Alexander Tugolukov tired of tourism

In March, the businessman agreed to sell the Biblio-Globus company, which he had been creating for 25 years, but the plans were not destined to come true.  
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In March, $ 9 million was already in your pocket. The founder of the Biblio-Globus travel agency, Alexander Tugolukov, received the first part of the $ 150 million deal to sell his company’s international business to the British giant Thomas Cook. The entrepreneur has long dreamed of concentrating fully on the development of domestic tourism. “Our tourists annually take a lot of money to foreign resorts, I wanted to change something,” Alexander Tugolukov explained his decision in an interview with Forbes.

Six months later, on September 23, 2019, Thomas Cook, founded in 1841, announced its liquidation. Great Britain began the largest evacuation of its citizens, vacationing on international vouchers since World War II. The deal with Tugolukov fell apart, he had to return the deposit. What is the entrepreneur going to do next?

War and Peace

In September 2014, Alexander Tugolukov came to the office of the founder and co-owner of Transaero. Alexander Pleshakov invited a partner to discuss the situation with Egypt, where a military coup took place in July, and find a solution. Every year, "Biblio-Globus" sent about 800,000 tourists on Pleshakov's planes to Egyptian resorts, providing the tour operator with up to 40% of the proceeds. The Egyptian direction was loaded with the Transaero fleet, which performed an average of seven flights a day. Tugolukov proposed replacing troubled Egypt with a stable Russian south. The offer was unexpected.

“He always sought to show his compatriots the world,” says one of the acquaintances of the entrepreneur. The large-scale business of Tugolukov grew precisely on the overseas vacation of fellow citizens. He founded the Biblio-Globus company in 1994 with his wife Julia. The tiny travel agency of the son of a military man and the daughter of a co-owner of Boris Yesenkin, a bookstore known since Soviet times, sold vouchers to private individuals in Cyprus and gradually grew. In 1998, Biblio-Globus sent 20,000 people to the island, two years later - already 35,000. In 1999, the company's turnover amounted to $ 2.5 million - for the founders it was already decent money. “It became clear that with our experience we can develop a new agent market for us,” recalls Alexander Tugolukov.

By 2008, Biblio-Globus worked in three main areas - Cyprus, Thailand and Tunisia - and developed several new ones, including the Maldives and Indonesia. Then the operator launched its own online management system. Its competitive advantage was the ability to instantly change the cost of the tour depending on the prices of hotel rooms, airline tickets, etc. The system showed good results, increased business efficiency and allowed to reach a new level. In 2009, Biblio-Globus signed a contract for joint work with Transaero Airlines. He was introduced to Alexander Pleshakov by Inna Beltyukova, the founder of Capital Tour, one of the country's largest tour operators at that time, whose subagent was Biblio-Globus.

It was not easy to work with Transaero: the tour operator had to load huge planes, increase volumes, open and run in new directions. Tugolukov took a risk by offering Pleshakov a strategic partnership: he bought all the seats on flights at the best price (before that, Biblio-Globus purchased tickets for flights through other tour operators). Pleshakov agreed. In the future, low prices from the carrier became almost the main competitive advantage of Biblio-Globus. In 2009, the tour operator sent 180,000 people on vacation, and in 2012 - already 1.2 million tourists in 30 countries. A year later, revenue almost doubled and amounted to 62 billion rubles, Biblio-Globus became the largest tour operator in the country, overtaking Tez Tour and Pegas Touristik.

In 2013-2014, one of the mass directions of the Biblio-Globus was Egypt, where at that time one revolution replaced another. Due to unrest in the country, the Russian Ministry of Foreign Affairs and Rostourism have repeatedly recommended that tour operators stop selling tours to the Red Sea. At a meeting in September 2014, Pleshakov asked Tugolukov how to replace Egypt when it was finally closed. “Sochi,” the founder of the Biblio-Globe answered without hesitation. “For twenty years we have invested in foreign resorts, but we wanted to in the domestic economy,” the entrepreneur said in an interview with Forbes.

Olympic dumping

In October 2014, Alexander Tugolukov flew to Sochi to assess the potential of the local hotel market. For a long time, the shortage of rooms was a limiting factor for the development of domestic tourism on the Black Sea coast; existing hotels could not ensure the implementation of mass tourism programs. After the Winter Olympics, the situation changed: according to the Ministry of Resorts and Tourism of the Krasnodar Territory, in the fall of 2014, 992 hotels with a total number of rooms of 65,600 rooms were operating in the city - 2.5 times more than in 2010. “Before the Sochi Olympics, domestic tourism was perceived as an unpromising direction,” says Taras Demura, CEO of TUI Russia. “The new infrastructure has allowed tour operators to apply the principles of package tourism in working with hotels and host companies, as abroad.”

