More ammo post-IPO

Gordon Wilson, CEO, Travelport, is bent on providing travel agency customers worldwide with the broadest possible travel content - and he's got more ammunition after the IPO last September. He talks to Raini Hamdi

Gordon Wilson

You’ve been on a buying spree – the latest was German tour operator distribution company, travel-IT, last January. This followed Hotelzon and Locomote in June and August 2014 respectively, and increased investment in eNett. What’s the strategy behind these buys?
First of all, we’re clear and focused about what we are. We are a travel commerce platform. We take content, put it onto our platform, then distribute it out to the market. We are not an IT solutions company for airlines or hotels – our competitors do that, they are good at it, let them do it. We’re in the forward, front-facing distribution part of the business but on a much more holistic and broader basis than our competitors.

Gordon Wilson

So we’re buying to extend our platform.  For example, travel-IT gives us that extra tour operator content in a state-of-the-art level technology. Hotelzon fills the gap of negotiated rates of independent hotels which we didn’t have.

Any regret then that you sold GTA to Kuoni – surely that’s a lot of content?
Not really. You have to bear in mind that what I’m about is distributing the content, not amassing it, which GTA does. It has a huge group business for a start and all these people contracting the hotels and putting in the rates into the system. That’s good business but I’m more interested in distributing and to do that I would need more content than GTA had on its own. I distribute GTA today and the other wholesalers, but I don’t need to own them to do that. So I don’t regret selling it at all; it’s not core to what I am.

How does eNett fit in?
It’s what Bain Consulting, which helped us with our strategy, called ‘adjacencies’ , ie, businesses that are not completely alien to us and are a natural extension. We do all these transactions but not the payment piece (of the puzzle). That’s when we started looking at eNett, at the time an electronic funds transfer company, but which we have transformed into a Virtual Account Number company.

We decided to increase our stake in eNett to 76 per cent because it’s such a fantastic growth engine for our business – growing 50 per cent year over year and we still feel we’re just scratching the surface of what that business can do. And as a result of the deal, we have rights to use the eNett platform above and beyond travel.

Will you?
Not in the near term, because we have a huge target of US$810 billion of B2B travel payments which eNett is seeking to service. But at some point in the future, we may decide to go into B2B payments outside of travel.

Will you continue to buy?
Yes, being public(-listed) and having less debt means we have more money to do other acquisitions.
In 2014, I paid about US$300 million in interest payments but this year, I should pay around US$140 million to US$150 million in interest payments. That’s cash I now have to pay dividends to my shareholders and do more investments internally and externally.

Now that isn’t saying that the sole strategy is to acquire, but having a core strategy on how we build up the travel commerce platform through organic growth or inorganic investment, where we see may be somebody has technology or some content which makes sense for us to put into our platform. And I want to stress it’s not all inorganic; we also continue to invest US$170 million a year in our own activities which have been successful for us.

What might be the unmet needs now?
Areas such as expense management, mobile, other services to corporations, automation of meetings and incentive travel, and marine and mining travel.

Are there opportunities in Asia?
There are Asian companies which are doing good things in mobile, expense management and obviously, something unique to Asia – for instance, a lot of corporate travel is uniquely booked through secretaries clubs in Asia. We’re not restricted in our horizons, that whatever we buy must be American or European or whatever. We take the best we can find.

It’s interesting how travel companies are growing through ‘adjacencies’, you  with eNett, Kuoni with VFS Global (visa facilitation), etc. A CEO needs to think more broadly today.
Yes. My job is to set the strategy for the company with my board and also go out and realise it. A strategy is a living thing though, especially when you are in the travel and technology business, which is so dynamic and so fast-changing that you have to think sideways and forward and seize the opportunities.

Were there challenges in integrating the companies you’ve bought?
Yes, especially when you bring in the smaller companies, as they have different culture and dynamics. Sometimes you can’t swarm small companies with too much big company love, or with too much big company practices. But equally, when you are a public-traded company as we are, you’ve got to make sure things are done appropriately – compliance, etc. So we have to find the right balance.

Over the years, even during my Cendant days as you know, we have bought a lot of companies. I like to think we’ve learnt a lot and sometimes the hard way (laughs). We lost some of the enterpreneurship and dynamism of the companies – the very thing we were buying – because we got it wrong.

But that’s in the past. Look at eNett for example. Effectively we control it, but we run it as a separate company. It has its own CEO, management team and a board of directors, and obviously the joint venture partners are in there as well. We consolidate its numbers into ours of course and we work closely together all the time, but it’s got its own identity, independence and is self-financing. That’s a good model going forward.

We look at other people who have been successful (in integrating), such as the Priceline Group with Agoda,, etc, and they’ve kind of done that too, ie, not overly integrate the companies’ independence into the management of the bigger group.

Beyond Air:Air revenue ratio is about 21:79 per cent for you now. What will the ratio be in the future?
Beyond Air grew 14 per cent last year. The acquisitions we’ve made have been in the non-air (sector) and we’ve said publicly that we earned US$424 million Beyond Air revenue last year and I’d be disappointed if in next three years it would not be US$1 billion, because of growth in eNett, hotel bookings, travel-IT and we may well do some other things in that space going forward.

Air will continue to be big but less as a percentage to the total. Beyond Air will also grow at a faster rate.

This article was first published in TTG Asia, July 17, 2015 issue, on page 9. To read more, please view our digital edition or click here to subscribe.

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