TBO Tek Ltd. , a Gurugram-based travel market services provider, has announced a significant move to expand its global reach in the luxury travel market. The company's wholly-owned step-down subsidiary, TBO LLC, has approved the acquisition of 100% ownership interest in Classic Vacations LLC, a US-based luxury travel wholesaler, for up to $125 million.

Acquisition Details

The deal, subject to closing adjustments, is expected to be completed by the first week of October 2025. Notably, the acquisition requires no regulatory approvals, paving the way for a smooth transition.

Strategic Expansion

This strategic acquisition aligns with TBO Tek's plans for inorganic growth and expansion into the premium outbound travel market. Classic Vacations has a strong presence across the US luxury travel space, boasting a network of high-value travel advisors and deep ties with major American consortia.

Gaurav Bhatnagar, TBO's co-founder and Jt. Managing Director, expressed enthusiasm about the deal, stating, "We're thrilled to bring Classic Vacations into the TBO family – the company's longstanding delivery of outstanding services has earned the trust of its more than 10,000 travel advisors in the US, and their end customers, making them a seamless fit for our vision moving forward in the fast-evolving travel and tourism industry."

Financial Highlights

Classic Vacations has demonstrated solid financial performance, with net sales of $111.04 million for the year ended December 31, 2024. The company's revenue and profitability have remained relatively stable over the past three years:

Funding the Acquisition

To facilitate this acquisition, TBO Tek has approved an inter-corporate loan of up to ₹350 crore to its wholly-owned material subsidiary, Tek Travels DMCC. This loan will be used to aid TBO LLC in funding the acquisition.

Additionally, TBO Tek will issue a letter of comfort and subsequently a corporate guarantee for up to $77 million to secure credit facilities of up to $70 million from Standard Chartered Bank for TBO LLC.

Market Impact

The acquisition is expected to strengthen TBO Tek's position in the global luxury travel market. Melissa Krueger, CEO of Classic Vacations, commented on the synergies, saying, "TBO's tech-centric solutions are geared fully toward our travel advisor community. TBO connects us to its first-class technology platform unlike what the wholesale market has ever had access to – allowing us to bring even more resources, tools and insider connections to our valued travel advisors."

Looking Ahead

Post-acquisition, Classic Vacations will become a wholly-owned subsidiary of TBO LLC and a material step-down subsidiary of TBO Tek. The company plans to leverage the combined strengths of both entities to accelerate growth as a global leader in the luxury travel market.

Despite the positive news, TBO Tek's shares have seen a 22% decline year-to-date, closing 1% higher at ₹1,376.50 on the day of the announcement, still 31% below their 52-week high of ₹2,001.00.

As the global demand for luxury travel is projected to expand significantly over the coming decade, this strategic move positions TBO Tek to capitalize on evolving traveler expectations and drive sustained value in the premium travel segment.

TBO Tek Limited demonstrated resilience in its financial performance for the first quarter of fiscal year 2026, despite facing significant challenges in the travel industry. The company reported growth across key metrics while navigating through geopolitical conflicts and aviation incidents that impacted the peak summer travel season.

Financial Highlights

• Gross Transaction Value (GTV) increased by 2.00% year-over-year
• Revenue grew by 22.00% compared to the same quarter last year
• Gross profit rose by 19.00% year-on-year
• Monthly transacting buyers expanded by 5.00% to over 29,500

Operational Performance

The company's performance was particularly strong in its hotels and ancillary business, which drove faster growth in revenue and gross profit compared to GTV. Despite the challenges, TBO Tek's EBITDA remained flat on a like-to-like basis, with marginal growth in Profit After Tax (PAT).

Market Challenges

TBO Tek faced several headwinds during the quarter, including:

• India-Pakistan conflict
• Iran-Israel conflict
• An Air India crash during the peak summer travel season

These events led to significant disruptions in the travel industry, particularly affecting the crucial summer travel period.

International Expansion and Investment

TBO Tek continued its aggressive investment in international markets, focusing on hiring key account managers (KAMs). This strategy has shown early positive results:

• Monthly active agents grew from the 8,600-9,000 range to nearly 11,000 in June
• New customer addition rate increased by 69.00% year-over-year
• 4.20% of international GTV was contributed by travel agents added in the same quarter

Regional Performance

Future Outlook

Management expects the investment phase to complete by Q4 FY26, anticipating improved operating leverage in the latter half of the year. July has shown quick recovery in Europe and Middle East markets, with demand normalizing to expected levels.

Gaurav Bhatnagar, Co-Founder and Joint Managing Director, commented on the results during the earnings call: "In spite of these headwinds, the business has shown resilience, and we have continued to grow. Our hope is that we continue to believe in the previous hypothesis that by Q4 we should start to see a lot more operating leverage flow through in this part of the business."

TBO Tek remains focused on its growth strategy, particularly in the hotels and ancillary business, while continuing to optimize its operations and expand its international presence. The company's ability to navigate through industry challenges while maintaining growth underscores its strong market position and adaptive business model in the dynamic travel industry landscape.