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A Look Back at 2008's Movers & ShakersDecember 19, 2008 By: George Dooley Travel Agent
These mergers and acquisitions are proof that the industry has many healthy years ahead
As 2009 begins, the travel agency industry might be facing an
economic downturn of unknown severity and duration. But throughout
2008, the movers, shakers and dealmakers have been largely driven by
confidence in the future.
Former Carlson executive Mike Batt, with the support of Carlson’s chair and CEO, Marilyn Carlson Nelson, drove this home in January 2008 with the surprise announcement of the formation of the Travel Acquisitions Group (TAG).
The dramatic move created a new 500-plus-member agency powerhouse from Carlson Wagonlit Travel network agencies, now known as Travel Leaders. Included in TAG are four sizable franchise groups: Results! Travel, SeaMaster Cruises, Cruise Holidays and the former Carlson Wagonlit U.S. agencies.
the onset, Batt expressed confidence in the future and pledged
aggressive expansion of TAG. Batt committed TAG to an aggressive
acquisition strategy and the goal to expand its sales/asset base by
$1.5 billion within two years.
Within months, Batt proved true to his word. In another surprise deal, TAG and Tzell merged,
adding Tzell’s strength to the new TAG. Today, TAG is a retail giant
with both wholly owned and independently owned franchises.
merger of the Tzell Travel Group and TAG now forms one of the top 10
largest travel companies in terms of annual sales volume. TAG's Batt
will continue as chairman of TAG while Tzell’s CEO Barry Liben will serve as CEO of TAG as well. Tzell will operate as a separate business unit based in New York City.
“Merging Tzell and TAG will improve the services we can provide to our
franchisees and agents, while increasing our relevance to suppliers,"
said Batt. "It’s a ‘win-win’ for everyone associated with TAG and
“Through this merger, we will see sourcing and
operating synergies as we build an even larger and more effective
group,” added Liben.
Less well-reported was the emergence of TAG’s franchise network, the Travel Franchise Group, under Roger Block.
In addition to the former CWT agencies, TAG had nurtured other groups
to maturity, including Results! Travel, SeaMaster Cruises and Cruise
Other TAG brands impacted by the move include specialized businesses such as All Aboard Travel, Carlson Destination Marketing Services, Connexion Loyalty Travel Services, CruiseDeals.com, Cruise Specialists, Fly4Less.com, Luxury Travel Network, Partners In Travel and SinglesCruise.com.
TAG’s decision to purchase the Carlson Leisure Group (Carlson Companies' leisure-related businesses, including CWT agencies), created a multibillion-dollar force in retailing.
Another major deal in 2008 was finalizing the Flight Centre Limited acquisition of Liberty/GoGo, announced in late 2007. The Australia-based global retailer picked up the Ramsey, NJ-based Liberty/GoGo, which includes wholesaler GOGO Worldwide Vacations and its corresponding retail travel agency arm, Liberty Travel, late last year. The sale was valued at $135 million.
The transaction included the purchase of 193 retail travel locations along the East Coast, Chicago and Florida and 40 wholesale locations in 22 states. When Flight Centre revealed the purchase to the Australian Securities Exchange, it noted that the combination of the Liberty and Flight Centre businesses would exceed an anticipated $2 billion a year.
“We’re under quite a lot of direction to make positive change quickly. We’re talking about a company that’s got a 50-plus-year legacy and we want to honor that,” said Dean Smith, GoGo’s new president. “The only way that we can honor it is by making it bigger and better and pushing it forward.” Smith most recently headed up Flight Centre’s wholesale business in Australia.
Smith said Flight Centre and GoGo will become a single-distribution platform. This will enable agents in the U.S. to have access to the entire Flight Centre Australia-Pacific/Asia product range that it contracts in Australia. Agents in the Flight Centre network will likewise have access to GoGo’s substantial core Caribbean, Mexico and Americas product.
The acquisition gives Flight Centre a strong presence in North America. The combined companies are expected to produce annual revenues of $2 billion, making the business the 10th-largest travel group in the U.S. and the second-largest brick-and-mortar leisure agency, after AAA Travel.
One of the year’s bigger dealmakers was Uniglobe Travel Center (UTC), the Irvine, CA-based host agency division of Uniglobe Travel (USA), LLC, which announced its acquisition of Magellan360, a host agency located in Glen Ellyn, IL.
Magellan360 supports 57 affiliates with approximately 85 travel professionals serving clients with both corporate and leisure travel. This acquisition will increase Uniglobe Travel Center’s annual sales to more than $85 million, supporting more than 400 independent contractors and home-based agents.
“This acquisition by Uniglobe Travel Center strengthens our position in the host agency sector where we see ourselves as the best of the best in the biz,” said U. Gary Charlwood, founder, chairman and CEO of Uniglobe Travel International. “It’s the high quality of travel industry professionals who work in the Uniglobe system that has made Uniglobe Travel a global leader.”
“We are very excited about this acquisition,” added Rose Snyder, UTC’s vice president and general manager. “Magellan360 affiliates will have access to Uniglobe programs, including business and marketing planning assistance, marketing tool kits, expanded support help-desk hours and the ability to network with more than 750 Uniglobe agencies in 40 countries.”
Pam Miller, president of Magellan360, will join UTC to facilitate a smooth and seamless transition. “One of the many aspects that solidified our decision to sell the operation to Uniglobe is their complementary business model and corporate culture,” she said. “Despite their size and global reach, they are a family-owned business rooted in the values and principles of delivering exceptional customer service based on dependability, integrity and initiative.”
