Magellan eyes the future

ianmcfarlaneBy Jasmine O’Donoghue

Magellan Travel Group fell short on its member and agent number goals for FY15, but exceeded its financial goals, CEO Andrew Macfarlane (pictured) revealed at the Group’s annual conference.

The Group surpassed its goal of $850 million TTV for FY15, reaching $863 million, while operating profit reached $8.9 million, past the target of over $8 million. Magellan also kept costs down to 8.2 per cent of operating profit, after aiming to achieve less than nine per cent.

While the Group had high hopes, planning to reach 105 members and 130 agents, it fell short, achieving 98 and 122 respectively.

For 2016, Magellan has its sights set on $926 million TTV and is eyeing exceeding $10 million in net income, while at the same time lowering costs to less than eight per cent of income.

Macfarlane told travelBulletin shortly after his CEO address that the group expects its membership to grow but hasn’t pinned down any particular numbers.

He said forecasting what will happen next for competitor groups and what that will mean in terms of industry stability or mass movement of agents is difficult, emphasising that “anything could happen”.

The Group has reached “critical mass” in terms of buying power, allowing it to be “more selective than ever in selecting the right agents for the group,” and grow by spreading the word in “a low key way”.

“If you run the niche strategy where you want a particular kind of agent, you really are better off if people hear about the group, talk to an existing agent in the group and then make an enquiry,” Macfarlane told travelBulletin.
Macfarlane expects some growth to come when contracts expire and agents look at the alternatives.“They’ll ask themselves ‘has it worked with the group I’ve been with during the contracts period?’ and if that’s a yes then I guess they’ll stay and if not then they might look at what the alternatives are and we’re one of those.”

One obstacle to growth Magellan faces is the “enhanced agent incentives scheme” offered by some other groups.

“That’s code for pay-to-stay… it’s not something that we do. We want our members to stay with us for as long as the model is working for them… and we’ve continued to grow with that model.

“We don’t need to provide “sweeteners” to join or make payments for agents to stay,” Macfarlane said.

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