Following its change in investor from MTN to HarbourVest in late May, Amadeus Capital Partners-backed Travelstart has made the first of an expected series of acquisitions in its bid to own Africa – this week, it announced it is buying 100% of the Club Travel Group.
Travelstart’s CEO Stephan Ekbergh told WiT the deal, whose closing is subject to the approval of the Competition Commission, was significant on several fronts. “We gain market share and it gives us new customers – we get a partner that gives us access to black empowerment credentials for the corporate and government business. We were not very good at that, and we needed to get into that.
“It also allows us to scale up our B2B offerings to the travel industry and cater to the low LSM business. In the social scoring for spending power, we only cater for the top two levels and there are 10 in this scoring – this gives us access to the lower levels, the segment that takes buses.”
By adding Club Travel’s established complementary corporate and franchise divisions to Travelstart’s offerings, the acquisition creates a formidable full-service African travel group.
Club Travel, established in 1987, has grown from a single branch into travel agency network that includes leisure travel, over 400 branded and non-branded franchises and a corporate travel division. Its corporate trading subsidiary, Club Travel Corporate, is a Level One B-BBEE contributor, with a 135% procurement recognition.
Club Travel will continue as a standalone company within the Travelstart portfolio. Thebe Tourism Holdings (Thebe), the majority shareholder of the Club Travel Group since 2009, will sell its stake in the Club Travel Group to Travelstart. Thebe and Travelstart will jointly invest in and own Club Travel Corporate, a level one B-BBEE rated division of Club Travel Group.
Thebe Tourism Group is a 100%-owned subsidiary of Thebe Investment Corporation Formed in 2001, the group is the oldest black-empowered South African tourism group.
Ekbergh said he’s known Club Travel for 20 years and talks had been ongoing for the last three years. “We love Club Travel because, like us, they have a long history in discount travel. Travelstart is strong in the consumer segment and we want to bring consumerization to the corporate and government sectors, where Club Travel is an emerging star.”
“Travelstart shares a common mission which is to make travel easier for customers. Our team is excited to partner with them to build an amazing long-term business over the next decade,” said Wally Gaynor, Club Travel’s managing director and founder who will retain a board seat.
While Africa’s travel and tourism market is worth an estimated $194 billion, digital uptake among consumers is still in its growth phase. With the acquisition, Travelstart and Club Travel enter a co-operation which will enable the former to expand its business and reach new customers, and the latter to gain the expertise to deliver digital product innovation and remain competitive.
“The deal is a response to the changes in travel in Southern Africa as consumer and corporate travel markets increasingly favour technology-driven solutions. We are excited to partner up with the team from Travelstart,” said Jerry Mabena, CEO at Thebe Tourism.
Asked what was his approach to acquisitions – that is, do you integrate fully or leave them as standalone businesses – Ekbergh said, “It depends why you are acquiring in the first place. With this acquisition, there are a lot of synergies. Some of the supply that they have, we don’t and we can sell each other’s inventory. They get access to our tech stack and experience in data harvesting, for example.
“With the other two acquisitions – Nightsbridge and Safari Now – they run as completely standalone businesses. We do work together on some tech stuff and we take supply from them. It is part of our strategy to own more supply. “There’s no one formula. It is important to understand why you are acquiring. For me, acquiring just to gain market share is a bad acquisition, I’d want there to be a lot more reasons.”
• Featured image credit: FernandoQuevedo/Getty Images
