SAN FRANCISCO -- An Automobile Club of Southern California
executive confirmed the club acquired a majority interest in tour
operator Pleasant Holidays more than two years ago, Travel Weekly
has learned.
The purchase, for an undisclosed amount, came to light when two
candidates for the board of directors of the club requested club
financial statements from 1999 and 2000; the statements show the
club and a subsidiary had purchased a majority interest in a "tour
company" in January 1999.
Tim Irwin, vice president of travel products and services,
confirmed that the firm was Pleasant Holidays, the 42-year-old
Westlake Village, Calif.-based tour operation founded by Ed and
Marilyn Hogan.
Ed Hogan, chairman and chief executive officer of Pleasant
Holidays, told Travel Weekly that despite the Auto Club's
investment in the firm, he "runs the company and [makes] the
decisions."
"No one from the Auto Club or anyone else tells [me] how to run
the company. There is no change whatsoever."
The Auto Club wanted to invest in the company, Hogan said,
"because with all the consolidations in the market, they wanted
someone they could count on."
The acquisition was revealed when Carl Olson and Mark
Seidenberg, the board of directors candidates who subsequently lost
the election and are now plaintiffs in a lawsuit against the club
for alleged "election irregularities," reviewed financial documents
from two years ago.
The papers show that the club and its insurance subsidiary, the
Interinsurance Exchange, purchased a tour operator called PTHC in
January 1999. In July 2000, the club acquired the Exchange's
interest in PTHC (Pleasant Travel Holdings Corp.).
Irwin confirmed that the firm in question was Pleasant Holidays.
He declined to disclose the purchase price or the exact percentage
of the club's stake, saying the club, as a policy, "does not
discuss its holdings."
The club does not release sales figures from its travel agency
operations, but Irwin said its sales would put it among the top
retailers in the country.
Hogan described the investment as a strategic alliance that
strengthens Pleasant Holidays. "I was glad [the club] wanted to
invest in Pleasant," he said. "It is a great company."
The auto club wanted to invest in the company, Hogan said,
"because, with all the consolidations in the market, it wanted
someone it could count on."
Hogan said he had also negotiated with American Express over
selling an interest in the company, but had bowed out because the
agreement would not have allowed him control. "We almost made a
deal," he said, "but I decided I would rather be with my good
people who helped me build a hell of a business."
Hogan said the agreement was not disclosed because it was a
private business agreement. "I've always worked like a Swiss
banker," he said. "I have confidentiality agreements with almost
everyone I deal with."
At age 73, Hogan has run Pleasant Holidays for 42 years. After a
quadruple bypass operation in September 1999, he said he "had to
cut back a little" although he remains active with the company and
the Hogan Family Foundation, a charitable organization.
Irwin confirmed that Pleasant is operated separately from the
auto club. However, he said that the club and Pleasant are working
on private label brands that the club, which covers Southern
California plus Hawaii, New Mexico and Texas, would sell
exclusively to its members.
"We're a private company and we look for opportunities to
protect our members.
"Several years ago when we made this investment, there were many
mergers and consolidation taking place [among tour operators].
"We wanted to make sure our members would have continued access
to competitive prices, with a company that we had done business
with for a long time," Irwin said.
The acquisition was in keeping with the mood of national AAA
officials at the time, who were concerned over tour operator
consolidation.
At the organization's national conference in September 1998,
AAA's then senior vice president Graeme Clarke said "we do not
intend to abrogate our position in the leisure market and will take
whatever steps [are] necessary to continue to be a major player,"
even if it means buying tour operators.
"We will continue to be No. 1, whether we have to build it, buy
it or align with it."
The Pleasant Hawaiian transaction occurred three months
later.