Travel Agent - December 22, 2009 - (Page 31)

AGENCY DEALS EXPERT SEES MORE ACTION IN ‘09 SELL IT, MERGE IT, BUT DON’T JUST CLOSE YOUR AGENCY DOWN! This is the advice of Bob Sweeney, president of Innovative Travel Acquisitions (ITA), Alpharetta, GA, one of the best known and most respected travel agency brokers. With more than 507 deals behind him since 1991, Sweeney believes that agency owners have an obligation to staffs, clients and suppliers to sell or merge their agency, not to just shut down. “Every agency has value and owners should consider options,” he says. “It makes economic sense.” Sweeney notes that there are a lot of people involved in a closing, including customers, long-service agents, outside agents (if the agency hosts), suppliers and even the community. Not least in importance is the owner and their family, who can benefit from a buyout as opposed to a closing. Sweeney and his professional staff handle from 24 to 36 deals a year and he expects 2009 to be on the high end of the transaction scale. Despite the economic downturn, Sweeney sees opportunities for buyers and sellers. Buyers will seek to expand market share and position themselves for a recovery, acquire talent or to open market niches. Sellers often are blind to the value of their client base or location or specialties. There is lot of owner pride involved in an agency’s sale that can be a liability, especially agencies that have been in a family for generations, he warns. Other deal breakers include using an unskilled broker or an attorney or accountant unfamiliar with the travel industry. No transaction is without risks, he warns, especially in a volatile economy. But merging agents can share risks and take advantage of the synergies and economies of scale. Agency owners are also aging, he notes, and should plan ahead to ensure continuity. Health issues are another concern. “In any transaction,” Sweeney says, “due diligence is critical. Owners should not go it alone. Use a broker’s expertise and an attorney experienced in travel.” He also warns that there is no fixed formula or a scale for purchase. “Each transaction is unique.” Once, a valid rule of thumb was that a small agency was worth about 33 percent of annual gross profits. Today, the value of a medium-sized agency may be three or four times the net. But again, Sweeney cautions about the danger of a protracted economic downturn and the impact on any transaction. Many factors are involved, including the type of agency and mix of business, client lists, supplier relationships and position in the market. Buyers and sellers differ. But it’s a regional and national market and owners should be open-minded. While ITA has handled lots of agency transactions, Sweeney is also active in the tour operator sector of the market and the National Tour Association (NTA) (www.ntaonline.com). “The next year will see a lot of activity on the supplier side and the possibility of more joint ventures,” he says. Sweeney also expects volatility in terms of agency affiliation with consortia as agencies seek to optimize the value of their affiliation. Sweeney stresses the confidentiality of his operations, the quality and expertise of his staff and invites inquiries. His website (www.travelbusinessbroker.com) includes a generic listing as well as details on his services. For more information, call 800-619-0185. A free newsletter is also available for subscribers. were BCD Travel members, and both will continue to operate under their own names. Protravel International (www.protravelinc. com), headquartered in New York City, opened its 23rd full-service location in Grand Rapids, MI, and Protravel president Priscilla Alexander said the agency is committed to a growth strategy. Projected sales for her entire company are $540 million. In business since 1984, the agency has close to 650 employees, is the largest producer for Virtuoso (the agency group) and is ranked among the top 15 privately owned agencies in the U.S. Another upbeat indicator is that Protravel has established a division called Virtually Pro, or VPro, which is focused on home-based agents. VPro will provide these agents with cutting-edge technology, marketing support and a pro-growth culture. Off the Radar While major deals make headlines, the real action is between smaller agencies. These deals are intensely private and essentially under the radar of publicity. But they are critical and the volume—and value—of the transactions offers an insight into the retail industry. Early in November, Alpharetta, GA-based Innovative Travel Acquisitions Inc. (www. tvlacq.com), a major broker, said it had recently completed seven purchase/sales transactions in the U.S., with a combined annualized volume equaling business booked of $49 million in total sales. These transactions bring ITA’s total number of completed deals to 507 since its inception in 1991. The acquisitions include: I Frosch Travel, Houston, which acquired World of Travel in Columbus, OH; I Atlantic Pacific Travel Leaders, San Jose, CA, which acquired A World of Travel in Phoenix; I Uniglobe Wings Travel, Blue Bell, PA, which acquired Mittle Travel in Allentown, PA; I Protravel, New York, which acquired The Travel People in New York; Global Management Services, Chicago, which acquired The Ultimate Travel Store in Bartlett, IL; I Travel Leaders in New York, which acquired Bokoff Kaplan Travel in Norwich, CT; and I Business and Pleasure Travel in Lavonia, MI, which acquired Drolett Travel in Grand Ledge, MI. While these mergers and acquisitions are one sign of confidence in the future of the retail agency industry, they are the tip of the iceberg. Organic year-over-year growth in sales, investment in new technologies, joint promotions with suppliers and productivity gains are often not publicly reported. Nor is expansion of host agency networks. In 2009, as in 2008, the competition for quality agencies will remain intense. I I CONNECTING YOU For all the latest industry merger and acquisition news, visit www.travelagentcentral.com December 22, 2008 TravelAgent | 31 http://www.ntaonline.com http://www.travelbusinessbroker.com http://www.protravelinc.com http://www.protravelinc.com http://www.tvlacq.com http://www.tvlacq.com http://www.travelagentcentral.com

Table of Contents Feed for the Digital Edition of Travel Agent - December 22, 2009

Travel Agent - December 22, 2009 Reality Check Contents Online Now From the Editor Mexico: The Riviera Maya has Hotels for Every Taste and Style Europe: The Brand-New ME Barcelona has an Exciting and Stylish Vibe These Europe Deals Can Get your Clients Moving Las Vegas: Big Plans are in Store for Sin City Next Year Caribbean: Even in a Down Economy, Almond Resorts is Growing Cover Story: Industry Deals of the Year Tips to Weather the Economic Storm Julia Aliseo Specializes in Cruises Social Networking can Spur Growth Niche Cruises Offer Great Deals Industry Reacts to Mumbai Attacks Travel Counsellors Ramps Up for ‘09 Change is Underway at Air Jamaica Uniglobe Travel Center Expanding Agent Access Editorial Index Advertising Index In the Spotlight Special Supplement: Caribbean Travel.com

Travel Agent - December 22, 2009

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