VTS Buys Direct, Joins Top 10

<B> VTS Buys Direct, Joins Top 10</B>

By Sarah Welt


<I>Mahwah, N.J.</I> - VTS Travel Enterprises last week acquired its New York-area neighbor Direct Travel, which has been seeking a buyer for some time (BTNOnline, June 3).

VTS's $346 million in 1998 air sales, when combined with Direct's $192 million (down 9 percent from $210 million in 1997), will make it the tenth-largest corporate agency in the nation. VTS also gains Direct's technology subsidiary, DirectLink Technologies, and broadens its customer base to Boston, Chicago, San Francisco and Washington, D.C.

VTS president Vincent Vitti acknowledged that Direct "certainly had financial pressures that motivated them to look at alternatives, such as selling the business. There is no question that any agency headquartered in New York City has got a whale of a problem, and I think anyone there needs to reassess how to move forward, with commission rates not at 12 percent, but closer to 5 and 6 percent."

Vitti said his own assessment of the value of Direct took into account the fact that its brick and mortar would simply have to go.

"We were able to look at this on an incremental revenue basis, and not have the burden of extra real estate," he said. "One of the strong points is Direct's lease in Manhattan expires in the next three months, so we will be able to give up that space and consolidate with our other Manhattan locations, or perhaps use some capacity in our New Jersey location as well."

Vitti also said he was interested in DirectLink's automated booking software, in which Direct had invested a significant amount of money. DirectLink will become part of VTS's wholly owned subsidiary First Internet Travel LLC in North Carolina. VTS had been marketing Galileo's Travelpoint, but now plans to switch clients to DirectLink.

Direct Travel president Herbert Edelberg will remain at VTS as executive vice president, responsible for customer and new account business development, under what Vitti called "a long-term contract.