WorldTravel BTI, McCord Merger Triggers New Synergi

WorldTravel BTI said its Feb. 14 stock equity merger with Chicago-based McCord Travel Management has given the Atlanta-based mega agency claim to second place in sales behind long-time industry leader American Express, which for years had outsold closest competitor Carlson Wagonlit Travel by several billion dollars.

With $3.8 billion in reported U.S. travel sales for 2001, WorldTravel's new muscle does not threaten American Express' supremacy, but it does put it in contention with Navigant International, which snatched second place from Carlson Wagonlit Travel in June with its acquisition of SatoTravel (BTN, June 11, 2001).

The increased jockeying for position is a sign of intense competition for market share in an industry where size does matter for technological economies of scale, for negotiating better deals with suppliers and for getting invited to bid on significant pieces of corporate business.

Under the terms of the deal, WorldTravel retained McCord's clients, offices and personnel, including the former agency's management team led by former CEO Bruce Black, now CEO of WorldTravel's new Chicago-based meetings and incentives division.

Integration of the two companies should be completed next month. In addition to Black, Scott Graf, formerly president of McCord's performance division, also was tapped to lead the new $100 million meetings and incentives division.

Black said the MCI industry has recovered from the chaos of last year. "We took a hit early on, as did so many other companies, with canceled meetings and incentives," he said. "But that business is starting to come back."

Danny Hood, president of WorldTravel BTI, said the new leaders will "bring real expertise to our operations, in what is definitely the most profitable side of the business."

He said the new division would be the fourth-largest meetings and incentives operation in the business, following last year's purchase by TQ3 Maritz of McGettigan Partners (BTN, Dec. 3, 2001).

McCord's strong position in the key urban markets and its expertise in entertainment travel, meetings and incentives were the keys to the deal, Hood said. "We had four markets targeted for expansion: Los Angeles, Chicago, New York and Houston," he said.

McCord's strong position in Chicago and New York bought WorldTravel coverage in two of those key markets, while McCord's Hoffman Travel brand shored up WorldTravel's position in Los Angeles. Because neither of the agencies have a strong presence in Houston, Hood said, growth in that market still was on WorldTravel's "to do list," either through acquisition or otherwise.

For McCord clients, Black said there will be more technological and business resources available, while they will continue to receive support from their previous staffers.

Formerly the U.S. agency anchor of the $12 billion global Synergi Network, the McCord organization now has joined forces with WorldTravel-affiliated Business Travel International. Filling the void left at Synergi is New York-based super regional Sea Gate Travel, formerly affiliated with Hickory/First Travel.

Synergi did more than just replace McCord, however. It also expanded its number of shareholders from one to four, with plans to include more shareholders in the future.

Sea Gate is one of the new shareholders in the organization, along with London-based Travel Co. and Synergi Travel New Zealand/Synergi Travel Australia. The new shareholders join current shareholder, Shepperton, England-based Ian Allan Travel.

Under the new structure, Greg O'Neil, formerly Synergi worldwide managing director, assumes the role of president and retains his seat on the board of directors. "Broadening the base of shareholders raised the level of investment in the Synergi organization," O'Neil said. "This investment allows us to meet the growing demand for global infrastructure in the travel management business."

WorldTravel BTI's closest competitor for second indicated that it probably would continue to up the ante, but none of the other largest players said they had plans for merger or acquisition activity.

Thom Nulty, president and COO of Denver-based Navigant International said that despite rumors, the acquisition mavens in Denver "were not involved in the McCord dealing." McCord did not offer significant gains in the key domestic areas on Navigant's short list for growth, he said, indicating that the agency wants a stronger presence in Philadelphia, Tampa and Miami.

"Our chief target for growth in 2002 will be in the global arena," Nulty said. With inroads in 17 nations made by Navigant's Sato acquisition and business relationships with overseas agencies Lufthansa City Center and South African Airways City Center, Nulty expects global sales to be strong in 2002. "Our operations give us access to a $10 billion market in 67 countries," he said.

Bob Briggs, executive vice president of business development and marketing for North America at Minneapolis-based Carlson Wagonlit Travel, said the merger would not change the bidding process for buyers or agencies. "Bidding is very, very competitive as it is," he said.

TQ3 Maritz senior vice president Mike Koetting said his St. Louis-based agency would focus sales efforts on select global and multinational companies that currently are not exclusive TQ3 Maritz clients.

"In total, the list includes approximately 75 to 100 current and potential clients with a combined global air volume exceeding $1 billion," Koetting said. "Sales, operations and account management resources have been allocated to the goal of landing that new business." TQ3 Maritz stepped up investment in the international market, he said, and the company "is actively pursuing acquisitions, where appropriate."

Issuing a prepared statement, Philadelphia-based mega agency Rosenbluth International said: "The WT-BTI acquisition of McCord Travel is among several of the consolidation efforts that have been and will continue to happen in our industry. Rosenbluth International maintains its position as one of the largest travel management companies in the world, with global travel sales totaling in excess of $5 billion."