With V.com deal, Travel Leaders comprises 30% of all agencies

By Johanna Jainchill
With the acquisition of Vacation.com, North America's largest travel consortium, the Travel Leaders Group has now brought under its umbrella 30% of all travel agencies in the U.S. and Canada.

Vacation.com alone represents about 20% of North America's leisure marketplace. Combined with the rest of its portfolio, Travel Leaders comprises about 35,000 individual sellers of travel; 6,400 wholly owned, franchised and affiliated locations; and sales of about $15 billion.

Travel Leaders Chairman Michael Batt said the Vacation.com acquisition made the company "by far" the biggest leisure travel seller on the continent.

Travel Leaders, formerly Carlson Leisure Group, acquired Vacation.com from Amadeus, which had owned Vacation.com since 2000. Both Amadeus and Vacation.com felt it was time to go their separate ways.

"Amadeus has evolved into a technology and IT company," said Vacation.com President Steve Tracas. "They are focusing on technology-centric types of business. It was time for Vacation.com to spin off and go our own way and be aligned with a more travel agent-centric organization."

Describing Travel Leaders' portfolio, Tracas said, "The agency business is the heart and soul of all of these organizations. As great a parent as Amadeus was, they are a technology and GDS company. All these businesses under Travel Leaders are purely travel agency-centric businesses. That is a key benefit to anybody who is a member of these organizations."

Travel Leaders Group's other agency brands are Travel Leaders, Tzell, Results Travel, Nexion, Cruise Holidays and Cruise Specialists.

Travel Leaders Group CEO Barry Liben said Vacation.com would continue to operate as a stand-alone division led by Tracas, who will report directly to Liben.

Tracas said it would be "business as usual at Vacation.com." which becomes Travel Leader's only consortium.

"They don't have anything like us within the organization," Tracas said. "They have corporate, retail, franchisees and host models, but we're the large consortium that fits the one item they haven't had historically."

In addition, Liben pointed out that Vacation.com's $300 million in annual luxury sales alone significantly increased the group's presence in the luxury market.

It has long been rumored that Vacation.com was being acquired, and the buzz had been increasing in recent months.

Tracas said the company was continually approached by interested suitors.

"We're a very good consortium that runs a very good business," he said. "People have continually approached us and showed interest in us. ... The timing was right."

Amadeus said it would remain a preferred supplier for Vacation.com and that mutual programs currently in place would continue.

Batt remarked that Vacation.com gave Travel Leaders "excellent-quality agencies, increased size and significant buying opportunities."

He said Travel Leaders would now be able to invest more across its portfolio in areas such as technology.

"We believe that by having so many people selling travel under our banner, we can put a lot more money against the systems we've got because there are a lot more travel agents likely to use it," he said. "It doesn't make any sense to build something for 500 travel agencies when you can build it for 6,500 travel agencies. It's pure economics. It's the same reason why any company gets bigger: You can spread the cost of development."

In addition, he said the company's numbers would help enable its agencies to be more efficient and better able to optimize their margins.

He also said that all Travel Leaders brands would become stronger in terms of their relationships with suppliers. Having enough negotiating power to protect themselves is important, Batt said.

"Some people will say suppliers don't want large distributors," Batt said. "All we want is a balanced relationship with suppliers. We don't want to take advantage of anyone and don't want to be taken advantage of. We just want what's fair for all the people that get up in the morning and spend their lives selling travel and doing a great job for their customers."

Nevertheless, he added that Travel Leaders did not want to be the Walmart of travel and did not intend to "beat up the suppliers."

"It's not about that. It's about what makes you money and what makes us money and what makes the customer happy," Batt said.

In addition, Batt said the growth of Travel Leaders could help grow the number of travel agents and possibly buck a 15-year trend that has seen the agency population decline.

"We believe that by being big and genuinely experienced in this world, and with the relationships we have with suppliers, we can do more to make that happen than any other organization," Batt said. "By virtue of our experience, competence and size."

Batt would not identify any potential future acquisitions, but said that Travel Leaders, which is half-owned by JP Morgan, was a well-capitalized company that was "not short of money."

"We can buy whatever we need to buy if it's sensible to make us a stronger organization," he said.

Tracas said he expected the move to increase travel agents' interest in joining Vacation.com.

"The travel agency community in general should be excited about this and embrace this, because we represent them," he said. "We are all travel agents, and our job is to make them more efficient. Hopefully, there will be a lot of intrigue and interest out there when they look at this travel organization."
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