The merger of two industry behemoths, Apple Leisure Group and the Mark Travel Corp., will bring increased efficiencies to the combined company, said CEO Alex Zozaya. He also predicted it will mean better support for agents in the form of products, marketing and technology.

The merger has been a long time coming, according to Zozaya, with conversations having taken place throughout the years. It finally came to fruition and was announced last week. Zozaya will head the combined entity, which will keep Apple's and Mark's existing brands intact under the umbrella of Apple Leisure Group.

Zoyaya called the merger "so obvious and so natural."

"We actually spoke about doing this a long time ago, but for one reason or the other, we never had a chance to really do it in a way that we were ready at the same time [Mark Travel owners] the La Macchia family was ready," he said. "But of course, it made sense to do this merger for many, many years."

In late 2016, Apple Leisure Group was acquired from Bain Capital by KSL Capital Partners and KKR. The two firms will continue to be majority stakeholders in the combined entity, Zozaya said. Apple Leisure Group is likely to phase out the Mark Travel Corp. name over time, he said.

Mark Travel Corp. and its sister company, Trisept Solutions, also part of the merger, are subsidiaries of La Macchia Enterprises. Mark founder and CEO Bill La Macchia as well as chief engagement officer Bill La Macchia Jr., will remain involved with "a very significant stake of ownership in the holding company," Zozaya said. They will also join its board.

The merger, expected to close in the second quarter of this year, is subject to regulatory approvals.

Industry experts said there are a number of benefits the two companies are likely to realize post-merger.

Tom Botts, the head of commercial business for Uplift who in a previous position with Miraval worked for KSL, said the companies do share similarities, but they also have some "really big differences." For example, Apple has a large hotel management division, while Mark Travel is strong in technology.

"You end up with this kind of interesting dynamic," Botts said. "If you think about these hotels that are managed by Apple under the [AMResorts] brands, assuming that Mark Travel will feed those brands with wholesale customers in the same way that Apple does, those hotels are looking at a pretty significant shot in the arm."

That will help feed the combined entity, he said.

Zozaya said that today AMResorts is the biggest part of Apple's business.

"They don't have hotels," he said of Mark. "So it also makes a lot of sense for them to be able to sell our hotels in the destinations that they're already selling."

Botts also pointed out that Apple and Mark have been "notorious industry competitors" over the years.

"For them to come together, I don't want to call it quite Hatfields and McCoys, but it is certainly an interesting dynamic that's going to change the industry, because they have been so fierce and competitive," he said.

Jack Mannix, founder of Jack E. Mannix & Associates, agreed that the "two behemoths" have been competitive.

"Certainly there must have been some chemistry there personally as well as from a corporate standpoint" he said. "Otherwise, I don't think they would have gotten together."

He said that the combined entity will enjoy a number of benefits.

"The obvious thing," Mannix said, "is the proverbial economies of scale, certain things in terms of efficiencies in accounting and other things like that -- that's sort of the garden-variety stuff that's a benefit typically to these kinds of mergers."

Zozaya said Mark's development of technology was also a big draw to Apple, especially its Trisept Solutions, which offers several different products: Synapse, an operating platform with merchandising solutions for suppliers like airlines and hotels; and its agent-facing solutions, Vax VacationAccess, a leisure travel marketplace, and Xcelerator, an agency management platform.

"That was a very important part of our decision," he said. "They have a much better technology solution than we do in Apple Leisure Group."

Apple's acquisitions over the years, most notably Travel Impressions and CheapCaribbean.com, forced the company to invest a lot into technology to combine all its brands on a single platform. Zozaya said a lot of technology was outsourced over the years because the company was growing so quickly it couldn't wait to develop its own.

In the future, the combined Apple Leisure Group will look to Trisept Solutions for its technology resources.

Henry Harteveldt, founder of Atmosphere Research Group, said Trisept Solutions was key to the merger.

"Essentially, Apple Leisure Group bought Trisept Solutions and got the rest of Mark Travel as a gift with the purchase," he said.

There is indeed "enormous value" in Mark's leisure products, Harteveldt admitted, with brands like Funjet Vacations, United Vacations and Southwest Vacations.

In the Hot Seat

Apple Leisure Group CEO Alex Zozaya explains the logic behind the company's merger with Mark Travel Corp. Read More

"But much of the value in this acquisition is in Trisept," he said. "Trisept has been investing in a variety of technology enhancements, including improvements that incorporate components of artificial intelligence, that give it a meaningful advantage in the marketplace. Along with the technology are the IT professionals who work on the software. So, in a small way, this is also an 'acqui-hire' move."

Robert Cole, a former Mark Travel vice president who is now Phocuswright's senior research analyst for lodging leisure travel, agreed that Trisept will be valuable for Apple.

"The important part of Trisept really is VAX because they connect a lot of tour operators to a very, very large number of travel agencies," he said.

Still, Cole said Harteveldt might be underestimating the strategic importance to Apple of brands such as Southwest Vacations and United Vacations.

"If you have that type of volume, you can talk with suppliers more effectively," Cole explained. 

For example, he said, Southwest Airlines has a strong presence in Las Vegas. 

"If you have a monstrous group like MGM that has 40,000 rooms in Las Vegas to fill every night, Southwest Vacations becomes pretty important."

Zozaya said the merger will be good for the industry as a whole, giving agents the option to sell more complete vacation packages. Agents can expect to see the same brands going forward.

"I think that reflagging and playing that game is risky," he said.

Agents will benefit from back-of-house efficiencies, he said, as the combined companies will have more resources to put into agent technology, training and marketing.

Agency groups viewed the merger positively.

Pam Young, senior vice president at Travel Leaders Group, said, "The prospect of expanded product lines, new technologies and enriched partnerships are all positive changes we'd be happy to pursue, as the result would be good for our travel agents and their clients."

Cece Drummond, managing director of destinations and experiences at Virtuoso, agreed.

"Industry developments that benefit travel advisers are positive for Virtuoso, and this has the potential to increase efficiencies for advisers and sharpen their competitive edge," Drummond said. "If this results in access to additional products for our advisers as well as better services and technology improvements, it will be good news indeed.
___

This story was updated on Monday with comments from a Phocuswright analyst.

Comments
JDS Travel News JDS Viewpoints JDS Africa/MI