On the technology side, The Travel Zone signed a worldwide partnership agreement with Uniglobe Travel International. The move will include setting up new hosting and fulfillment operations across the globe for Uniglobe’s regions. Uniglobe currently has 700 locations across 30 countries.
Each fulfillment center will receive a customized version of The Travel Zone’s Agent RC technology platform, which includes booking tools, content, language preferences and region-specific back-office interfaces. The Agent RC system has special value for host agencies’ management of outside agent networks.
New fulfillment centers will be created to serve Southern Africa, South Asia, Austria, the British Isles, Canada, China, Germany, Holland, Italy and Switzerland.
“The U.S. market has seen exponential growth in the home-based and hosting market segments,” said William Almonte, president and CEO of The Travel Zone. “The Travel Zone and Uniglobe intend to combine their expertise to offer a powerful worldwide hosting solution.”
“We see the hosting and outsourced fulfillment as an opportunity that could be implemented globally,” said Amanda Close, Uniglobe vice president of global operations and regional services. “As a result, traditional agencies and home-based agencies would have the opportunity to streamline their operations and focus on growing their businesses.”
The Agent RC technology platform is a web-based, hosted solution that offers travel agencies of any size a complete turnkey system to manage host/fulfillment operations at an affordable monthly subscription cost, which the agency can then resell. Agencies can customize the entire application with their own branding, content, booking engines and information.
Other Noteworthy Deals
Radius Travel and Transport of Omaha acquired Abacus Travel, based in the Boston area, in January. Abacus had $100 million in sales and 100 staffers and was rebranded as Travel and Transport, specializing, as did Abacus, in business travel management.
Another interesting deal is online travel-
selling giant Expedia’s recent alliance with Canadian franchiser CruiseShipCenters. This suggests that new technology will be combined and blended by online players who also want the offline skills of personalized service and knowledgeable staff that agencies provide. Expedia CruiseShipCenters now has 107 retail locations and 1,600 cruise consultants.
In October, the merger of New York-based Pisa Brothers Travel with Southern California-based Worldview Travel was announced. The company has an estimated $200 million in annual sales and will be led by Ricci Zukerman, founder of Worldview. A Virtuoso member specializing in luxury travel, the company has more than 100 independent contractors. Both agencies will retain their own name identities.
Another example of confidence is offered by Altour. Admitting the current economic uncertainty suggests an inevitable slowdown for the travel industry, Altour, one of the leading travel agencies serving the affluent market, said it continues to actively seek acquisitions.
In the past 18 months, Altour said it has completed five acquisitions in both domestic and international markets and remains undeterred by the current financial climate. With total sales of $535 million in 2007, Altour is among the largest independent agencies serving the luxury and mid-market travel niches. It has 700 employees and offices in 21 countries—and it continues to grow. Barry Noskeau, Altour’s executive vice president, said that the company’s goal is to increase sales to $1 billion through organic growth and acquisitions.
From Far and Near
One trend worth watching is the entry of overseas companies into the North American market. Travelzest, a UK-based specialist travel group, acquired the Canadian luxury cruise retailer The Cruise Professionals in June, for a reported $10 million. The company employs 41 travel professionals and was designed to expand into markets outside North America—especially the luxury cruise market. Travelzest, Travel Counsellors and Flight Centre are all international firms who entered the North American market.
Back in the U.S., Denver-based Andavo Travel and Salt Lake City-based Christopherson Business Travel announced a merger in January to form a $250 million travel management giant. The goal was to strengthen the two companies’ marketing positions, realize business efficiencies and exploit buying power and technology gains. Both were BCD Travel members, and both will continue to operate under their own names.
Protravel International, headquartered in New York City, opened its 23rd full-service location in Grand Rapids, MI, and Protravel president Priscilla Alexander said the agency is committed to a growth strategy.
Projected sales for her entire company are $540 million. In business since 1984, the agency has close to 650 employees, is the largest producer for Virtuoso (the agency group) and is ranked among the top 15 privately owned agencies in the U.S.
Another upbeat indicator is that Protravel has established a division called Virtually Pro, or VPro, which is focused on home-based agents. VPro will provide these agents with cutting-edge technology, marketing support and a pro-growth culture.
Off the Radar
While major deals make headlines, the real action is between smaller agencies. These deals are intensely private and essentially under the radar of publicity. But they are critical and the volume—and value—of the transactions offers an insight into the retail industry.
Early in November, Alpharetta, GA-based Innovative Travel Acquisitions Inc., a major broker, said it had recently completed seven purchase/sales transactions in the U.S., with a combined annualized volume equaling business booked of $49 million in total sales. These transactions bring ITA’s total number of completed deals to 507 since its inception in 1991.
The acquisitions include:
* Frosch Travel, Houston, which acquired World of Travel in Columbus, OH;
* Atlantic Pacific Travel Leaders, San Jose, CA, which acquired A World of Travel in Phoenix;
* Uniglobe Wings Travel, Blue Bell, PA, which acquired Mittle Travel in Allentown, PA;
* Protravel, New York, which acquired The Travel People in New York;
* Global Management Services, Chicago, which acquired The Ultimate Travel Store in Bartlett, IL;
* Travel Leaders in New York, which acquired Bokoff Kaplan Travel in Norwich, CT; and
* Business and Pleasure Travel in Lavonia, MI, which acquired Drolett Travel in Grand Ledge, MI.
While these mergers and acquisitions are one sign of confidence in the future of the retail agency industry, they are the tip of the iceberg. Organic year-over-year growth in sales, investment in new technologies, joint promotions with suppliers and productivity gains are often not publicly reported. Nor is expansion of host agency networks. In 2009, as in 2008, the competition for quality agencies will remain intense.