Two of the big three global travel management companies have consolidated their positions in Europe in the past two weeks. Business Travel International's managing partner, Hogg Robinson, announced late last week that it has bought BTI Central Europe from the Swiss travel company Kuoni. The deal gives Hogg Robinson ownership of BTI operations in Austria, Germany, Hungary, Lichtenstein and Switzerland.
Meanwhile, TQ3 Travel Solutions lost its French licensee, Protravel, to Carlson Wagonlit Travel. Carlson Wagonlit and Protravel will create a new company under the Carlson Wagonlit name. However, Protravel is contracted to remain a licensee of TQ3 until December 2004. TQ3 said it will replace Protravel with a wholly owned business in France.
The two deals are the first of a wave of business travel agency acquisitions and mergers in Europe that had been expected since American Express bought Rosenbluth International this summer. The consolidation within BTI is not necessarily finished. Kuoni owned 8 percent of the worldwide BTI company, with two more partners, BCD Holdings (Dutch parent of WorldTravel BTI in the United States) and Hogg Robinson, holding 46 percent each. BTI CEO David Radcliffe, who is also CEO of Hogg Robinson, hinted that ultimate consolidation of ownership into one entity was in the cards. "We always said it would make sense to bring BTI together," he said. "I wouldn't preclude that from being a logical end point."
For now, BCD and Hogg Robinson have restructured their equity in BTI as 50/50 partners following the Kuoni move, marking the near-culmination of a decade-long strategy by Radcliffe to consolidate a previously disjointed ownership. BTI Central Europe's 1,600 staff will continue to be managed by its managing director Reto Bacher. Radcliffe described the acquisition as "closing the back door for us in Europe."
Managing director of Protravel Jean-Claude Tacnet will run the new Carlson Wagonlit unit in France, which will be 70 percent owned by Carlson Wagonlit, with the remaining 30 percent owned by Protravel. The deal increases Carlson Wagonlit's volume by 50 percent in France and 7 percent worldwide. Carlson Wagonlit and Protravel are the second and third largest players respectively in the French business travel market, but the merged entity still will be smaller than the market leader, American Express Havas Voyages.
TQ3 is believed to have been given almost no notice of the Protravel deal, but it may prove a blessing in disguise. Since its launch in February 2001, TQ3 EMEA's owner TUI has changed its strategy from licensing national markets to owning them. TUI owns and operates 85 percent of TQ3 locations in Europe, and in the past year it has made acquisitions in Belgium, Canada, Luxembourg, South Africa, Turkey and the United Kingdom.
Although the loss of Protravel will mean starting a business travel operation from scratch in France, TQ3 will not be without assistance. TUI owns the leisure travel operation Nouvelles Frontières, which is France's biggest travel company.
"We have critical mass there and Nouvelles Frontières can help us with issues, such as human resources and financial systems," said TQ3 EMEA COO Toby Joseph. "We have a lot of experience and contacts in the French market."
CWT worldwide president and CEO Hervé Gourio said of the merger, "The main reason was not to harm TQ3 at all, but to deliver strong profits. It will not be hard to deliver synergies from this deal."
Meanwhile, he saw it more as a response to another competitor. "We have to confront a large competitor that is being very aggressive on price. Amex is worried about its airline relationships and to reduce the risk it is buying marketshare at a fast rate."
The Protravel deal mainly involved exchange of paper rather than cash, and Gourio said Carlson Wagonlit has strong cashflow that will enable it to make further acquisitions from its own funds. Carlson Wagonlit said it has signed $1 billion in new business in 2003.