Biblio-Globus signed the first contracts with the hotels Azimut, Bridge, Imeretinsky, Gorky Gorod, Bogatyr and Velvet Seasons. The latter at that time belonged to the Center Omega company of the Department of Property Relations of the Krasnodar Territory. “After the Olympics, the resort’s room capacity utilization was only 35–40% of the total number of rooms, despite contracts with large operators such as Intourist and Alean,” says Omega’s former general director Valery Danchenko. Biblio-Globus took over 5,500 rooms in the coastal zone of Sochi and in the first year ensured their full load. Tugolukov says that he achieved this thanks to a dynamic pricing system: “Nobody believed in this, because no one had signed such large-scale agreements in Sochi before me.”

The arrival of a mass tour operator to the resort was remembered as “frighteningly profitable offers in the Krasnodar Territory”. Even before the start of the season, in May 2015, local travel agencies noticed how the operator sold accommodation in the four-star Bogatyr hotel for 670 rubles per day. It was hard to believe, but a month later the press received confirmation from Biblio-Globus of booking a room for a period of 20 days at the Russian House Hotel for only 771 rubles. For comparison: a similar offer from the tour operator "Alean" cost about 35,000 rubles. “Our pricing policy is an investment in customer loyalty and high occupancy,” Tugolukov explains. “We never hid that we would earn on turnover, and not on high margins.”

By the beginning of the tourist season of 2015, Biblio-Globus provided Transaero with a flight program for 60 flights a week to Sochi and about 30 flights to Crimea. But the cooperation lasted only six months, in October the airline failed to cope with the debt burden and stopped flights.

How did Tugolukov survive the loss of a strategic partner? “To resist the collapse of Transaero and not even use the help of the same Travel Assistance Fund is a precedent,” says one of its competitors. According to him, back in 2007, the founder of the Biblio-Globe got support in the Presidential Administration of Russia. “Perhaps access to the administrative resource allowed Biblio-Globus to be beneficially re-credited to several state-owned banks,” said one of Tugolukov’s acquaintances. Biblio-Globus never took loans and now lives on its own working capital, ”Tugolukov assures. One way or another, in the fall, tourists who have already bought permits were transported by other airlines. By the end of 2015, Biblio-Globus transported 250,000 people only to Sochi, the operator’s revenue amounted to 75.4 billion rubles, of which 5.7 billion rubles came from the Russian direction.

Hotel season

Biblio-Globus is well prepared for the new summer season of 2016: it organized an extensive flight program for the resorts of the Krasnodar Territory and the Crimea on 13 Rossiya airplanes, booked 25,000 rooms, opened receiving and service companies, one of them, BG South ", Headed by Valery Danchenko.

For the first year of work in the Russian south, Tugolukov noticed an interesting trend in sales. Along with the “airfare plus hotel” package tours, a significant part of customers booked only a hotel on the site. The share of such tourists in Sochi was 43.9%, 51.5% chose a tour with air travel. In Anapa, Gelendzhik and Tuapse, the ratio was 36.3% without a flight versus 32.4% with a flight, another 26.2% chose a tour package with a train ticket. Tugolukov decided that he would be able to load up to 90% of the number of rooms on the Black Sea coast without a ticket at all. “On the one hand, it reduced the risks.

Since February 2017, the founder of Biblio Globus opened up new prospects when he took control of his first accommodation facility - Azimut Hotel Sochi, part of the largest hotel complex in Europe with 2880 rooms, located on 24 hectares of land and having 350 m of beach. At the end of 2016, the hotel owned by Renova Group of Companies Viktor Vekselberg was bought by the Yug-Biznespartner company, associated with Krasnodar businessman Roman Batalov, son-in-law of the former Minister of Agriculture Alexander Tkachev. The new owners transferred the management of the complex from Azimut Hotels of Alexander Klyachin to Biblio-Globus for a period of five years and renamed the object to Sochi Park Hotel.

Tugolukov established “BG Management” and appointed Valery Danchenko as Director General. The condition of the object was deplorable. “Six out of 12 buildings were mothballed, another 600 rooms were occupied by staff: maids, cooks, security guards,” Danchenko recalls. The average occupancy rate of the hotel was 43% per year, and in winter it did not exceed 12%, he says. But it seems that the previous managers did not care, the top manager is surprised. The new manager opened all the preserved buildings at the Sochi Park Hotel after a major renovation in March 2017. By the beginning of the high holiday season in May, 90% of the rooms were completely ready to move in, according to Forbes.

