Hogg Robinson Group last month said it nearly completed in North America and has started in Europe an operational restructuring toward a more regional rather than national orientation. The new structure, which will be implemented next year in Asia-Pacific, places a president atop each of the three geographic regions and reflects the increasingly multinational nature of the company's client base, according to chief executive David Radcliffe.
"We're now starting to dismantle our old country structure," Radcliffe told analysts last month as he announced the company's 2007 fiscal year performance. "It's no longer appropriate in today's world. Many global clients think and act in regions, and don't think and act like countries anymore."
HRG is "rolling out integrated divisions" and "doing away with a lot of duplication and a lot of branches and centering them on larger and a fewer number of centers," he said.
As part of an ongoing effort to emphasize corporate services over transactional services, HRG created business lines including events and meetings management, corporate travel management, expense management, consulting and sports.
Following a spate of acquisitions and the reflagging of a number of former Business Travel Internationalmembers, HRG said its global network now covers about 100 nations, 25 of which are home to entities that HRG "owns or controls." The company said it is planning "further infill acquisitions" following recent deals in the Czech Republic, Poland, Slovakia, the United Kingdom and the United States.
In its most recent acquisition, HRG last month bought Belgium's Weinberg Travel, previously an affiliate within the HRG network. The transaction was valued at £1.5 million (US$2 million).
Meanwhile, HRG is rolling out a "Universal Super Platform" first in Europe and then in North America. "One of the things we're able to do is plug in to different stocks of inventory, which we can then carry to wherever the booking or the interest comes from," said Radcliffe. "It could be an online booking from a client, from one of our own consultants, direct with an airline, direct with a traditional global distribution system, etc." HRG documentation also indicated that links to "hotel groups" are incorporated.
"Another important technological development is the linking together of travel reservation centers in the U.K., Hungary, Sweden, Singapore and Canada," according to the company.
During its fiscal 2007 year, which ended on 31 March, HRG enjoyed revenue growth in all regions, hindered slightly by client losses leading up to HRG's initial public offering.
"With everything that's going on, I'm actually reassured that our performance is coming in line with most people's expectations," said Radcliffe, calling 4.8 percent revenue growth "slower than we would have liked." Mainly in Europe, Radcliffe said, HRG "lost a larger number of clients than any of us expected in the run-up to the initial public offering, and that acted as a drag anchor on the revenue." Still, he claimed the rate outpaced the industry average, which he said is "probably running at about 3 to 4 percent." Net of acquisitions, HRG's revenue growth was closer to 3 percent.
Preliminary fiscal year 2007 results included annual revenues of £311 million (US$611 million) and 9.7 percent higher earnings before interest, taxes, depreciation and amortization of £48.5 (US$95 million).
"We're confident of the prospect of growth for the year ahead," Radcliffe said, noting "a number of substantial client wins" and a "strong" sales pipeline. New clients include Gambro, KPMG in Australia, Merrill Lynch in the United States, PepsiCo outside North America and--as previously announced--Credit Suisse in the U.K., U.S. and Switzerland. The company said clients that went out to bid and stayed with HRG include Agilent globally, BMW in Germany, Bombardier in Canada, Motorola in the United Kingdom and UBS in Switzerland and the United Kingdom.
"At the same time as we lost some clients in the run-up to the IPO, there were also some delayed bids and tenders, which meant that we had up to an 18-month lag between when we were told we won and when we actually started implementing," said Radcliffe. "There's no doubt there were some concerns during the run-up as to what was going on and why," he said, adding that management's "eyes" are "now firmly back on the ball."
"The international corporate travel management market comprises four main global players (of which HRG is one) that have both the experience and the capability to offer a truly global service," HRG stated. "Crucially, the majority of our partners have worked with Hogg Robinson since the mid 1990s."