Travel Agents

Flight Centre acquires two travel management groups

Hannah Edensor

So Flight Centre is on one hell of a roll right now, making two more acquisitions in the New Zealand corporate and leisure travel market.

Flight Centre has announced it will acquire Travel Managers Group (TMG), a largely leisure-focused group that provides systems and support services to a network of over 180 individual brokers, with 22-shop franchises, including 12 TravelSmart shops and 10 non-branded stores.

And because that wasn’t already enough, it’s also acquiring Executive Travel Group (ETG), New Zealand’s largest independent corporate travel management company.

The addition of ETG takes Flight Centre to basically one of the biggest corporate travel management companies in NZ, while the TMG acquisition gives Flight Centre a strong broker and franchise network to complement its multiple other leisure offerings.

The acquisitions set up Flight Centre’s Kiwi operations to become the fifth largest business globally by sales, behind Australia, the US, UK, and Canada.

“Executive Travel and Travel Managers are profitable businesses, generating earnings before interest, tax, depreciation and amortisation in excess of $NZ3 million annually, with solid growth trajectories and good track records of success,” Flight Centre’s Managing Director Skroo Turner said.

“With their addition, Flight Centre New Zealand will go close to becoming a $NZ1.5 billion-per-year sales comapny during the 2018 fiscal year (FY18).

“ETG will enhance our already strong corporate travel offering in New Zealand and will give the business additional scale and expertise.

“Through TMG, we will gain access to new business models and leisure revenue streams to complement our offerings across our other key channels, which include online, contact centres, our community and flagship shop network and our expo and event program.”

Flight Centre Travel Group has previously flagged its intention to expand in the broker or home-based sector within its key travel markets globally, with TMG the company’s first acquisition in the sector.

The Group recently secured acquisitions of hotel management company, Bespoke Hospitality Management Asia, and Mexico-based DMC Olympus Tours.

It also upped its stake in the DMC acquisition, Buffalo Tours, while simultaneously streamlining APAC operations and making some redundancies.

“The home-based or broker offering has strong growth potential and is attractive to us for a number of reasons,” Turner added.

Turner said it will deliver “access to a talent pool of highly experienced travel experts” and “new career opportunities for our sales people”.

It will also deliver “added convenience for customers, greater efficiencies, as the home-based or broker model has a lower cost base than a traditional shop”.

“It will deliver new distribution channels for our manufactured products, which includes a rapidly expanding range of unique airfares, packages and in-destination offerings.

“We look forward to working together with TMG to deliver exciting new opportunities, services, benefits and products to its network of expert sales consultants and their customers.”

Former Flight Centre NZ employee Kevin Weston co-owns ETG, and is a major shareholder in TMG.

Weston and his business partners, Nicola Jamieson and Dave Wallace, will continue to oversee both businesses’ day-to-day operations and report to Flight Centre’s NZ MD David Coombes.

The price tag of the acquisitions has not been disclosed, however in addition to an upfront payment, the ETG deal includes additional performance-related payments that the owners will be entitled to if the business achieves future profit-related targets.

The deals are set to officially wrap up during the first quarter of FY18.

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