8/22/2014

INTERNATIONAL
EXPANSION
KESARI TOURS & TRAVELS

Group 7: Shashank
Rohit
Ritika
Sonal
Sriti

KESARI TOURS AND TRAVELS AND THEIR EXPANSION INTO AUSTRALIA
Executive Summary:
Kesari Tours and Travels Pvt. Ltd. was established in 1984 as a premium travel company offering
holiday packages both in India and abroad. When the company began, their primary source of
earning was tours to Kashmir, but in the early 90s as the valley became politically unstable, they
were forced to look for options elsewhere. They started with their International tours in 1992,
beginning with South Asia, they expanded into Europe, America, and very recently, they also
organized an expedition to Antarctica, covering all 7 continents.
Their expansion into Australia in 2002, was a significant strategic move by the company as they
ventured into the country after bilateral agreements between India and Australia to promote
tourism. They had a significant first mover advantage as the influx of tourists from Australia went
considerably up, and they were followed by many other Indian companies venturing into Australian
hospitality industry (Including Tatas, who started off with Australian Taj after the trade
agreements). The stable economic conditions of the country along with a very stable currency rate
Australia proved to be one of the best performing Franchisees of Kesari Tours and Travels. Pvt. Ltd.
Also, they chose to expand via franchisees and not starting up a fully owned Australian subsidiary
so as to reduce their risk exposure and to ensure a fixed income, which is an intelligent move for a
mid-size company having monetary constraints.
About Kesari.

Vision
"Kesari-The World Class Travel Company, spreading smiles and happiness..."
Mission
"Kesari is passionately committed to Total Quality Travel, with continual
delivery of value added services.
We uphold the highest ethical standards and believe in creating new
benchmarks in the industry."

Established in 1984, Kesari is a premium travel company, which offers world-class holidays in India
and around the world. With its launch as a small travel agency in Mumbai in 1984, Kesari initially
offered domestic ticketing and accommodation services. The company ventured into the domain of
world tours in 1992. The company slowly started offering destinations of South East Asia, Europe,
the Americas, Australia, Scandinavia and Alaska. By 2003, Kesari established itself in the world
tours segment and then went ahead with innovation. Its headquartered in Mumbai, India and
boasts of having about 70 per cent repeat clientele.


Divisions:
Strawberi: A division of Kesari, caters to the needs of the individual traveller. These are
customized or tailor-made holiday packages created for you, 'As you like it', to destinations
worldwide.
Kesari MICE: A division of Kesari caters to the corporate travel needs of companies mainly for
Meetings, Incentives, Conferences and Exhibitions.
Happy Hours: This division of Kesari, created with the idea of giving an opportunity to every
Indian, with a budget constraint but a passion to travel, within India and around the world. These
cost-saver tours are becoming very popular since the past few years.
Kesari Forex: An authorized 'Full Fledged Money Changer' by Reserve Bank of India, Kesari Forex
tries to fulfil all the currency needs of the Indian traveller going abroad.
Kesari Inbound: India's favorite outbound tour operator now also offers inbound operations.
Kesari India, winner of many National and International Tourism awards, offers you a variety of
packages - with responsible prices, meals, no hidden costs and much more.

Products:
Apart from offering the trade of the mill family vacations, Kesari tours and Travels is well known
for its Innovative product categories. They are run as Specialty Tours:
1. Students Special

2. Honeymoon

3. Marigold : Spiritual Tours
4. Ladies Special
5. Senior Citizens
6. Chota Break
7. Men Only
8. Jungle tour
9. Cruise Special
10. Self-Drive Tours
11. Low Price Tours

Global tourism industry
The travel and tourism industry has emerged as one of the largest and fastest growing economic
sectors globally. According to the United Nations World Tourism Organization (UNWTO) Tourism
Highlights 2013, tourisms total contribution to worldwide GDP is estimated at 9 per cent. Tourism
exports in 2012 amounted to USD 1.3 trillion accounting for 6 per cent of the worlds exports. New
tourist destinations, especially those in the emerging markets have started gaining prominence
with traditional markets reaching maturity. Asia Pacific recorded the highest growth in the number
of international tourist arrivals in 2012 at 7 per cent followed by Africa at 6 per cent.