Biblio-Globus infrastructure was created by itself, on a vast territory before, for example, only one Swedish line and an Italian restaurant provided meals to tourists. “There was no pharmacy, no shops, no rental points,” Danchenko lists. “They decided to open everything on their own, having received licenses for medicines and alcohol.” More than 300 million rubles were invested in the project, excluding rent. “The amount is decent,” Tugolukov admits. “But without a variety of services, it’s impossible to reach planned targets.” The company's revenue, according to SPARK, for 2018 amounted to almost 2 billion rubles. In total, in the projects of the Krasnodar Territory, according to Tugolukov, he invested 600 million rubles in five years. But money is of secondary importance to an entrepreneur. “Most importantly, we have expanded the tourist season from four months to a year. Sochi and Krasnaya Polyana came to life, many small enterprises opened, which had a positive effect on the city budget, ”Tugolukov rejoices. In 2018, the operator brought 1.2 million tourists to the Krasnodar Territory, in 2019 there will be more than 1.5 million.

In 2019, “BG Management” took up another project. Not afraid of sanctions, Tugolukov began to work on a large scale in the Crimea. By the beginning of the season, in just four months, he had built an ultra-modern camping “Olenevka Village” of 250 cottages for 1000 people right by the sea near Cape Tarkhankut. The project has become part of the federal target program for the development of the Crimean Peninsula. According to one of the tour operators, among Russian businessmen, officials have been looking for investors for the construction of tourist facilities in Crimea for a long time, but only Alexander Tugolukov decided on this. “Such projects are interesting to me and the state,” says an entrepreneur who has invested 300 million rubles in camping. “The business is transparent and generates a tourist flow, which provides additional income to the local population and the regional budget.” The turnover of "Olenevka Village" for the first season amounted to more than 70 million rubles, since May the object has taken about 20,000 tourists.

Unexpected divorce

In March 2019, Tugolukov returned to Moscow from London satisfied - he managed to negotiate with the largest British tour operator Thomas Cook (in Russia he already owned Intourist) to sell a 100% company. The amount of the transaction could be up to $ 150 million, depending on the results for three years. The combined tourist flow of Biblio-Globus and Intourist could exceed 4 million people a year - almost twice as much as that of multidisciplinary tour operators - market leaders, noted the industry publication Vestnik ATOR.

Why did Tugolukov decide to sell the company he had been building for 25 years? He himself does not comment on the deal. “The owners had an appetite to develop more cost-effective infrastructure projects - hotels, and they decided to merge the low-margin tour operator business while it was worth something,” says Vladimir Sharov, the head of the Association of Domestic and Inbound Tourism of Russia and the president of Vladinvesttur. Thomas Cook acquired a stake in Biblio Globus through BG TC Holding Ltd, registered in Cyprus in January 2019. The buyer got the contracts of the Russian tour operator with all transport, hotel and host companies (in particular, with the airline "Russia"). Domestic tourism did not enter the perimeter of the deal, a source close to Tugolukov said. “The margin of the tour operator business is reduced, for the largest players it is no more than 3%,” says Sharov. “TUI, Trafalgar, Anex are investing in their planes, hotels, bus fleets, and tour operator technologies have become a client pump for this infrastructure.” The hotel segment, according to him, can bring 20-25% of profit per year.

«Классический туроператорский бизнес вырождается. С развитием цифровых технологий основными игроками становятся агрегаторы, маркетплейсы и платформы динамического пакетирования: Booking, Aviasales, Expedia и другие», — говорит Инна Бельтюкова, которая сейчас является председателем комиссии по цифровым технологиям Ассоциации внутреннего и въездного туризма. Первого октября «Библио-Глобус» вынужденно расторг сделку с Thomas Cook, объявившим о своей ликвидации, и пообещал отправить на отдых всех российских клиентов компании, которые купили путевки заранее. «Весь бизнес — основной и оборотный капиталы, торговая марка, клиентская база, лицензии, имущество и технологии — переходит прежним владельцам», — сообщили представители туроператора. Сейчас задача «Библио-Глобуса» — перевести здоровые куски бизнеса, оставшиеся после владельца-банкрота, обратно в Россию и успокоить потребителя, говорит владелец крупного турагентства.

Tugolukov is ready for this: “We have created a tourist car that can reduce costs. The next stage is the creation of our own number of rooms in Russia. ” “This is not the first time that everything around is collapsing, but the Biblio-Globus continues to work quietly,” recalls the familiar Tugolukova. - Everyone remembers Transaero. Then the operator was not allowed to die, and now they will not let me. ”