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The Beat reported last week that The Advanced Travel Partner resigned from GlobalStar Travel Management after about three months of negotiations with the group's leadership failed to sort out how ATP's acquisition of marine travel specialist Instone International would fit in. To address the key vacancy in the United Kingdom, GlobalStar has "short-listed to four agencies that have expressed interest and taken the necessary steps to ensure their candidacy," said GlobalStar chairman and Ultramar Travel Management president Peter Klebanow. "Over the [coming] weeks, there will be further vetting and a recommendation will be made to the board and a selection made certainly before 1 September. We're approaching all markets with the same zest to find the right partner ... but I'd expect the U.K. will be first, followed shortly by Germany and France and the other markets soon thereafter, or possibly at the same time." Additional excerpts of Klebanow's comments about the change follow.
What happened with ATP?
ATP has resigned from the GlobalStar network. Back in April, ATP purchased Instone, one of the large marine specialists. As they were looking at that deal, we heard early on from ATP that there might be some conflicts with them signing our new partner agreement, so they were very up front about that. We waited for the deal to happen, and once it did we set out a course to discuss all the elements. Some of the biggest elements were the fact that Instone is located in 17 countries and a good many of those presented a conflict with some of our incumbent agents. So even though most of those [Instone offices] have a marine orientation, it was less than clear how we would be able to maneuver through an agreement that would articulate how business would be networked, and other such things as co-branding, which is a requirement in our new partner agreements. We have a very good relationship with ATP and a lot of business that is networked with them, and from them to our partners as well, and we want to ensure continuity for those clients, so we'll offer a continuous service to all those clients. Naturally, we will replace ATP in the markets where they are vacating. We're pledged to continue to work together for existing business and even potentially for unique new business opportunities. We have a lot of common facilities and interests. GlobalStar wants to protect its brand and have partners that are subscribing to our model appropriately in each country and so that's our first pursuit. My experience is that clients always dictate exactly how their programs get rolled out, and it's not uncommon for a client in one or two countries to say, "We want to maintain our existing relationship so can you integrate with these folks as opposed to your folks?" I don't think that kind of fluid behavior is a bad thing at all. It's a matter of how the business is pitched, how it's won and how it's implemented. Our goal will always be to support our partners, and we will look for the tightest integrations with them over time. We have a lot of shared knowledge and experience with ATP, so there's no necessity to rush off that platform.
GlobalStar does have multiple members in some markets, so why does this situation present conflicts?
It's really more a matter of how you articulate everyone's behavior. Certainly ATP expressed sincere intentions to be a good partner and to do the right thing to continue to support GlobalStar. There were some options in terms of how they might stay in the organization. But we have a tier structure. In our largest markets, we have Tier 1 partners who contribute the greatest and, in exchange, they get exclusivity, which is what ATP enjoyed in the United Kingdom. Ultimately, we'd love to see many markets be at the Tier 1 level with exclusivity in the market. The United States continues to be an anomaly because of the size of the market. So much of this market goes global to the rest of the world, much more so than the other direction. It's also a function of our incumbent partners and how we evolved. We're loyal to the people who helped build this organization. We do our best to emulate a global travel management corporation and with that there's a certain clarity and simplicity with how our partners interact. We don't want to follow a line of multiple partners in countries unless there is a market requirement for sheer size or a unique capability.
ATP announced the Instone acquisition in April, so they resigned from GlobalStar in mid-July?
Yes. Essentially, we asked all partners to sign new agreements 1 April, which was around the same time this deal was presented by ATP's private equity backers, Barclays Capital. They had to consider the opportunity, and as they were going through that process they shared as much as they could until the deal was done. At that point, there were hopes to find a way to continue to work together, because there have been only good energies and cooperation, but as we got into the minutia of how to handle each of these redundancies ... for example, we have terrific partners in Singapore, Hong Kong, Moscow, India where Instone also has locations. They are marine specialists, but when it comes to the co-branding requirement that we had, and also how we would articulate our understanding of how those markets would perform, ATP wasn't in an easy position to make that black and white.
So the co-branding is part of the new partner agreements. Can you explain that?
As a way of providing continuity, we have asked our partners to take a choice of options with regard to how the co-branding is delivered. For someone who uses travel management in their name, like Ultramar Travel Management, then there's a dot and GlobalStar. If it had been just Ultramar, it would be Ultramar then a dot and GlobalStar Travel Management. So much of our business is global or multinational that we want to really establish the GlobalStar brand, and we want to promote [it] in every experience with any of us. Companies are looking for that consistent branding; otherwise it gets confusing to people.
ATP was in a number of countries, so the replacement doesn't have to be a single company, right?
Right. Our motto and view is, "best local choice worldwide." One of the things we hope to gain by this is to upgrade in certain countries where we can strengthen the partnership. Clearly, clients like to have an easy rollout and common branding. ATP has a small office in Paris and a joint venture in Germany, and if we can replace those with stronger local partners that may not be connected but offer the local clients strength--our view is to try to work with the best partner in each local market in spite of the fact that may mean for our account management people another phone call, another entity, another appendix to the contract--in the long run, that's what's best for the clients.
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