Brisbane, Australia-based Flight Centre, parent of FCm Travel Solutions, has taken a 25 percent stake in the prominent Chestnut Hill, Mass.-based independent travel management company Garber Travel. The cost of the deal, which closed yesterday, is undisclosed. The joint venture deal leaves 37.5 percent of the company in the hands of the Hill family, and 37.5 percent in the hands of the Garber family and gives Flight Centre first right of refusal when the families are ready to sell.
The Garber deal represents a significant expansion of FCm in the United States, which previously included operations in Chicago and on the West Coast. For Garber, the deal strengthens its international reach while providing financial resources to develop a domestic base of larger customers.
Alan Spence, CEO for FCm in Europe, the Middle East and Africa, told
BTN that Garber would be co-branded as Garber FCm Travel Solutions "within six months." According to the statement announcing the deal, Garber handles $270 million in annual transactions through 20 offices in Massachusetts, California, Rhode Island, Illinois, Vermont, Virginia, New Hampshire, Toronto and London.
"This represents a huge opportunity for growth for both of us in the United States and also presents an opportunity for our corporate clients in terms of servicing their global needs," said Garber CEO and president Roz Garber. She said the capital from the FCm investment "will be used for investing in technology and growing infrastructure, including account executives and salespeople, so that we can increase and service new sales. Our focus now will be primarily on larger accounts. New accounts of less than $300,000 in U.S. booked air volume we will target to the existing FCm offices. Our forte is those accounts with more than $1 million in air."
For interacting with the other FCm holdings in the United States, Garber said they have "carved out very clear guidelines for sales and service. The Chicago group will service clients in their area only, and we will service the entire East Coast and other geographical areas. We will service and pursue the larger accounts. FCm's niche to date has been in servicing smaller accounts."
Going forward, Garber will participate in global meetings and FCm president for North America Greg Dixon will have a seat on Garber's board.
Flight Centre made its first U.S. acquisition in March 2006, when it bought Bannockburn Travel in Chicago for $9 million
(BTN, April 3, 2006). Its FCm network has a presence in 50 countries, of which 15 are fully or part-owned. FCm had been looking to add a TMC with a strong East Coast presence for well over a year.
Talks between the two companies began in earnest last October and the terms of the deal were reached in December. "FCm had been calling on us for many years, but it had only been interested in purchasing the company," Garber said. "My husband passed away four years ago, and I took over the company when he died. I certainly was not and still am not interested in selling the company, so I wouldn't talk to them." After FCm entered into a joint venture with Garber's former German Synergi partner DER, however, Garber decided that she was willing to talk about a joint venture.
To some extent, the new arrangement is not unlike the one Garber previously had with international travel management consortium Synergi, from which it resigned its longtime membership a few weeks ago, except that FCm appears to be much more stable because of its ownership position in the agencies in the network.
"This is a good move for us. Garber is a well-respected company," said Spence. "It will enable us to compete with the big players now that we have strength in the U.S. It makes us a genuine global TMC."
"We have had our sights set on taking our business to the next level by partnering with a global travel management company," Garber said. "We're very excited about joining forces with FCm because of the worldwide reach it gives us, and the close alignment in our business systems, service style and development of our people."