WASHINGTON -- Global Vacation Group acquired Friendly Holidays, the
Lake Success, N.Y.-based wholesaler to Mexico, the Caribbean and
Florida.
GVG, which last year led the tour operator consolidation frenzy
by buying five companies, paid $10 million in cash for Friendly and
may pay $3 million more in performance-based "earn-out"
incentives.
Friendly is a 30-year-old company with 110 employees and $13
million in annual net revenues.
Dorothy Mazzotta, Friendly's founder and chairman, will stay
with the company through the end of the year. She will then become
a GVG consultant. Friendly will continue to be based in Long
Island, N.Y.
Eric Aversa remains president of Friendly, reporting to to Roger
Ballou, GVG chairman and chief executive officer. Ballou said the
addition of Friendly to the stable of GVG brands gives GVG
increased penetration in New York and surrounding states, where
Friendly is strongest, and paves the way for GVG to expand in
current and new destinations.
"We feel that combining Friendly with Classic Custom Vacations
and Globetrotters brands will make GVG one of the top three
suppliers to Mexico, Caribbean and Florida markets and gives us a
strong foothold in the adjacent Central America market," he said.
"There is very little overlap between Friendly and our Classic and
Globetrotters customer and travel agent bases. We see significant
opportunities to cross-sell, improve products and penetrate
existing markets," Ballou said.
Mazzotta, noting that "consolidation has become a fact of life"
in the tour operator industry, said she had been in talks with
"many companies" looking to acquire Friendly and decided on GVG
because of its commitment to travel agents and its desire to have
Friendly "add value" to GVG.
"I invested 30 years of my life in Friendly and didn't want to
see it go up in smoke," she said. "I wanted to be aligned with a
company with integrity and a desire to grow, especially in our key
destination markets."
Ballou said GVG will use Friendly's purchasing relationships
with suppliers in Mexico to launch an upscale Classic Custom
Vacations Mexico product in 2000.
The addition of Friendly also gives GVG contracts with all the
major carriers to the Caribbean.
Friendly's Caribbean product line will remain largely unchanged
this year, and it will retain its carrier relationships with Air
Jamaica, Air Aruba, US Airways, Delta, TWA and Continental. Its new
GVG sister company, Globetrotters, has a contract with American to
the Caribbean.
Friendly also handles Continental's private-label brand for
Central America, which GVG will use to expand into that part of the
world, Ballou said.
Ballou said it was too soon to talk about additions or changes
in Friendly's carrier relationships. "We are not going to make any
precipitous change in the suppliers we are working with. We'll sit
down and work it out in our year 2000 planning," he said.
GVG still committed to top brands
WASHINGTON -- Global Vacation Group chief Roger Ballou said the
company remains committed to operating Globetrotters and Classic as
its two major brands, with Friendly Holidays potentially merging
into one of those two brands.
Friendly, which GVG recently acquired, will be converted to the
same Trase Miller-designed technology platform that Globetrotters
and Classic installed this year, Ballou said. GVG is considering
the same Web strategy for Friendly as the one in place at
Globetrotters, which recently launched a site with both a consumer
and agent booking engine.
Ballou said GVG is "comfortable with achieving analysts'
consensus expectations of 20% annual net revenues growth" because
of acquisitions like Friendly, which will add about 10% to GVG's
net revenues in 1999.
"You can see a smaller market in Central America but growth
there at a rapid pace, and good growth in Mexico and Caribbean
because of the fact we put Classic, Globetrotters and Friendly and
their synergies together," he said.
GVG was formed a year ago by Thayer Equity Investors, a
Washington-based equity fund that owns 55% of GVG and is the
investor behind Travel Associates Network, which has purchased Gem,
AURA and other consortia in the last year.
GVG held its initial public offering in July and is traded on
the New York Stock Exchange with the symbol GVG.