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Consolidation has heated up in the travel agency space in recent years, but no move may be as impactful as a merger between Travel Leaders Group, one of the largest travel agencies in the U.S., and Altour, another major player.
Altour will be held by Travel Leaders Group Holdings, which owns Travel Leaders Group as well. With a combined $24 billion in annual sales between the two, the plan is to continue operating under separate brands with the same leadership. Financial terms of the deal were not disclosed.
Ninan Chacko will continue to run Travel Leaders Group as CEO while Alexandre Chemla, Altour president and CEO, will remain in his role. Chemla will also join Travel Leaders Group’s board and become a shareholder in Travel Leaders Group Holdings.
Both companies have successful corporate travel arms along with leisure and luxury divisions. Altour also has a strong presence in the UK, where it is one of the country’s most successful travel agencies, and has a strong general focus on luxury travel.
“Historically, as I think about our business, it’s got lots of different parts and pieces to it,” Chacko told Skift. “Two of the most interesting pieces are ProTravel and Tzell Travel; they index very heavily at a luxury level, they’re both corporate and leisure, and they have fascinating business models because they hugely embrace the independent contractor model. They distinguish themselves from our other units. In my fairly new perspective, in looking at the landscape there was probably only one other agency of size [doing the same thing]: Altour. It was really completing the trifecta for us of finding someone who had broadly the same characteristics: independent contractors, luxury, spanning leisure and corporate.”
Travel agencies combine or sell for a variety of reasons. Often, the aging owner of a successful agency wants to make some money before the market turns. Other times, combining can create a competitive advantage in the market based on commission earnings and marketing.
“There are agencies looking to expand through acquisition and looking to increase profitability,” said Robert Joselyn, a consultant and founder of TAMS, a service providing financial guidance to travel agencies, last year. “By combining volume, they may be able to generate more revenue from sales.”
Travel Leaders Group, the largest U.S. travel agency by volume and number of agents, is known to be extremely active in acquiring and merging with agencies, perhaps more than other players in the space.
Moving forward, a major focus will be on developing technology tools that can be used across both companies.
“Ultimately over time we see [the merger as allowing us to] create best-in-class programs,” said Barry Noskeau, executive vice president and chief operating officer of Altour. “More so, we see over time the importance of technology; technology is moving fast so quickly and it needs a tremendous amount of business investment.”
The separate companies, according to Noskeau, will retain their individual relationships with travel providers. He said the companies expect the merger to become official sometime in mid-August and each of the companies’ individual brands to remain intact. Sometime in the future, they’ll reevaluate their supplier relationships based on their new scale, though there is “no rush,” according to Chacko.
For Travel Leaders Group, the merger will help the company ease its way into the international marketplace. The company recently restructured, eliminating some of its brands, including the well-known Vacation.com.
International expansion is one Chacko’s priorities going forward, two years into his stint at Travel Leaders Group.
“When I first came onboard, an accurate word would have been opportunistic,” said Chacko, in terms of the company’s stance on acquisitions. “We’ve been more specific and directive in terms of where we want to put our focus. We’re not solely limited to the U.S. and definitely broadening our scope and screen in terms of geography. We’re really pleased with the complimentary aspect [of Altour] on the West Coast and in the UK. Our perspective and focus on international opportunities has probably existed independently [of this deal].”