Mergers and Acquisitions – death of the independent or an opportunity to reinvent and grow?
Helloworld Travel’s purchase of Magellan Travel Group is once again sparking debate about the future of true independents. If it were not enough that margins are being squeezed and customers are demanding more for less, the market continues to consolidate with mergers, acquisitions and other forms of partnerships becoming more commonplace. Afterall, in travel as in any business, “volumes speak volumes” about what you can negotiate, and the amount of TTV any travel organisation enjoys will determine its commissions earned from airlines, GDSs and other suppliers. Or, not to put too fine a point on it, a travel business’ profitability – and survival.
This recent event is a reminder to small, independent groups that the way to survive and thrive – today and in the long run – is through reinvention. This can take many forms: diversifying your target markets, investing in technology to reduce cost and encourage growth without additional manpower, and building strategic partnerships.
For those who see increasing market consolidation as a concern, we recommend that you work as smart as you can with your existing partners and suppliers, and, importantly, that you re-examine your processes with a view to reduce inefficiencies. Only then as a leaner business can you weather the market changes, improve your negotiation position, and continue to build your own empire.