Whats What

  • BCD will acquire TUIs business travel subsidiary and a majority stake in The Travel Co., and will combine it with WorldTravel BTI to create the third-largest travel management company in the world.
  • Hogg Robinson and BCD have agreed to pursue independent strategies regarding new business and have signed a service agreement covering existing client contracts under the BTI brand.
  • Navigant International and TUI terminated their TQ3 Travel Solutions joint venture, with Navigant retaining the rights to the TQ3 brand.
  • NEW YORK — The
    parent company of WorldTravel BTI is relandscaping the corporate
    travel battleground with a couple of acquisitions and the decision
    to sever a longstanding partnership.

    BCD Holdings, a
    Dutch family-owned travel and financial services company, will
    create a new travel management brand by patching together
    WorldTravel BTI with TUIs business travel subsidiaries and a
    majority stake in U.K.-based The Travel Co.

    The purchases of
    TUIs corporate travel business and The Travel Co should be
    completed in March. The TUI transaction is subject to regulatory

    If approved, the
    move would create the worlds third-largest travel management
    company, with $8.5 billion in annual sales, behind American Express
    and Carlson Wagonlit Travel.

    The new brand,
    under a single management, would employ more than 10,000 people,
    and operate on five continents. The TUI portion of the transaction
    contributes $3.5 billion in sales, and The Travel Co. pitches in
    $500 million.

    WorldTravel BTIs
    CEO, Mike Buckman, will be the CEO of the new entity; BCDs Joop
    Dreschel will be chairman. Marc Hildebrand and Mike Walley, CEOs of
    TUIs business travel division and The Travel Co., respectively,
    will remain in leading roles.

    A new brand name is
    expected be unveiled in March. Possible headquarters for the new
    company include Atlanta, New York, London and Amsterdam. Officials
    declined to reveal the financial terms of the

    In our business,
    scale is very important in terms of our ability to negotiate with
    our suppliers and to provide services to our accounts, said Mary
    Ellen George, executive vice president of sales and marketing at
    WorldTravel BTI, which projects $4.09 billion in 2005 sales.
    (SeeIn the Hot Seat: Mary Ellen George.) Thats
    really what we are up to. Its been the plan of BCD for the last few
    years to get to that size.

    The decision to
    acquire the two travel management companies came after unsuccessful
    talks with Hogg Robinson, BCDs longtime 50-50 joint venture partner
    in Business Travel International (BTI), she said. BCD and Hogg
    Robinson revealed that they will part ways and pursue independent
    strategies in going after new business, although they signed a
    service agreement in which they will honor contracts with existing
    clients under the BTI brand.

    Effect on

    BCDs initiatives,
    meanwhile, rippled across the corporate market, effectively ending
    the TUI-Navigant International global joint venture — TQ3 Travel

    Under the terms of
    the BCD-TUI transaction, BCD will acquire TUIs wholly owned
    businesses in Belgium, Canada, France, Germany, India, Luxembourg,
    the Netherlands, the Nordic region, South Africa, Spain and the
    U.K. However, the transaction does not include affiliates of TQ3 or
    ownership of the TQ3 name.

    The businesses
    acquired by BCD Holdings must cease using the TQ3 brand by the end
    of June.

    Ian Corydon, an
    analyst for B. Riley & Co., said the transaction will hurt
    Navigant, which will lose the international reach provided by its
    joint venture with TUI. The joint venture was instrumental in
    Navigants securing contracts with multinational companies such as
    Bank of America, Corydon said.

    Navigant and TUI
    agreed to terminate their joint venture immediately, with the
    latter transferring its 50% stake to Navigant, which retains the
    rights to the TQ3 brand and will manage the remaining TQ3
    international network offices. TUI and Navigant said they will
    honor existing contracts with clients and partners.

    Edward Adams, the
    chairman and CEO of Navigant, termed the developments very positive
    in that TUI paid Navigant an exit fee for leaving the joint
    venture, giving the Denver-based company new opportunities to
    expand the TQ3 brand globally. According to Adams, one of the
    reasons TUI opted out of the joint venture was to focus on leisure
    travel, the German companys core business.

    Adams said Navigant
    will maintain relationships with TQ3 licensees and expects to be a
    little more aggressive in taking ownership positions in a number of
    the licensees.

    Navigant ranked No.
    4 and WorldTravel BTI ranked No. 6 in Travel Weeklys 2005 Power List of U.S.-based travel

    WorldTravel BTI
    will compete with Navigant and the TQ3 brand in the U.S., said
    George, but it will face less competition from Navigant globally.
    The TQ3 Network will be much smaller than American Express, Carlson
    or the WorldTravel-TUI-The Travel Co. combination, she

    The BCD
    acquisitions put to rest speculation about TUIs expansion into the
    North American corporate travel market.But George said that BCDs
    new company, with TUIs corporate businesses in the fold, will still
    be considering additional growth opportunities.


    Meanwhile, in this
    complex web of relationships, Boron Securities, the personal
    investment arm of the John Fentener van Vlissingen family (which
    owns BCD Holdings) retains ownership of about 11% of Navigants
    common stock, according to a June SEC filing.

    But George
    downplayed the significance of that investment, saying Boron
    Securities is completely separate and is in no way operationally
    connected to our organization.

    At the same time,
    Hogg Robinson, which owns Sea Gate Travel and BTI Canada in North
    America, said that it is a global company in its own rightand
    believes in a single ownership in strategic markets.

    So, do these
    developments mean joint ventures should be viewed as outdated in
    corporate travel? No, said George.

    It can still be
    done because we proved it works, she said. Its just that when you
    start investing in the technology to bring that to life, its more
    of an obstacle when you are not dealing in a wholly owned

    To contact
    reporter Dennis Schaal, send e-mail to [email protected].

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