International tourist arrivals are set to increase at a growth rate of 3.3 per cent per annum and
amount to approximately 1.4 billion by 2020 and 1.8 billion by 2030 implying an increase of 43
million international tourist arrivals each year.
While international tourist arrivals in Europe and America are expected to witness modest growth
rates of 2.5 per cent and 2.2 per cent respectively by 2030, Africa and Asia Pacific regions are
expected to witness higher growth rates at 5.7 per cent and 5.0 per cent per annum during the same
period.
The global travel and tourism industry is expected to witness certain key trends:
Increased inter region travel and hence increased air travel
Arrivals for the purpose of visiting friends and relatives, health, religion etc. are expected to
witness faster growth than those for business and professional purposes.


Indian tourism industry
The travel and tourism sector holds strategic importance in the Indian economy providing several
socio economic benefits. India ranks 11th in the Asia pacific region and 65th globally out of 140
economies ranked on travel and tourism Competitiveness Index. India has been witnessing steady
growth in its travel and tourism sector over the past few years. Total tourist visits have increased
at a rate of 16.3 per cent per annum from 577 million tourists in 2008 to 1057 million tourists in
2012.


With the international tourist arrivals in India (pegged at 7.5 million in 2013) expected to
witness an annual growth rate of 6.2 per cent over the next decade, visitor exports (expenditure
generated by foreign tourists) are expected to amount to INR 2958 billion by 2023 growing at
9.6 per cent per annum.

Impact of tourism sector on GDP
The travel and tourism sector directly contributed INR 1920 billion to Indias GDP in 2012
reflecting a growth CAGR of 14 per cent since 2007. This is forecasted to grow at a CAGR of 12
per cent from the estimated INR 2222 billion in the year 2013 to INR 6818 billion by 2023.



Kesaris international expansion:
Between 1985 and 1989, Kashmir was Kesaris main tourist destination, accounting for 60-70% of
the revenue and 200-250 travellers in each trip. But once insurgency shot up in the Valley, the
business was severely impacted. This led them to think of foreign expansion and in 1990 they
moved into countries like Thailand and Singapore. They slowly started offering destinations of
South East Asia, Europe, the Americas, Australia, Scandinavia and Alaska.

By 2011 they had realized the high propensity of the westerners to travel abroad. They had 11
branches in India and abroad, with 24 subsidiaries specialising in verticals ranging from branding
and promotion to in-house foreign exchange services.
In January 2012, they organized their first trip to Antarctica, covering all seven continents.
Expansion Strategy:
Kesari, started its international operation with countries like Singapore, Thailand and Malaysia
because of the below mentioned reasons:
High demand from loyal domestic customers
Ease of VISA processing.( VISA on arrival)
Cheaper than other western destinations.
Easy tie-up with airlines and respective hotels
Comfortable package design by Kesari
Number of days in advance required to plan the trip.
Initially the idea of using the foreign exchange rates to its benefit was not in their minds. However,
after the regular success of their outbound program they ventured into different countries where
they could leverage the foreign exchange rates. As a result of their long term strategy they had
franchised in 5 countries:
1. United States of America
2. Australia
3. New Zealand
4. Oman
5. Ireland.
The focus of our discussion in this paper is Australia.
Factors that helped Kesaris expansion in Australia
India Australia Agreements to promote tourism:
Tourism trade is already significant and is growing strongly for both the Australian and
Indian economies. Both countries have taken steps to encourage tourism in both directions,
prominently since 2002.
Cooperation is also assisted by the Joint Working Group on Tourism (led by Australia's
Department of Resources, Energy and Tourism and India's Ministry of Tourism with an
MOU signed in 2002).
The Tourism Forecasting Committee estimated in 2002 that Indian visitation will reach
340,000 annually by 2007, with TIEV expected to be US$ 1 billion.
Kesari Entered the Australian market during this time. There was a significant rise in the
inbound tourism from Australia in the years following the joint efforts both by the

Australian and Indian government. As the company moved in early, they were able to reap
the first mover advantage.
India is currently experiencing robust inbound tourism growth from many countries
including Australia. India's travel services exports to Australia have been rising consistently,
increasing by 12 per cent in 200809. They represent India's largest services export to
Australia.
The Government of India opened an Indian Tourism office in Australia (Sydney) in 2007,
while the Australian Government opened a Tourism Australia office in Mumbai in 2008, and
the Australian State of Queensland has also opened a tourism office in India. This further
promoted the influx of Australian tourists in India.
Indian companies are also investing in the Australian tourism sector the Indian Hotels
Company which is part of the Tata Group has invested in the hotel market in Sydney. (2006,
Taj entered Australia and then many others followed.)


