WorldTravel BTI to get more worldly

NEW YORK -- The parent company of WorldTravel BTI is relandscaping the corporate travel battleground with a couple of acquisitions and the decision to sever a longstanding partnership.

BCD Holdings, a Dutch family-owned travel and financial services company, will create a new travel management brand by patching together WorldTravel BTI with TUIs business travel subsidiaries and a majority stake in U.K.-based The Travel Co.

The purchases of TUIs corporate travel business and The Travel Co should be completed in March. The TUI transaction is subject to regulatory approval.

If approved, the move would create the worlds third-largest travel management company, with $8.5 billion in annual sales, behind American Express and Carlson Wagonlit Travel.

The new brand, under a single management, would employ more than 10,000 people, and operate on five continents. The TUI portion of the transaction contributes $3.5 billion in sales, and The Travel Co. pitches in $500 million.

WorldTravel BTIs CEO, Mike Buckman, will be the CEO of the new entity; BCDs Joop Dreschel will be chairman. Marc Hildebrand and Mike Walley, CEOs of TUIs business travel division and The Travel Co., respectively, will remain in leading roles.

A new brand name is expected be unveiled in March. Possible headquarters for the new company include Atlanta, New York, London and Amsterdam. Officials declined to reveal the financial terms of the transactions.

In our business, scale is very important in terms of our ability to negotiate with our suppliers and to provide services to our accounts, said Mary Ellen George, executive vice president of sales and marketing at WorldTravel BTI, which projects $4.09 billion in 2005 sales. (SeeIn the Hot Seat: Mary Ellen George.) Thats really what we are up to. Its been the plan of BCD for the last few years to get to that size.

The decision to acquire the two travel management companies came after unsuccessful talks with Hogg Robinson, BCDs longtime 50-50 joint venture partner in Business Travel International (BTI), she said. BCD and Hogg Robinson revealed that they will part ways and pursue independent strategies in going after new business, although they signed a service agreement in which they will honor contracts with existing clients under the BTI brand.

Effect on Navigant

BCDs initiatives, meanwhile, rippled across the corporate market, effectively ending the TUI-Navigant International global joint venture -- TQ3 Travel Solutions.

Under the terms of the BCD-TUI transaction, BCD will acquire TUIs wholly owned businesses in Belgium, Canada, France, Germany, India, Luxembourg, the Netherlands, the Nordic region, South Africa, Spain and the U.K. However, the transaction does not include affiliates of TQ3 or ownership of the TQ3 name.

The businesses acquired by BCD Holdings must cease using the TQ3 brand by the end of June.

Ian Corydon, an analyst for B. Riley & Co., said the transaction will hurt Navigant, which will lose the international reach provided by its joint venture with TUI. The joint venture was instrumental in Navigants securing contracts with multinational companies such as Bank of America, Corydon said.

Navigant and TUI agreed to terminate their joint venture immediately, with the latter transferring its 50% stake to Navigant, which retains the rights to the TQ3 brand and will manage the remaining TQ3 international network offices. TUI and Navigant said they will honor existing contracts with clients and partners.

Edward Adams, the chairman and CEO of Navigant, termed the developments very positive in that TUI paid Navigant an exit fee for leaving the joint venture, giving the Denver-based company new opportunities to expand the TQ3 brand globally. According to Adams, one of the reasons TUI opted out of the joint venture was to focus on leisure travel, the German companys core business.

Adams said Navigant will maintain relationships with TQ3 licensees and expects to be a little more aggressive in taking ownership positions in a number of the licensees.

Navigant ranked No. 4 and WorldTravel BTI ranked No. 6 in Travel Weeklys 2005 Power List of U.S.-based travel agencies.

WorldTravel BTI will compete with Navigant and the TQ3 brand in the U.S., said George, but it will face less competition from Navigant globally. The TQ3 Network will be much smaller than American Express, Carlson or the WorldTravel-TUI-The Travel Co. combination, she added.

The BCD acquisitions put to rest speculation about TUIs expansion into the North American corporate travel market.But George said that BCDs new company, with TUIs corporate businesses in the fold, will still be considering additional growth opportunities.

Complex web

Meanwhile, in this complex web of relationships, Boron Securities, the personal investment arm of the John Fentener van Vlissingen family (which owns BCD Holdings) retains ownership of about 11% of Navigants common stock, according to a June SEC filing.

But George downplayed the significance of that investment, saying Boron Securities is completely separate and is in no way operationally connected to our organization.

At the same time, Hogg Robinson, which owns Sea Gate Travel and BTI Canada in North America, said that it is a global company in its own rightand believes in a single ownership in strategic markets.

So, do these developments mean joint ventures should be viewed as outdated in corporate travel? No, said George.

It can still be done because we proved it works, she said. Its just that when you start investing in the technology to bring that to life, its more of an obstacle when you are not dealing in a wholly owned structure.

To contact reporter Dennis Schaal, send e-mail to [email protected].