Dnata buys stake in Asian travel company

Emirates Group’s travel services company, dnata, has acquired a stake in Destination Asia Group, a destination management company, its first in an Asian inbound travel market.

Dnata declined to disclose the value of the stake, however, it is not a full takeover of the com­pany.

“Our stake in Destination Asia opens the door to business oppor­tunities in new markets,” said Iain Andrew, the divisional senior vice president of dnata’s travel business.

Destination Asia Group, set up in Thailand and Vietnam in 1996, is present in 11 countries in Asia, including China and ­Japan.

The Destination Asia Group has 700 staff. There has been no change in the employment contracts, according to dnata.

The stake in Destination Asia Group is more about building a corporate link to another Asian-based travel group than it is about driving revenue growth, according to Saj Ahmad, an analyst at London’s Strategic­Aero Research. “They want to see how Destination Asia operates and how it would converge with its own strategic direction before making [any full takeover],” he said. “A stake also decreases the risk if they feel Destination Asia isn’t for them.”

Last month, dnata’s president, Gary Chapman, told The National that it was looking at destination leisure management companies in the Far East for investment as it is a natural add-on to its business. “We are sending a lot of people through our travel businesses from the Middle East and from the UK to the Far East,” he said last month.

The travel services division is dnata’s largest segment by revenue, posting a 34 per cent rise in the last financial year ending March 31 to touch Dh3.3 billion. It sold Dh11.7bn worth of travel services during the per­iod, a 20 per cent rise from a year earlier. Last year, dnata invested Dh585 million in new acquisitions besides developing human resources, facilities and technology.

It is one of the largest travel agents in the UK. In 2014, it bought Thomas Cook’s Gold Medal for £45m (Dh251.5m) besides Stella Travel Services. It acquired UK-based Travel Republic in 2012.

Dnata clocked a record pro­fit, crossing Dh1bn for the first time in the financial year ending March 31, a 16 per cent rise from a year earlier. It is also sitting on a cash balance of Dh3.5bn.

Thailand is starting to recover after a tough period. The economy grew 2.8 per cent in 2015, a year after political turmoil brought the country to the brink of recession. But growth continues to undershoot most other South East Asian economies and there are downside risks to the IMF’s forecast for 3 per cent growth in 2016, the fund said.

“The current accommodative monetary policy stance is appropriate,” the IMF said after completing its annual review of South East Asia’s second-largest economy.

“Going forward, while there is room for further easing, this should balance support for the economy against financial stability concerns and the need to preserve policy space.”


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