Thomas Cook is moving into the fast-growing Russian package holiday market with a $45m (£29m) joint venture with former Soviet state travel agency, VAO Intourist.
The UK-listed group is buying a 50.1 per cent stake in Intourist with $10m in cash and $35m in shares. The new entity will subsume Intourist's 144-strong network of retail outlets but does not include the Russian company's hotel business, although Thomas Cook retains the option to buy out the rest of the company over the next five years. The existing Russian management team will remain in place.
Intourist was set up in 1929 and had a monopoly until it was privatised in the early 1990s. It still has a strong business catering to Russians' growing demand for holidays, particularly in Turkey and Egypt, and carried more than 650,000 passengers last year.
Russia is a key prospect in the global travel industry, with growth forecast to be in the double-digits in the coming years as disposable incomes rise across the country's vast population, fuelled by the booming natural resources sector. Both Thomas Cook and its key rival, Germany's TUI Travel, are showing an increasing interest in emerging markets such as Russia and China.
Manny Fontenla-Novoa, the chief executive of Thomas Cook, yesterday described the Intourist deal as a "financially attractive transaction" that will secure a "strong partnership".
"The move into Russia is in line with our established strategy of capturing growth in emerging markets," Mr Fontenla-Novoa said.
The Business Secretary Vince Cable, who is currently on a trade mission to Russia, also welcomed the deal. "This tie-up between Thomas Cook and Intourist is not only very welcome, it is also a great illustration of the potential for UK companies to expand into this exciting market where 600 UK firms are already active," Mr Cable said.