The Association of Corporate Travel Executives' proposal this month to engage in merger discussions with the National Business Travel Association commenced a shaky prelude to direct negotiations.
While NBTA this month said it would review the offer, president Kevin Maguire said the earliest formal negotiations could occur is at the NBTA International Convention and Exposition in San Diego. "Because of the timing, we really haven't had a chance to spend any real quality time to go over the proposal," he said.
ACTE's proposal reversed its stance on remaining a standalone organization, which the association has held since June, after a handful of board members from both associations produced a merger proposal that failed to gain the necessary ACTE board support.
Since then, ACTE pursued a "strategic alliance" with the Professional Convention Management Association, which dissolved amid its decision to engage with NBTA, several ACTE officers resigned from their posts, and a handful of influential corporate travel suppliers —including Continental Airlines, Delta Air Lines and BCD Travel— asked the boards of both organizations to reconsider or face reduced financial support
(BTNonline, June 22).NBTA has maintained that it would keep the door open for talks, and ACTE came knocking on Aug. 5 when it "presented openly for industry consideration" a proposal. However, NBTA leadership said it was not made aware of the new deal beforehand. "Quite frankly, it has not sat well with the board," said NBTA's Maguire, whose presidency is at its end (see story, page 12). "We don't normally negotiate through the media, and we weren't even notified of the new conditions until after the media was notified."
Within 48 hours of issuing its proposal in the form of a press release, ACTE president Richard Crum told BTN, "I would have thought, with their board voting unanimously for this and how much they were outspoken about this, I would already have had a meeting booked with some negotiating team at NBTA to sit down and talk about it. The honest truth is, it was not as positive as I expected it to be."
Crum said the new ACTE proposal combines the "best of both" organizations, citing NBTA's strength in the United States—with its network of local and regional chapters, active political action committee and its flagship annual convention and trade show. "We think in the U.S. they have an advantage and that we should keep the best of both," he said. "However, when you look outside of that—at Canada, Europe, Latin America, Asia/Pacific—ACTE's done more."
NBTA leadership acknowledged ACTE's international reach is a chief aspect of the association's appeal.
"If you say, what's the difference between seven weeks ago and today," Crum said, noting the time that had passed since the ACTE board declined the NBTA-approved offer, "this proposal can win the approval of ACTE's membership. The one before could not have." Crum said the previous effort "was too much of an American-centric proposal, and we know that in order to achieve the 51 percent of our members approving the merger, it's going to have to do more to make sure there are guarantees for members outside the U.S."
Key points of ACTE's proposal that the board believes will gain that requisite vote include a co-branding for the next two years, followed by a new name. The merged entity would have a new two-year interim board with five members from ACTE's and NBTA's current boards, with new elections to be held among the joint membership and non-U.S. board seats guaranteed. ACTE also proposed educational programming to be based on the "ACTE philosophy" with all 2009 programming remaining as planned. Incoming NBTA president Craig Banikowski and a soon-to-be-hired NBTA executive director would lead the new organization.
In the previous rejected proposal, ACTE would contribute five additional members to the existing NBTA board, three of them representing regions outside the United States.
Another issue ACTE hopes to resolve is the diverging treatment of members, since ACTE counts buyers and suppliers as equal members and NBTA affords different rights to buyers. Crum said, "That's really one of the tenets at the formation of ACTE 21 years ago. There are those who prefer NBTA's different treatment of buyers and suppliers. We're going to have to harmonize that. I don't want to speculate how."
ACTE executive director Susan Gurley said once a negotiating team hammers out terms of a deal, the respective boards of each organization would then vote on whether to approve it. If so, Gurley said ACTE would engage in a "get out the vote campaign" to gain the requisite membership support.
Gurley said, "Our hurdle is statutorily significantly higher, and 60 percent of our members are outside the United States. We need 51 percent of members to vote yes, so if you don't vote it's a no. You have to get a huge number of members to vote in favor."
If approved, Gurley would leave her post to make way for a new executive director. "I think this makes a lot of sense," according to Gurley. "When you merge two organizations you should a have a fresh voice and face, and I'm 100 percent supportive of that."
Countering what sources described as precarious financial footing exacerbated by sponsors' reluctance to kick in more dollars in the wake of the failure of the first merger attempt, Crum said ACTE is "not at all" in dire budgetary straits. He said registration for ACTE's upcoming Global Education Conference in Prague in October is ahead of last year's pace, while other events for the remainder of 2009 are "actually doing very well for this economic environment." As such, ACTE's new merger proposal was not borne of financial necessity, Crum said.
With the ACTE board agreeing to reopen NBTA merger talks, PCMA this month pulled the plug on the "strategic alliance" it formed with ACTE in June.
In a message to the PCMA board of directors, PCMA chairman John Folks said "some additional financial challenges surfaced," following the resignation of ACTE director of global finance Cynthia Godes.
"I don't know what he means by any other financial challenges, to be honest with you," Crum said, adding Godes' departure was "more a personnel matter than anything else." An ACTE spokesperson said a replacement already has been selected, though no announcement had been made by press time.
Crum said of PCMA, "We let them know about our intention to reengage with NBTA, and they made the decision that they no longer wanted to continue in the pursuit of the alliance we were working on."
With PCMA, Crum said ACTE pursued a "shared services arrangement, where some non-member-facing activities—finance, IT—can be outsourced to either party, so that one group can take it over and the other one pay a fee."
When ACTE and PCMA announced the formation of a strategic alliance, officials stressed each association would remain independent entities with separate boards and staffs, but would cooperate on joint member benefits, education, research and collocation of events
(BTNonline, June 25).Crum said he is hopeful ACTE and NBTA can come to an equitable agreement, but ACTE in the meantime will continue to plot its course as a stand-alone entity.
"We have to come to something that will get our board and our members to approve it," Crum said. "If not, we go forward. We have events planned for later this year, we have the team putting together the calendar and we have a number of events already booked for 2010."