It was a deal that took months and more than a few setbacks to negotiate, but Helloworld is set for a very new year when it merges with AOT Group under the stewardship of chief executive Andrew Burnes.
Helloworld will acquire the inbound operator for $25 million in cash and a consideration of 218.7 million HLO shares which will give the vendors of AOT 40% of HLO at completion when combined with their existing shareholding.
Speculation was rife after AOT Group chief executive Andrew Burnes upped his stake in Helloworld to 10.3% in April this year. Burnes called it a “tough commercial negotiation”.
“We reached an impasse a couple of times but I think everyone acted professionally and in good faith, and we were able to get the deal over the line.”
And his first order of business will be to enable franchisees to follow his lead and increase their shares in Helloworld.
AOT Group is a strong inbound tour operator, owning Sunlover Holidays, Air New Zealand Holidays, Territory Discoveries as well as destination management services.
These brands will join Helloworld’s outbound offering of Qantas Holidays, Viva! Holidays, Insider Journeys, Rail Tickets, The Cruise Team and ReadyRooms.com.au, which Burnes believes will strengthen Helloworld.
“I don’t think we are cannibalising the brands. I think there are some really complementary strengths in each of the businesses. We don’t think coming into this that in terms of what AOT does, that we do it better than Helloworld.”
The opportunities that existed between Helloworld’s outbound offering and AOT’S inbound business were touted as a powerful proposition by Burnes.
“It’s just a question of trying to hone those down and get the best of breed for the business,” Burnes said.
And that may mean consolidating the wholesale brands.
“When it comes to brands, I’m a fundamental believer that less is more. And you’ve seen what Helloworld has done with consolidating all of the retail brands into one brand.
“Is there any room for consolidation across the wholesale brands within Helloworld and the corporate brands? It’s too early for me to say – I’ve literally just arrived. But no doubt that’s a conversation we’ll be having,” Burnes said.
“Helloworld had an inbound business and sold it to AOT so we’ve got our inbound businesses back.”
Burnes’ credentials left franchisees confident at the Helloworld Owner/Manager Summit in Wellington last month. His resume includes stints as ATEC national chairman, Tourism Australia deputy chairman and TCF trustee.
AFTA has also thrown its weight behind the appointment.
“Andrew Burnes has travel and tourism in his DNA. He knows distribution maybe better than anyone before him and the fact that he has put a significant amount of money on the table and merged his very successful business, I think it sets them on a great trajectory for success,” AFTA chairman Jayson Westbury said.
“There was a very positive vibe [at the owners/managers conference]. I think the fact that Andrew spoke at very start settled everyone’s chatter up front, which I think was a good decision,” Westbury added.
Burnes reassured the owners and managers that he is “critically aware” of the challenges in the travel distribution business.
“Despite the oracles and the pundits and the doomsayers, the retail travel distribution industry in Australia adds real value to the customer experience and it will remain alive and well as long as it continues to do so.”
In that address there was a brief nod to the past, but it was all about the future for the CEO-elect.
AFTA said that Helloworld had a “tumultuous” couple of years.
“Perhaps this decision will now settle the company,” Westbury said.
Burnes also acknowledged fierce price competition from Flight Centre.
“They have taken ownership in consumers’ minds of the fact that they can and will provide the lowest airfare guaranteed.”
Flight Centre, however, was unfazed by the changes.
“At shop level, it really doesn’t change anything. The individual franchisees have always been strong competitors,” a Flight Centre spokesperson said.
Flight Centre said it’s a positive step for the industry.
“A strong agency sector highlights to the travelling public and to suppliers the value that travel retailers add,” the spokesperson added.
“The industry needs a successful Helloworld, even Skroo Turner said the industry needs a successful Helloworld,” Westbury said.
But Flight Centre couldn’t resist a shot at the brand consolidation.
“We believe in a multi-brand strategy and we saw great value in the names that fell under the old Jetset umbrella, particularly Harvey World, which was a highly recognisable brand name in Australia,” the spokesperson said.
Helloworld’s operations in New Zealand also came under scrutiny, with Burnes flagging a handover of the Air New Zealand holiday shops from wholly-owned to franchisee. While the conversion helps establish the footprint of Helloworld in New Zealand, it is not Burnes’ intention to own those when existing or contesting franchisees could buy them.
“We’d be looking to provide those opportunities for them to genuinely join the franchise network, not some wholly owned network,” Burnes said.
Meanwhile, technology was one of the biggest bugbears among owners and managers at the conference. Project Nexus has been delayed, and Burnes is aware that Helloworld needs to make it a compelling proposition for agents.
“The challenge is technology. We have a raft of technology across the business so actually ensuring they continue to function, are enhanced and to roll out new technology is a big challenge and opportunity for the business,” Burnes said.
At this stage, it’s all about conversations for the future, with extended opening hours and online commissions flagged to change.
After an hour talking to Burnes, one thing is very apparent. He has his sights firmly set on how to improve the bottom line for franchisees and will be executing a new vision for Helloworld in 2016.