WASHINGTON -- Some 15 months after its takeover by private
investors, SatoTravel is emerging from the shadow of its former
airline owners and becoming a competitive force as a travel agency.
The Arlington, Va.-based $1 billion agency recently won new and
re-awarded accounts in the corporate, federal civilian and military
markets worth more than $70 million in air sales.
One win that provided a boost -- both to the bottom line and to
morale -- was a $10 million chunk of the corporate account of EMC,
a Boston-based technology firm, according to SatoTravel chief
executive officer Lawrence Hough.
In an interview, Hough said the account is not even half of
EMC's business (American Express has the rest) "but it's an
important signal to us because it shows confidence in our
platform."
He said his 2,000-employee agency offers three booking channels
-- call center, e-mail and self-booking -- with "very reliable,
very efficient, high-service standards," as well as on-site offices
for customers who want them.
In the federal civilian market, SatoTravel has won four accounts
so far in the big sell going on among firms with General Services
Administration master contracts.
Hough (pronounced huff) calls it the "shuffling of the deck
chairs," as travel agencies win some, lose some in the civilian
market. Hough is the founder of Stuart Mill Capital, a Virginia
investment firm that is one of a trio that bought SatoTravel after
45 years of airline ownership.
Ambassadors International, a travel company in Spokane, Wash.,
and GE Pension Trust round out the investment team.
After Hough and his colleagues at Stuart Mill Capital took over
SatoTravel's management on Jan. 25, 1999, the company gave up its
own ticket stock and settlement system, obtained ARC accreditation
for its U.S. locations and started reporting sales through ARC.
The new management was obliged to spend a lot of time making the
operation Y2K-compliant because "not much had been done before," he
said.
The new owners also undertook the "gigantic task" of converting
clients from rebates to fees, he said.
"We dedicated a huge amount of our resources to implementing the
Army Europe contract," Hough said, referring to the $80 million
account won last year from Carlson Wagonlit Travel.
"At this point, we're looking at [acquiring] new business and
fulfillment activity that supports the Internet," he said.
Hough said SatoTravel is interested in being the fulfillment
center for companies that use the Internet for self-booking and use
another travel agency for live bookings.
"There's not a lot of fulfillment business going on now, but I
believe it will grow, and we'll be ready."
Asked whether he's interested in buying other agencies or
putting SatoTravel on the block, Hough responded, "We can acquire
our way to growth, we can concentrate our resources here and
continue investing in the company or we can look at companies our
size or larger to see if a partnership is [feasible]. We're
thinking through all three options."
Will SatoTravel go public? Not unless Wall Street pays better
returns for travel agencies, he said.
Hough said he "and I suspect Rosenbluth and others" are watching
the results at Navigant International, which went public. "They
perform fabulously well, but the stock market doesn't reward them,"
he said.