Why are DMCs so hot now?

What’s exciting for me is this criss-crossing of DMC acquisitions – India into Asia, Japan into Europe, Middle East into Asia.

Raini Hamdi

It is raining DMCs at our newsdesk. Who would have thought that it’s the smaller guy who would take the wheel at the larger player? That’s the story of Stephan Roemer, who founded Tourasia in 1992 and grew it to be a reputable Swiss tour operator specialising in travel to Asia, with just 50 staff in Europe (including operations in Germany and Poland). He’s now a “substantial” shareholder of Bangkok-based Diethelm Travel Group (DTG) – established in 1957, 450 staff, 12 Asian countries – substantial enough to put him in the driver’s seat to shape Diethelm’s future.

Over at Bangkok-based Destination Asia, there’s also a new CEO, Monique Arnoux, replacing Jim Reed, co-founder of the company who has been elevated as executive chairman. You recall that in June last year, DNATA bought an undisclosed share of Destination Asia. And let’s not forget that Kuoni Group went to pieces; Thomas Cook India vultured its network of DMCs – Allied TPro US, Asian Trails, Australian Tours Management, Desert Adventures/Gulf Dunes Middle East and Private Safaris Africa – while JTB Corporation swooped in on Kuoni Global Travel Services, which handles a growing volume of Asian leisure and corporate business into Europe.

What’s exciting for me is this criss-crossing of DMC acquisitions – India into Asia, Japan into Europe, Middle East into Asia. More of this will happen. Intrepid Group, which owns 20 adventure travel DMCs throughout Asia, South America, Africa and Europe, is on the prowl for more DMCs to buy. Executive chairman Darrell Wade told me they collectively contribute half of the group’s revenues. He aims to buy five DMCS this year, in Japan, Mexico, Costa Rica, Panama and Iceland, and another five next year in Indonesia, Brazil and three others.

So why are DMCs so hot now? The major reason is  they are profitable, and benefit from continued rise in travel. For companies like Intrepid, it’s the rise in new adventure travel markets in China, Japan and everywhere else. And if you look at ‘adventure’ in the broader sense of the word, i.e. not necessarily jumping off a cliff, but going off-the-beaten path, engaging with locals, etc – well, there’s a whole lot of passengers wanting that today. Which is why DMCs thrive; they are after all ‘Destination Management Companies’ (although I find the word pretentious, not to say confusing, when ‘specialists’ alone will do, but that’s another story).

For organisations like JTB, it’s the rise in Asians travelling longhaul, while for companies like Thomas Cook India and Tourasia, it’s the re-emergence of Europe and the US for Asia. As Thomas Cook India’s CEO Madhavan Menon told me: “As Singapore Airlines, Qantas and other carriers start operating longhaul aircraft – nonstop from Asia to North America, from Australia to Europe – these tourists will find it easier to come to Asia, unlike today where it involves a stop through say Emirates or Qatar in the Middle East.”

Economies of scale and vertical integration (Tourasia’s DMCs, for instance, are now into DTG) will enable DMCs to invest more on technology and resources to be more personalised, knowledgeable and speedier in responding to clients’ needs.

Expect them to be ‘hotter’.

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  1. Interesting , with what seems like the exception of JTB, that no other Asian based DMC, or its owners , are among those acquiring, but rather are being bought. Was this a result of too narrow a home view over the wider markets growth potential, or simply a lack of financing available regionally to take better advantage of what may have been more of an Asian led expansion into such connective ownerships?

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