IN BRIEF: December 2018 edition
CTM slammed by VGI hedge fund
It’s been a wild few weeks for Corporate Travel Management, which was blindsided by an attack in the form of a report by short-selling investment group VGI Capital. The hedge fund admitted that it had a strongly vested interest in driving the CTM share price down, and it certainly succeeded, with the price dropping about 35% in the wake of the initial report.
CTM managing director, Jamie Pherous, responded strongly to claims by VGI about accounting irregularities, appointing Flight Centre auditor Ernst and Young to run the ruler over the CTM books. VGI’s 180-page-plus dossier also included photographs of so-called “ghost offices” across the globe, including one apparently located in a baggage retrieval area of an airport in Alaska. While acknowledging the need to keep the CTM website updated in terms of office locations, Pherous fiercely rebutted suggestions the international locations were bogus, noting that the Alaska facility is in fact heavily used by fly-in fly-out resource workers during the mining season, while other addresses allowed the company to access local BSP and tax advantages for the company’s clients.
VGI also criticised the CTM accounts on the basis of low interest earnings, a claim Pherous debunked by noting that it displayed a fundamental misunderstanding of the company’s business model which, unlike listed leisure-focused travel companies, did not involve a significant amount of prepayments sitting in the bank.
He concluded by saying CTM “does not intend to have the business distracted by baseless and self-serving claims,” with the board confident its strategy would continue to deliver benefits for customers, staff and shareholders.
Regal Princess set to sail into Sydney
Princess Cruises has announced the Sydney deployment of its Royal-Class ship Regal Princess, which is set to sail her inaugural local season alongside sister ship Majestic Princess from December 2020.
The move represents a 40% lift in Princess Cruises’ capacity from Sydney compared with the line’s current summer season, and marks the biggest deployment the cruise line has ever had in the harbour city.
Princess Cruises senior vice president Asia Pacific, Stuart Allison said the cruise line was thrilled to welcome the ships to Sydney. “Not only will this be the first time in history that Princess Cruises has deployed two Royal-Class ships from the same homeport outside the Caribbean, but it will be the biggest deployment we’ve ever had in Sydney,” he said.
The 330m Regal Princess will offer similar features to Majestic, including 13 dining venues, atrium, over the ocean walkway, poolside cabanas, the Princess Live! television studio and Chef’s Table Lumiere private dining experience.
She will sail to Sydney from Rome, calling in at four continents on the way, with a detailed itinerary set to be released in March 2019.
Bunnik continues Egypt commitment
Small group tour operator Bunnik Tours has cemented its longstanding commitment to the Egyptian tourism sector by acquiring a majority stake in its Cairo-based ground operator.
The business will operate as a joint venture with its management team, CEO Dennis Bunnik told travelBulletin, adding that the company saw the deal as an “investment in the future of Egypt”.
Unlike many other operators, Bunnik Tours had unwaveringly maintained its presence in Egypt, continuing to work with and support the team there during the lean years after the 2011 Arab Spring revolution, he said.
That commitment has now paid off, with Bunnik saying “Egypt is back — booking numbers are now above pre-revolution peaks.
“It is the perfect time to realise our dream and officially launch the joint venture,” he said.
This included relocating the team into a “new and bright office in an up market leafy Cairo suburb,” with the official opening of the expanded Cairo presence last month attended by founder Marion Bunnik and sons and co-owners, Dennis (CEO) and Sacha (MD), along with many local hoteliers and Nile cruise operator suppliers.
Bunnik said it was an opportunity to “celebrate old friendships and 14 years of working together showing Australians the best of Egypt”.
He also noted attendees included representatives of several Europe-based operators who will use the Bunnik services for their Egypt clients.
Back-Roads rebrands in US
A long-running dispute between Back-Roads Touring Company and a Californian firm with a similar name has been resolved, with the Flight Centre majority-owned operator adopting a new brand for its US business. The operator will now be known as Blue-Roads Touring Company in the US after a trademark infringement case brought by American firm Backroads Corporation. Court action was instigated back in 2015 by the US company, which alleged the Flight Centre offshoot was “knowingly and intentionally using the infringing Back-Roads Touring brand in an effort to confuse the public” and sought damages and an injunction against selling tours to US-based customers.
The California company was established in 1979 and had registered a range of “Backroads” trademarks in 2005. It stated in its action that these and the Back-Roads Touring brand were “virtually identical and convey substantially the same commercial impression”. The Blue-Roads brand was agreed to after mediation, based on the concept that minor byways on Rand McNally touring maps are coloured blue.
“By creating a new brand that speaks to a distinctly American audience, Blue-Roads is helping to bring the small-group tour experience to life in this key market,” the company said in a statement. The US rebrand has seen the launch of a new website, social channels and marketing collateral for North American travellers.
Banyan Tree heads to Lindeman Island
Construction is set to begin in 2019 on three new Banyan Tree resorts, to be located on Lindeman Island in the Whitsundays region of Queensland.
According to Island owner White Horse Australia, the new properties will include a “six-star spa resort, a five-star beach resort, a five-star eco resort and a tourist villa precinct”, with the $600 million project set to boost overnight stays to the island by more than 200,000 annually.
In addition to the management rights of the resort, the Banyan Tree project also includes a group of 89 villas which will reportedly target wealthy Chinese tourists.
The project is rumoured to be built by ASX-listed Watpac, with all energy and water for the sustainable resorts to be produced on site.
Webjet strengthens B2B presence
SHORING up its position in the business to business space, Webjet has purchased Dubai-based accommodation wholesale platform Destinations of the World (DOTW) for a whopping $240 million.
The acquisition is intended to complement the company’s B2B travel business WebBeds and will be used to enhance Webjet’s brand presence the Middle East, Europe, Asia-Pacific and the Americas.
“In addition to providing 5,600 unique new contracts, the overlap in existing directly contracted hotels will deliver increased depth to our global inventory offering,” said Webjet managing director John Guscic.
DOTW generated TTV of US$529 million in the year to 30 June, with earnings (EBITDA) of US$16.4 million.
News of the purchase follows Webjet’s acquisition of JacTravel last year, which Webjet said has been an instigator of growth since its integration with the business.
Webjet also issued earnings guidance for 2018-19, saying it was on track to deliver underlying EBITDA of at least $110 million, up from the $87.4 million of last financial year.
The purchase was funded by $102 million in debt as well as a $153 million entitlement offer to existing shareholders.
The DOTW portfolio is claimed to comprise 130,000 hotels globally.