Navigant To Continue Sailing Acquisition Course
<B> Navigant To Continue Sailing Acquisition Course</B>
By Sarah Welt
<I>Englewood, Colo.</I> - Newly public as of July 6, Navigant International plans to close twelve acquisitions in North America and overseas by the end of its fiscal year in April 1999, and add another billion dollars in sales to its bottom line.
The nation's newest mega-agency (<I>BTN,</I> Oct. 13, 1997) also plans to increase its presence in the top U.S. business travel markets from 16 today to 25 in that same time frame.
Navigant on July 6 acquired Minneapolis-based TravelCorp. Inc. and now plans to combine TravelCorp's operations, and its $45 million in air spend, with those of Navigant's other Minneapolis-based agency, World Travel and Incentive. It plans to announce another acquisition in the next four to six weeks.
To finance its acquisition plan, Navigant has a $75 million credit line with NationsBank, and "as the stock--which we think is pretty undervalued--moves up, we'll use cash and stock. We don't want to use stock at this level because it's too cheap," said chairman and CEO Ed Adams. "We are only trading at seven times earnings."
Navigant has two operations in the United Kingdom--a division of McGregor Travel in London and a division of Supertravel in Edinburgh, Scotland. Now, it is looking to expand into Western Europe, Germany, Italy and France. Said COO Doug Knight, "We have got to be global."
Adams said the company also plans to pursue a co-branded corporate card.
<B>New Hubs In Sight</B>
Navigant also wants to expand on its hub strategy--identifying one hub agency in each region to which the other agencies in the region report--with a new focus in the South, Southeast, Midwest and Ohio valley. Associated Travel now serves as Navigant's California hub, Mutual Travel is the hub in the Northwest, Professional Travel Corp. is the hub in the Rocky Mountains, and McGregor Travel is the Northeast hub.
Navigant plans to keep the operation fairly decentralized. All presidents of the operating units have separate profit and loss statement and budget responsibilities.
There is frequent contact between presidents of the umbrella organization and the operating units, however. All presidents share a weekly conference call and meet in person quarterly. Once a month, the executive committee gets together with all the hub presidents. Navigant also created a number of committees, including those focusing on technology, sales and marketing, and groups and incentives.
The organization plans to centralize areas that "do not touch the customer," Adams said, including purchasing, human resources, data gathering, back-room systems, vendor negotiations and technology development. "We'd like to eliminate the duplication and take a best practices approach," Adams said. For example, Navigant has eight Websites built and supported by different operating companies, as well as different booking products attached to corporate intranets and the Internet.
Navigant also is evaluating whether it wants to combine the reservation centers of its various operating units around the country, especially the three centers it now has in Washington, D.C.
On the revenue side, Navigant's corporate policy is not to take on any new customers that are not on some kind of fee basis. Seventy-two percent of its current customer base is on fees, and the goal is to get that number to 100 percent by April.
Meanwhile, its plans for the global Synergi network are very much up in the air. Said Adams,"We need to evaluate where we want to go with Synergi, and what its role is moving forward. Is it a marketing arm, is it a global network, is it a support group for the hotel program and 800 number? We are committed to Synergi as long as it is a viable organization."
Knight said Navigant will determine its direction regarding Synergi in the next eight weeks. Synergi president J.J. Doran said Navigant "has given complete support to us, and as far as I am concerned, their entire network is in Synergi. We treat them as a unit. Their support is crucial.