ARLINGTON, Va. -- Larry Hough, who became SatoTravel's chief
executive officer and cochairman on Jan. 25, already has the staff
working on a strategy to negotiate overrides with airlines -- a new
concept for the company.
Interviewed at SatoTravel headquarters here on his fifth day on
the job, Hough said the firm will "grow by acquisition" in part by
winning new corporate accounts and "investigating worldwide
relationships with other agencies," without neglecting its core
government market.
Down the road, he wants to see if the company's call centers
could be used to perform tasks that are not travel related for
businesses.
SatoTravel could not engage in these types of projects in the
past because it was owned by 11 airlines that required it to be
"carrier-neutral" and set parameters around its activities. For
example, its pursuit of corporate accounts was confined to Fortune
500 companies and those with air volumes of more than $10
million.
Now that the airlines have sold it to private investors, "the
wraps are off," said Hough. "We'll change the face of
SatoTravel."
Hough (pronounced Huff) is founding chairman of Stuart Mill
Capital Inc., an investment firm in McLean, Va., that is one of a
trio that bought SatoTravel.
Ambassadors International Inc., a travel company in Spokane,
Wash., that specializes in educational programs abroad, meeting and
event planning and incentive travel management, is part of the
investment team. John Ueberroth, Ambassadors' chief executive
officer, is cochairman of SatoTravel. He will continue to be based
in Spokane and will be an "active advisor" to SatoTravel, Hough
said.
The third buyer, GE Pension Trust, is a silent investor.
Hough and six of his colleagues from Stuart Mill Capital have
moved into SatoTravel's headquarters to take command.
Underscoring their satisfaction with SatoTravel president
Michael Premo and his managers, Hough's team moved into vacant
offices on the second floor, leaving undisturbed the executive
suite on the third floor.
Premo remains president, although he loses the "chief executive
officer" part of his title. The chief operating and financial
officers remain Denise McShea and Myles Mutnick, respectively.
"It's an integration of our team and the existing team," Hough
said.
Hough founded Stuart Mill Capital (named after the street where
he lives) in fall 1997 after a 25-year career with the Student Loan
Marketing Association (known as Sallie Mae), a Fortune 500
financial-services company in Washington that manages some $40
billion of student loans.
He became head of Sallie Mae in 1990. Although Sallie Mae is one
of SatoTravel's corporate clients, Hough's involvement with the
takeover stems from a personal friendship with Peter Ueberroth,
chairman of Ambassadors International and brother of John.
Hough was an athlete on the U.S. rowing team in the 1968 and
1972 Olympics (a silver medalist in '68), and subsequently served
on the U.S. Olympic Committee, most recently as treasurer from 1980
to 1984. He met Peter Ueberroth when he joined the organizing
committee for the 1984 Olympics in Los Angeles, which Ueberroth
chaired.
When Hough's then-new investment firm was seeking its first
target, he looked at nontravel companies that use call-center
technology, but turned his attention solely to SatoTravel after
"Peter called me" in early spring last year. "We were all over this
place [looking at the books and operations] and we came close to a
deal several times," Hough said.
The transaction took so long because two major intervening
events -- the possibility that SatoTravel would lose a $129 million
Navy account (it didn't) and the international air commission caps
-- caused the parties "to gather forces and chat about the impact,"
he said.
Now that the deal is done, Hough said he aims to duplicate the
type of success he engineered at Sallie Mae. "At Sallie Mae, we
created differentials so that our student loans were preferred over
others in the marketplace. We were innovators," he said.
SatoTravel, he said, will prosper "if we bring value-added
service to the customer and anticipate changes in the customer's
needs. "We will win in the marketplace if we deliver it better than
any self-booking [system], better than a direct relationship with
an airline, better than another travel agency."