Comment: Hoffmann deal could be vital for JTG
So Jetset Travelworld got its man. And boy, how it needed him.
Quite what inducements JTG offered Phil Hoffmann Travel to join Helloworld as an associate member may only ever be known to the parties involved.
But joined he has, to the considerable relief of JTG.
To lose such an influential and respected figure as Phil Hoffmann and his agency was almost unthinkable for Rob Gurney, JTG's under pressure chief executive, who may very well have adopted a ‘whatever it takes’ attitude to securing Hoffmann’s valuable signature.
It would not be unfair to say JTG needed Phil Hoffmann more than Phil Hoffmann needed JTG. His eight-location agency and business travel division employs 150 staff and has an annual turnover well in excess of $100 million. He could comfortably have gone out on his own.
Irrespective of the incentives tabled by JTG, it will come as a significant and timely boost for Gurney as he and his management team strive to convince wavering agents that Helloworld is the right model for them.
Speculation has been mounting for a while that very few retailers have yet to jump on the Helloworld bandwagon as they nervously ponder the much tighter franchise terms contained in a document the size of phone book. A reluctance of JTG to release figures has only fuelled suggestions that numbers are on the distinctly light side.
But securing the support of Phil Hoffmann could be the catalyst for others to put pen to paper.
While terms of the agreement with the Adelaide agency are likely to be far different from those of one-shop businesses with little financial clout and influence, those smaller agencies may take heart from its endorsement of JTG’s strategy. Gurney will certainly be hoping that’s the case.
Futhermore, it's a strong message to send to suppliers, who will be watching the Helloworld evolution with interest and anticipation. The terms of future commercial deals will rest on the uptake of JTG agents.
In a statement, Hoffmann offered remarkably fulsome praise for the JTG strategy – which raised eyebrows among some observers – in which he suggested Helloworld “is the only group that is realistically considering the future of travel in Australia by…providing support that will deliver long-term sustainability for agents”.
I’m sure some of the other players – Flight Centre among them – might have something to say about that. Nevertheless, Hoffmann’s support would, on the face of it, appear to be unequivocal.
The timing of the announcement was interesting, coming two days after the conclusion of the Magellan Travel conference in Noosa, where management outlined a three year vision to generate group combined TTV of $1 billion and grow membership beyond 100.
Magellan would surely have been hoping to finally woo Hoffmann from Travelscene American Express, an addition to its ranks that would have rapidly accelerated those TTV ambitions.
But even before Monday’s announcement, Magellan's chairman, Andrew Jones, conceded that Hoffmann was "one scalp we probably wouldn't get", an indication that he guessed what was coming 48 hours later.
Magellan's founding agents, Jones included, are all former Travelscene colleagues of Hoffmann and no doubt remain close. Indeed, Jones met Hoffmann during the Ashes cricket series in England this year and it would be remarkable if the Magellan chairman hadn't got to work on Hoffmann over a few beers. If nothing else, such a conversation would have taken their minds off Australia’s drubbing that was unfolding before their eyes.
Not that Magellan will or should be overly disappointed at Hoffmann’s decision. The group is cruising along nicely, and secured a major coup of its own in October by picking up Spencer Travel, another high profile Travelscene Amex agent.
The defection of Penny Spencer, universally respected and liked in the industry, made the signature of Phil Hoffmann Travel all the more important for Gurney. And it further underlined the pedigree of agents being targeted by Magellan chief executive Andrew Macfarlane and his directors.
Magellan will recoil, however, at use of the word "targeted", having insisted yet again, that it waits for prospective members to contact them, rather than proactively knocking on doors.
Be that as it may, and irrespective of who makes the first move in the agency courting game, Magellan is well placed to accelerate its recruitment, as, indeed, are other groups as the fall out from the JTG rebrand becomes clear.
Orient Express Travel Group and iTravel are both said to have picked up some agents, while the home working groups are also hopeful of using the upheaval to their advantage.
And this morning, Flight Centre announced it will invite agents "from the broader travel industry" to become an Escape Travel franchisee. It is almost inconceivable to think that this isn't aimed squarely at JTG agents, with Flight Centre already claiming it has attracted interest from agents "who are affiiated to other franchise groups".
None of this is meant to suggest that JTG will not hit its target to build a 1000-strong Helloworld network, 600 of which it wants to be fully branded (helped, maybe, by several head-office owned offices?)
It may well reach those goals, and progress may become clearer at its owner and managers conference in Melbourne next month.
Aside from the franchise network there are several other issues at play at JTG, including that of Best Flights and where its stands in the company’s future.
Back in July, JTG said the WA-based online division would “eventually be incorporated into the broader digital platform”, raising the question of whether it would be swallowed by Helloworld.com.au and its strategic partnership with Orbitz.
But JTG is now saying Best Flights “will continue to exist” – and so it should.
There are many issues yet to unfold. For now though, JTG can rest safe in the knowledge that its biggest agent is coming along for the Helloworld rollercoaster ride.
Email the Travel Weekly team at traveldesk@travelweekly.com.au
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