism market grew 17% per annum between 2000 and 2009, and is forecast to grow 12.7% annually between 2009 and 2014, according to the World Travel and Tourism Council.