State of the industry: May 2016

CTM expands in US again, Travel Corporation farewells John Weeks and advertising spending figures provide food for thought in this month's look at the State of the Industry.

Coles moves into travel

SUPERMARKET giant Coles has spread its tentacles into travel, with the launch early last month of a new online travel booking website. Flybuys Travel has been embarked upon in partnership with Corporate Travel Management, with a key driver for the initiative being to create another way for Coles shoppers to redeem their Flybuys loyalty points. Ironically Flybuys was a key partner for Jetset Travelworld Group some years ago, with the agency group at the time hailing the initiative as a key driver of customers into franchisee stores.

In a somewhat worrying trend Coles said it would not charge booking fees, and is using it as a loyalty driver rather than to make money, with spokesman Adam Story saying “we’re not relying on this as a profit generator”. Corporate Travel Management is supplying the technology behind the site which allows users to earn as well as burn Flybuys points on travel transactions. Managing director Jamie Pherous said the new site “further strengthens CTM as a key global player in the loyalty segment,” with the company also working in this area in the US through one of its recent acquisitions, Los Angeles-based Montrose Travel.

Gavin Smith is off to London

AUSTRALIAN cruising leader Gavin Smith has ascended to the global stage, having been named as Senior Vice President, International which makes him responsible for all sales, marketing and commercial operations for Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises in Europe, the Middle East, Southeast Asia, Latin America, the Caribbean and Australasia. Smith is well-credentialled for the role, having been a former president of Carnival Australia, general manager of P&O and general manager of Jetset Travelworld before establishing the Royal Caribbean office in Australia in 2008.

Over the last eight years he has presided over massive growth for Royal Caribbean, which started off with just one vessel, Rhapsody of the Seas and will this year see eight massive vessels operating locally including the arrival later this year of Ovation of the Seas which will be the newest and largest ship to ever cruise in Australasian waters. In his new international role Smith will be based in London, while his local position as managing director Australasia is being taken over by Adam Armstrong, who has worked alongside Smith as commercial manager since the local office opened.

CTM expands in US again

It’s been a busy month for Corporate Travel Management, which as well as launching the Flybuys travel operation in partnership with Coles (see previous story) has announced yet another acquisition in the USA.

This time it is Boston-based Travizon Travel, for which CTM is paying US$21 million plus an undisclosed one-year earn-out instalment. The purchase gives the company a larger presence in the US, building on other deals including the US$34 million purchase late last year of Californian group Montrose Travel. Managing director Jamie Pherous projected CTM’s North American total transaction value will lift to well in excess of US$1 billion as a result – making it one of the top ten TMCs in the USA and operating from 20 cities across the country.

CTM has worked closely with Travizon for some years on client programs on both sides of the Atlantic, with Matt Cummings, chief operating officer of Travizon saying “we have watched CTM build a wonderful business based on highly personalised service delivery with best-in-class technology solutions. We consider that CTM is an excellent fit to enhance our service offering to both current and future clients”. Pherous also confirmed that CTM’s USA integration is on track to be completed on schedule by 30th June, bringing all of its operations there onto a single platform. The company’s global aspirations continue to expand, with CTM also announcing an alliance with Middle Eastern TMC ITL World.

Air NZ flags Virgin selloff

RELATIONS between Air New Zealand and Virgin Australia are probably a little strained at the moment, after Air NZ announced it was looking at options to offload its 25.9% stake in the Australian-based carrier. The shock announcement, which triggered the instant resignation of Air NZ CEO Christopher Luxon from the Virgin Australia board, saw VAH shares plummet almost 10%. Air New Zealand says it’s looking at possible alternate uses of its capital, with chairman Tony Carter saying the airline “does not want a large minority equity position in Virgin Australia as it focuses on its growth opportunities”. Speculation is swirling about whether one of the other big airline shareholders in Air NZ, Singapore Airlines and Etihad, will take up the additional stake. Worth more than $300 million, some analysts suggest SIA is a more likely suitor as Etihad is focused on growth in Europe. Meanwhile Air New Zealand and Virgin Australia have reaffirmed their joint commitment to the trans-Tasman alliance which sees them closely cooperate on routes between Australia and New Zealand.

