Perspective – June 2013

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Ian McMahonWhither the JTG brands?

HAS your experience been the same as mine?

Without exception at every travel industry event I have attended in recent weeks the major topic of conversation has been: what is going to happen at JTG?

Fuelling the discussion has been a spate of stories in the digital publications containing all manner of speculation about the future of iconic Australian retail travel brands Harvey World Travel, Jetset, Travelscene and Travelworld.

One of the more hare-brained suggestions (surely) is that the company could resurrect Traveland as a single brand to replace the four existing franchised brands.

It is true that JTG is faced with the seemingly intractable problem of matching the marketing clout of Flight Centre which channels virtually all its advertising spend into promotion of a single brand while JTG’s resources are dissipated across four brands.

But how is it a solution to bring back a brand that, while well respected in its day, is last remembered for having gone broke in the Ansett collapse?

The only possible “advantage” that I can see is that it would equally upset the franchisees of all the current brands.

Even if the Traveland brand was not tainted, what on earth are we to make of a move that would result in a series of travel outlets, as good as next door to each other on the shopping strips and malls of Australia, carrying identical brands? That this suggestion has surfaced suggests to me that someone – or some people – may be leaking stories to cause maximum consternation among JTG franchisees so that there is a sense of relief when the actual, less draconian plan is unveiled. (Governments commonly use the ploy before bringing down “horror Budgets”).

Apart from anything else, I assume (without having checked, I must admit) that the brands owned by JTG are given some considerable “good will” value in the assets column of the company’s balance sheet. (If not, they should be – HWT, in particular, is right up there with Flight Centre as a retail travel brand.)

Shareholders would not take kindly to a write-off of those assets. What shareholders are likely to welcome, however, would be the realisation of some cash for those assets.

What about management buy-outs of the chains with the currently franchised agents, either individually or collectively, purchasing their brands?

Depending on the detail of such a scheme this could benefit not only JTG but the company’s other key stakeholders – the franchised agents who have invested not only money but their working lives into building the businesses that give the brands their strength.

By the time you read this, it may be that JTG will have announced its future strategy. Certainly restive JTG agents say they are growing impatient for information and there is some criticism of the company’s managing director Rob Gurney for what is perceived in certain quarters as a “slowly slowly” approach.

In my opinion this is unjustified criticism. Gurney has to get this right. He is clearly going out of his way to get the best advice he can, not only from the management consultancy, BCD, called in to review JTG’s set-up, but also from wide consultations including with franchisees.