Altour International last month announced it has agreed to buy super-regional agency The Travel Authority for an undisclosed amount. The employee stock ownership plan purchase is expected to close by the end of September.
Combined, the two travel management companies processed 548,804 ARC transactions in 2008 worth $429.8 million, according to
BTN's 2009 Business Travel Survey. Altour and Jeffersonville, Ind.-based The Travel Authority rank 12th and eighth, respectively, among those who released ARC transactions for this year's survey.
The agencies will continue operating under their separate names. Altour president Alexandre Chemla becomes chairman of The Travel Authority, where current president and CEO Tom Lumley will remain on the board of directors and "continue in an advisory capacity." TTA executive vice president Lee Thomas will become president.
New York-based Altour has 23 offices with more than 700 employees in the United States and Europe. The Travel Authority operates in more than 40 offices in Florida, Indiana, Kentucky, Ohio and Tennessee. Both agencies are part of the American Express Travel Representative network. Altour joined the network in May.
TTA had about $300 million in total 2008 volume, and Altour's exceeded $500 million.
Chemla plans to maintain most of The Travel Authority's operations, including its Jeffersonville, Ind., headquarters, which will fill Altour's infrastructure and employee gap in the central United States. Altour also will maintain TTA's 24/7 support services and corporate online booking tool SwiftTrip, a system now 80 percent owned by Altour. PassageWays Travel and Morris Murdock Travel own the remainder.
Lumley, who ran The Travel Authority since 1984, said a drop in corporate business by one-third and the high fixed cost of maintaining an employee stock ownership plan drove the sale.
The company has been 100 percent employee-owned since 2001. Average annual costs of maintaining the ownership plan are about $250,000, according to Lumley. TTA stopped issuing stock two years ago. "Funds that could have been used for growth or acquisition were used to maintain the ESOP," said Lumley.
TTA now has about 230 employees and another 100 independent agents, down from about 275 full-time equivalents 12 to 18 months ago, according to Lumley.
Altour has been on the agency-buying path for several years, with acquisitions including Revel Travel under its belt
(BTNonline, Oct. 18, 2004), but the TTA buy is by far its largest. With bases in Los Angeles and New York and a presence in London and Paris, Chemla plans additional purchases in the United States and abroad.
"Travel agencies have not been raising their prices," Chemla said. "The business is slower and that causes more panic in the minds of certain people. They feel they need to get out of it, and that is where we find opportunity."