France’s best foot forward

ATOUT France director for Australia, Patrick Benhamou, says he is trusting in the resilience of Australian travellers, whom he believes will continue to visit France despite the Paris terror attacks last year. French tourism authorities last month hosted the 11th annual Rendez-vous en France travel industry trade show in Montpellier, with Australian buyers out in force to source new content for their upcoming programs. Benhamou said the appeal of river cruises as well as cycling and hiking tours continues to grow for Australians, who are perceived as a key market for the country because they spend up big in hotels, bars and restaurants during their visits.

Later this year the French message will be further reinforced with the biggest ever French Workshop in Australia, which will see three major events taking place in true Benhamou style. These include ‘A night in Paris’ which will feature a swimwear parade, a Moulin Rouge show and the screening of a 3D animated film about Paris on 5 September in Sydney; a Monaco showcase including a Formula One vintage car display in Melbourne; and another Lyon-focussed event in Sydney. Almost 100 French exhibitors will take part in the workshops, showcasing their wares to local travel agents and tour operators wanting to capitalise on the perennially popular destination.

Travel Corporation farewells

LAST month saw the end of an era, with the resignation of John Weeks as non-executive chairman of The Travel Corporation. Weeks, who was CEO of the Australasian business for 16 years before being succeeded by John Veitch last year, said he had made the decision to relinquish his role as chairman to focus on other opportunities. “Having worked closely with John Veitch on his transition to CEO, this is an opportune time to step away, given he is now firmly at the helm and driving continued successful growth for TTC Australia.” Weeks’ departure became effective on 30 April.

Meanwhile another sad farewell for the Travel Corporation came in the form of the death of Mike Ness, who was the organisation’s global CEO for many years and a close confidante of founder Stanley Tollman. Ness had worked in the business for many decades, with Tollman saying he was a mainstay of the travel industry. “Mike was a wonderful friend and a revered business associate, whom we will all deeply miss,” Tollman said.

Advertising spending

ADVERTISING spending figures for the travel sector collated by Nielsen for 2015 provided some intriguing food for thought – and explained why there are all those cruise ads in the paper and on television. Flight Centre, which in 2014 was far and away the biggest spender on mainstream media travel advertising with a figure of almost $40 million, more than halved its spend last year, leaving APT at the top of the table with a total of $33 mil
lion. The actual amounts paid by the advertisers would have been significantly less, with media buyers typically negotiating big volume discounts, but the rack rate figures provide a good basis for comparison. Flight Centre’s spending shift away from mainstream was mirrored by Qantas which spent an estimated $18.5 million in 2015 – down 35%.

In second place on the 2015 spending table behind APT was deals provider Luxury Escapes Travel, which spent a whopping $29.6 million to promote its offers. That is perhaps understandable as the company builds its profile amid rumours of a planned public listing, while another cruise operator, Scenic, was in third position – but some way behind – with a spend of $22.8 million. On the ocean cruise side Royal Caribbean boosted its spending by a hefty 72% in 2015 to a total of $12.8 million. The various Carnival Corporation brands also spent significantly more, with an aggregate mainstream media figure of just over $22 million, up 40% on the prior year.

NSW RTO in administration

INLAND NSW Tourism, the regional tourism organisation formed five years ago as an umbrella group for a number of smaller RTOs, was placed into voluntary administration last month, with the board taking the step because it had been “unable to secure grants in time to meet its budgeted cashflow needs”. The move highlights the tightrope such RTOs walk when balancing their budgets, with Inland NSW Tourism saying grants accounted for more than 80% of its income.

NSW Tourism Minister Stuart Ayres is believed to be conducting a review of the state’s RTO structure, and naturally said the government is committed to growing tourism in regional areas.

Meanwhile the administrators, Brad Morelli and Andrew Spring from Jirsch Sutherland, said it was business as usual for the organisation which would be “operating as normal under our guidance”.

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