Rosenbluth Heading For IPO

<B> Rosenbluth Heading For IPO</B>

By Sarah Welt

<I>Philadelphia</I> - Last month's acquisition of Biztravel.com and the appointment of a new president and chief operating officer underscore a strategic shift for Rosenbluth International that will broaden the travel management company's scope and better position it to launch an initial public offering.

CEO Hal Rosenbluth hired Alex Wasilov to join the company as president and COO. Wasilov, former Xerox president of emerging markets, has been a Rosenbluth board member for two-and-a-half years. He takes over the role of president from Rosenbluth and replaces Hans Amell as COO. Rosenbluth said Amell, who joined the company in May 1998, left because "when I see areas for improvement I jump at them. I knew that I had to make a change." CEO Rosenbluth has added chairman to his title.

Wasilov said most of his attention will be on running day-to-day operations around the world, managing "revenue generation--making sure we are delivering a profit for the corporation and that we are managing our customer and employee satisfaction levels." He brings experience at Xerox and Kodak in managing sales and marketing as well as product development in Asia, Europe, Japan, Latin America and the United States to the role.

The change in leadership will allow Hal Rosenbluth to have more face time with clients, associates and Rosenbluth "thought leaders," Rosenbluth said.

The company also recently replaced its vice president of business development Robert McGurk. Rosenbluth would not comment on McGurk's reason for leaving, but said his replacement is director of business development Yma Shery.

The appointment of a new president follows the purchase of Biztravel.com by Rosenbluth International and partners Continental Airlines, Excite@Home, Marriott and Sun Microsystems. The agency set up a new affiliate, Rosenbluth Interactive, to host Biztravel.com and a separate consumer travel booking site whose name has not yet been released.

Some of the original investors in Biztravel.com, including Accel Partners, Comcast, Hummer Winblad Venture Partners and New Enterprise Associates, retained their interest in the startup. Rosenbluth International holds the majority ownership. Rosenbluth would neither disclose the price nor other terms of the sale.

For the highly managed corporate market, Rosenbluth will continue to offer the @Rosenbluth online booking system powered by Xtra On-Line. But for lightly managed travel and small or home-office market, it will offer Biztravel.com. The site also will allow the agency to service the leisure business of corporate customers much more easily, Rosenbluth said. The site will include Rosenbluth-negotiated fares and distressed fares. Rosenbluth also will integrate its existing quality control and low fare search technology with the Biztravel.com engine.

Troubled by the thinning margins of the online booking market after air carriers began imposing commission caps on them, Biztravel.com's owners earlier this year began looking for a buyer. The bidding also is believed to have included a venture capital group and Carlson Wagonlit Travel. Upon hearing of Rosenbluth's plans for the site, some of the existing owners opted not to sell their stakes.

"When we began to look at the electronic market space and existing travel Web sites, it became very clear what Rosenbluth International could bring to bear," Rosenbluth said. "First, the integration of our high-touch approach to customer service has not yet been achieved on the Web in any industry. And, second, we have an unparalleled ability to provide a broad selection of preferential fares. Quite simply, we want to be an oasis on the Internet for the harried traveler by anticipating all of his or her needs and fulfilling them."

Rosenbluth will serve as chairman and CEO of Rosenbluth Interactive, with Rosenbluth International's CIO Neal Bibeau on board as president. A few Biztravel.com executives also will join, including Ed Hardenbeck, vice president of engineering, George Roukas, vice president of product development, and Rob Cullen, vice president of sponsorship and advertising.

Asked whether all the change makes the atmosphere right for an IPO, Rosenbluth said the climate is "getting there." However, he noted the disappointing financial performance of Navigant International, the only other publicly traded travel management company (besides American Express, which is also a financial firm), and concerns that an IPO from Rosenbluth "would be comparable, and that is not exactly the kind of comparable we're looking for."

Still, the agency clearly is laying the foundation for a broader business model that will better appeal to Wall Street. "Part of positioning yourself for a public offering is being able to clearly define your long-term strategy and the businesses and industries that we will be participating in," Wasilov said. "We are clearly in a position to define where we will be in the travel services business, we are very close to being able to define where we are going to play from an Internet perspective, and we are getting close to being able to define where we will play from a general services business perspective. I think that all three of those need to be clearly aligned and integrated to position us for an extremely successful public offering."

Among the ideas for branching into general services is leveraging its call center management expertise for both Rosenbluth and non-Rosenbluth clients. "We already take reservations for a number of airlines and we have been approached by numerous companies to have us help train their people and their leadership in call center management," Rosenbluth said. "We have a tremendous core competency with call center management and customer service, and an area that is absolutely untapped but right up our alley is the ability to provide that for companies."

Plans for diversification do not mean that Rosenbluth plans to neglect its core travel business, however. Last week it signed a definitive agreement to acquire Professional Travel Services/National Reservation Center of Campbellsville, Ky., and it plans to transform the operation into its sixth IntelliCenter.

Professional Travel Services/National Reservation Center currently is staffed by 35 independently contracted agents, most of whom will be retrained to service Rosenbluth's corporate clients. Over the next two or three years, Rosenbluth plans to expand the Campbellsville IntelliCenter to employ approximately 180 associates.

The agency also broke ground last month for a 300-person IntelliCenter in Williston, N.D.--its fifth giant reservation center and its third in North Dakota--which is scheduled to open for business in mid-December.

Rosenbluth also is looking to grow its international operations, and expects to announce agency acquisitions in Italy, Spain and Latin America before the end of the year.