Skift Take

Travel Leaders has turned to a membership model instead of franchising or partnerships to build out its global presence in the corporate space. It's one way to grow without costly acquisitions, although more acquisitions are probably on the way too.

It’s been interesting to watch Travel Leaders Group grow in recent years, changing its strategy from dominating North America to making strategic inroads in business travel markets around the world.

The company’s most recent move to add 40 new member agencies to its Travel Leaders Corporate arm shows the way that industry consolidation has forced regional companies to begin competing on a global level. Instead of turning to acquisitions, as Travel Leaders did in 2017 when it bought Altour, membership is now the focus.

“We’ve traditionally been more domestic, [and] a lot of corporate growth plan and strategy have been around acquisitions,” said Gabe Rizzi, president of Travel Leaders Corporate. “We acquired about 11 agencies that were fairly regional in scope and nature but did have some very large customers. Those customers have caused us to seek fulfillment opportunities outside our borders. When this opportunity presented itself, it looked like a great way to get a leg up very quickly and compete for business.”

Many of the agencies that have signed on with Travel Leaders Corporate were formerly associated with HRG. When American Express Global Business Travel acquired HRG, these travel management companies were cut loose. The new members are scattered around growth markets in Asia, Europe, South America, and the Middle East. The full list of agencies is here.

The goal isn’t necessarily to compete for the biggest clients in the world, but bring expertise to those mid-level companies that have travel needs across different regions.

“This is premium business travel, we’re looking for partners who look at travel and expense as an asset, and a way to grow their business,” said Rizzi. “So, we’re going to be very selective about which bids that we’re a part of to make sure that we’re maximizing our value proposition as a premium mid-market player in a global fashion. Because, there are quite a few companies that [have sales] volume around the hundred million dollar volume range, our rate in the wheelhouse of what we build. But, when you start getting into the mega, global arena, that’s not our identity. Our identity is more of a solid mid to upper mid-market player.”

Increased sales volume translates to more revenue for travel management companies, and the wave of consolidation in the sector has made it challenging for some mid-level players to grow explosively. The new member agencies will be able to use the technology and sales tools offered by Travel Leaders but operate autonomously on the ground in their markets. This setup suits Travel Leaders Corporate just fine.

“From an operations point of view, they will be able to take advantage of the technology that has been developed by Travel Leaders Group,” said Roger Block, president of Travel Leaders Network. “In terms of data, there are very strict rules on how data must be transmitted for consolidation purposes. They will continue to operate their own businesses and service. There are existing accounts. And, many of these agencies are the largest or second or third largest agencies in their countries. So, they are very sophisticated business people, very successful, and they will be participating with us in both multinational and regional bids.”

Block wouldn’t rule out potentially acquiring more agencies around the world but said the focus, for now, is to sign on more partners on the corporate side to expand its reach in particular markets that have become hot spots for business travel.

Big travel management companies tend to have affiliates around the world and Travel Leaders Group has long relied on a membership model to power its leisure business. The company is also looking to push further into the meetings space, as evidenced by its recent acquisition of Your Event Solution in the UK.

“We are actively pursuing about another 25 to 30 agencies,” said Block. “In key countries that we need to [compete in]. There are many agencies who are calling us in markets that we have necessarily identified as being key. And, we are looking at those agencies. But, those are opportunistic. These are markets we need to have, these are markets that are nice to have, but not necessarily key for most multinational bids.”

With rumors circling that Travel Leaders Group is considering a public offering, expanding its global reach seems like the appropriate strategy. The company, though, has nothing to say on the matter: “Travel Leaders Group does not comment on rumors.”


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Tags: corporate travel, ctir, travel leaders

Photo credit: Passengers on an Air France flight Eric Salard / Flickr

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