Current strategic position of Kesari Tours
The company believed that its innovative products are different from others, thereby, considering
product differentiation as its core competency, such as Agro Tours, Jungle tours, Pilgrimage tours
etc.





Internal Factors
Strengths (S) Weakness (W)
External
factors
Opportunities
(O)
SO Strategic options
International expansion
WO Strategic options
Diversification through vertical
integration, considering economic
downturn as an uncertainty
Threats (T)
ST Strategic options
Innovation in product
development to differentiate its
product from competitor
WT Strategic options
Improving the Online booking facility
to cope up with future demands

Limitations in this project
As Kesari Tours is a private limited company, the financial informations required to analysis the
acceptability and feasibility analysis is not available. So assumptions have been made that the
company have enough financial capability to implement these strategies. And there is very less
previous research has been done on this company, so the availability of internal informations is
limited.
Problems faced by Kesari
Competition
As the travel and tourism industry in India is growing, Kesari is facing tough competition from very
big players like Cox and Kings, Thomas Cook, Kuoni etc. as they have entered India and are now
becoming established players in the Indian Markets as well. They are international giants with deep
pockets and for a mid-level player like Kesari they are posing a major threat. Many small tours and
travel operators are also eating away the market share of the company, according to an estimate by
the ministry of tourism, there are about 6000 big and small players in the tourism market
consisting of tour operators, travel agents and tourist transporters. The market hence is moving
towards becoming highly concentrated and the company needs to differentiate for a sustainable
survival.
Internal Strife
In 2013 Kesari Tours faced a management crisis in its leadership. Veena Patil who was Managing
Director of the company at that time was forced to leave her position from the company due to so
called misuse of the company assets.


Fluctuating Exchange Rate
Depending on the foreign exchange regime can prove to be a double edged sword. This was proved
during the 2008-09 sub-prime crises when tourism across the world suffered heavily. During this
period, apart from Australia, all the other countries showed negative growth in outbound tourism.
We have mapped the exchange rates of 4 years with tourist influx to study this incident.
Therefore, we find that more fixity in the exchange rate arrangements generates a positive effect on
tourism. The effect of common currency on tourism is around 20% while the effect of currency peg
is around 17%. That is, currency unions present a greater impact on tourism than currency peg o
managed floating regimes.




2008 2009 2010 2011
Australia 37.01 38.22 41.96 47.95
NewZealand 31.00 30.65 32.93 36.77
Oman 113.74 125.21 118.61 120.67
Ireland 64.14 67.36 60.58 64.65
U.S.A 43.78 48.37 45.66 46.46
30.00
40.00
50.00
60.00
70.00
80.00
90.00
100.00
110.00
120.00
130.00
Exchange Rate


Recommendations
The company should pursue Global Strategy by obtaining the benefits of
international value network to diversify its products. The company should develop
more products that better suits the local nations. For example, Kesari Tours in UK
should offer more products to ageing population. It should establish its operations
in countries where the workforce is cheap and close to its destination points.
To continue with the expansion plan of Kesari Tours and Travels, and also to
maintain its position as innovator in Tourism, we would like to suggest the
following options:
o Event based Tourism Tennis Grand Slams, Auto-Expos, Super bowls etc.
o Curated Tours
o Wonders of the world tour.
Also, to concentrate on forward vertical integration by acquiring hotels in the most
operational areas.
2008 2009 2010 2011
Australia 143340 149074 169647 192592
NewZealand 29688 30876 37024 36839
Oman 31703 32971 35485 40577
Ireland 18484 19223 20329 22089
U.S.A 795327 827140 931292 980688
10000
110000
210000
310000
410000
510000
610000
710000
810000
910000
Tourists Inflow