BTI Splits, BCD Buys Out TUI's TQ3 Holdings

The first working day of 2006 is starting with seismic changes in international travel management. BCD Holdings—owner of WorldTravel BTI—and Hogg Robinson announced their joint ownership of the global travel management network Business Travel International is to end. BCD announced that it has acquired the business interests of TUI, the German-owned travel giant that owns 50 percent of TQ3 Travel Solutions and is responsible for its global management. BCD also announced that it has acquired The Travel Company, a major independent business travel agency company in the United Kingdom.

The worldwide rights to the TQ3 brand are being transferred in their entirety to Navigant International, the other 50-percent owner of TQ3 Travel Solutions.

Meanwhile, Hogg Robinson will continue to trade under the BTI name everywhere except the United States, where it owns the travel management company Sea Gate Travel Group. It is understood that Hogg Robinson is close to making further acquisitions in the United States and also in Europe.

The BTI network, which has a presence in around 100 countries, was founded in 1990. Ownership slowly has consolidated over that time to just two players—BCD and Hogg—and in 2004 the pair announced they were trying to agree a merger. U.K.-owned Hogg's acquisition in April 2005 of Sea Gate, a direct competitor in the U.S. to WorldTravel, indicated all was not going well, and today the parties announced their long engagement has been broken off.

Hogg chief executive David Radcliffe, who is also chief executive of BTI, said the two parties would continue to work together to manage existing clients, pledging a policy of "business as usual for as long as the client wants. There is no question we can work together because it is in no one's interest not to," Radcliffe said.

"Both WorldTravel BTI and Hogg Robinson are fully committed to honoring all contractual obligations," confirmed Mike Buckman, supervisory board director of BTI and CEO of WorldTravel BTI, in a statement issued by BTI.

Similarly, TUI and Navigant said in a statement that they are "committed to honoring all existing contractual obligations with customers and business partners until the end of their contract period, expecting to ensure continued service and support without disruption."

Speaking on the split of BCD and Hogg Robinson, Radcliffe said: "It became obvious from our talks that the two groups had different ideas, so we have decided to call it a day. Naturally, we are sad we cannot take the merger forward. but this is still a big opportunity for Hogg Robinson. We own outright or have majority shareholdings in more than 20 countries, including having a great presence in the U.S."

Although BCD owns WorldTravel, the longtime BTI partner in the United States, which is the world's largest business travel market, it has bought out the German interest in TQ3 (effectively everywhere outside the Americas) because it is weak elsewhere, only having ownership in the Netherlands, Portugal and a handful of Latin American markets. Until today, both BCD and TQ3 Travel Solutions Management Holding (the holding company for TUI's business travel interests) owned stakes in Navigant International.

TQ3 has a presence in 90 countries, mainly through strategic partnerships, but it is the clear number one in Germany and has ownership in various other markets, including the U.K., France, Australia and India.

As far as Hogg Robinson is concerned, it will continue to trade as BTI everywhere except the United States "for the foreseeable future," according to Radcliffe. However, BTN understands a name change is being considered. This is partly because Hogg does not have the legal right to the BTI name in the United States, but also because Hogg wishes to distance itself from what it considers too much of a low-cost service approach to travel management by WorldTravel BTI.

If the name is changed, then a rebranding worldwide as Hogg Robinson must be considered the most likely candidate. Hogg steadily has been building up international promotion of its own name for the past 12 months. It also shed the last of its non-corporate travel interests last year to streamline its product offering and prepare for a return to the stock market.

Hogg has strong ownership in Europe, the Netherlands being its major weakness. In the United States, Sea Gate is thought to be one of the ten largest travel management companies but it is a super-regional, with a strong presence in the New York area and limited coverage elsewhere. Any impending U.S. acquisitions by Hogg would doubtless attempt to plug this gap, but Hogg also wishes to build up its sports travel business, a speciality of both Sea Gate and BTI Germany, which Hogg also owns. Hogg does not have any ownership in Latin America either, but it is a major player in Canada through BTI Canada, formerly Rider Travel.

Radcliffe declined to comment on potential acquisitions other than to say: "Where we don't own, you would expect us to have pretty advanced plans."