Agencies In Acquisition Mode

<B> Agencies In Acquisition Mode</B>

By Sarah Welt

Approaching the last quarter of the year, the traditional travel agency acquisition season, many agencies appear to be in the mode, as some owners search for the growth that brings economies of scale, and some seek to get out of the business altogether.

The $120 million Adelman Travel Group of Milwaukee, Wis., last month reached out toward the coasts to acquire the corporate travel management division of QST Travel Group, a $30 million air-volume agency whose main offices are in Boston and California. Adelman president and chief executive officer Craig Adelman said the deal will add 16 corporate onsite operations to its existing base of 80 such sites.

Neither QST's corporate meetings and incentives division nor its leisure travel business was included in the sale.

In an industry that seems to be consolidating under bigger players, Adelman Travel still is "looking at several other acquisitions with the same corporate focus," Adelman said.

Meanwhile, Travel One of Mt. Laurel, N.J., is finalizing a deal to acquire a $50 million agency in New England, which it expects to close in the next few weeks. While one acquisition in Northern California fell through, another, for an agency in Houston, is still on track to close next month.

In Cambridge, Mass., Aquarius Travel has "about $150 million of acquisitions at one stage or another in the pipeline right now," said president and chief executive officer Domenic Pugliares. He declined to disclose details except to say that all acquisitions will be in markets the agency does not currently serve.

Seven Eleven Tours Inc. of Melville, N.Y., with $18 million in domestic air sales and $30 million worldwide, last month acquired Manatee Around the World Travel of Bradenton, Fla., a $5 million agency. Both agencies draw the majority of their sales from corporate accounts.

Said Seven Eleven president Julius Haas, "I think airline commissions will be totally wiped out in a short time. To be viable to a lot of different airlines you have to be in a lot of different markets."

To meet that need, the agency has several more acquisitions on the front burner, including one in Reno, Nev., another in Portland, Ore., one in San Francisco, and two on New York's Long Island.

Haas is looking for profitable agencies with a minimum of $4.5 million in air sales, which he finds "not too readily available in the travel industry right now," he noted.

Fugazi Executive Travel of Boston also is "actively and aggressively on the acquisition hunt" and expects to "add $50 million in newly acquired business in the next three to six months," said president Jeff Smith. "We are looking for Sabre agencies doing in excess of $10 million or travel agencies with less than a year on their automation contracts, anywhere we can find them."

Fugazi is in talks with a $50 million agency in Miami, a $15 million agency in Washington, D.C., three companies in California, and one in Chicago.