FCm Forming German Agency Partnership

Aspiring global travel management company FCm Travel Solutions will announce before the end of July the formation of a partnership with DER Business Travel. DER is the second-largest player in the German corporate market after BCD Travel.

A letter of intent has been signed but a full agreement has yet to be finalized on such issues as the extent and timing of DER rebranding under the FCm banner. No exchange of equity is involved.

FCm, owned by Flight Centre of Australia, is positioning itself as the only global TMC headquartered in Asia and as a direct competitor to American Express, Carlson Wagonlit Travel, BCD Travel and HRG. Until this week, it had wholly owned offices in 10 countries, including the United States, where it bought Chicago-based Bannockburn Travel in March, and licensees in another 47.

Last week, FCm announced the signing of Flytour as its partner in Brazil and as regional master licensee for Latin America. FCm claims Sao Paulo-based Flytour is the largest air ticket issuer in Latin America, with annual corporate travel sales of $220 million. Clients include 3M, Ericsson, Credit Suisse and Caterpillar. Flytour has been briefed to sign licensees for FCm in Argentina, Chile, Colombia, Mexico, Peru and Venezuela.

The DER deal could significantly enhance the credibility of FCm's efforts to build a global empire. Germany is one of the top two business markets in Europe, alongside the United Kingdom, but travel buyers there are famously parochial in their choice of travel management companies. Amex and Carlson Wagonlit have a lower profile there than almost anywhere else in Western Europe. DER is owned by Rewe, a major tour operator and also Germany's top leisure agency chain. DER had a turnover of $1.4 billion in 2004 and was previously a member of the Synergi alliance that was gobbled up in the formation of BCD in January.

FCm also has been trying to tie up an acquisition on the U.S. East Coast for several months, but negotiations are said to be stalling. Alan Spence, FCm's CEO for Europe, would not comment on this, or the DER deal, but said, "Europe is coming together well. Another acquisition in the U.S. would put the cream on the cake for us."

Meanwhile, Spence observed a trend for corporate clients to shy away from selecting a single TMC globally, preferring to select a leading TMC in each region while retaining long-established favorites in some markets. "No one has global accounts that are 100 percent successful," said Spence. "What clients really want is their data managed globally. They are happy to go with more than one TMC, provided they can satisfactorily consolidate good global data."