Over the past few months, there have been articles on TRO suggesting perhaps that the travel industry might not be for you. TRO’s Editor, John Frenaye mentioned it and columnist Larry Norman did as well. We broker travel businesses and one of the most common fears I hear is that no one is buying travel agencies anymore. This can’t be further from the truth. There is a different buyer out there in the market, but despite the recession, the market for acquisitions is very robust.
Gone are the days of the spouse’s of doctors, CPA’s and lawyers being the buyers of retail travel shops. Back in the 70’s and 80’s airlines were paying 10% on all tickets and there was 30,000 locations across the U.S. Today there are approximately 10,000 full service headquarters locations. Over the past few months we have received serious purchase inquiries from two former GDS executives, a barter corporation, an upscale social media website, a network for the military, a media group, a London based tour operator, a corporate housing business, an insurance housing business, a medical research company, two human resource directors of fortune 500 companies , an immigration law firm and three corporate executives that where tired of the pink slip environment—all looking to get into the travel business!
In the “old days”, when you wanted to sell, you looked to a competitor down the street or perhaps a friend of someone you knew. With technology, your search (and your pond from which to fish) is global. Plaza Travel of Florida was just sold to a Venezuelan travel company. California companies are acquiring companies in Maine and abroad. If nothing else, technology has torn down the barriers to a global acquisition.
As travel agents age, these buyers are providing sellers with great exit strategy options. These buyers need locations and agents that are open to any GDS system. The use of travel agents is rebounding nicely as the stranding of thousands because of the European ash situation has really highlighted the value of a solid travel agent. Priceline’s stock has dropped 100 points in the past month. ARC transaction numbers for the last four months of 2010 share up 12%. This is the best available indicator of the pulse of the travel industry. Will history remember this time as the best of times for acquisitions? Certainly not, but with a little legwork and proper guidance, you will not fall into the trap of giving away something of value for nothing in return. After 911, I can’t begin to tell you how much money was left on the table by agencies that simply closed up shop and turned off the phones.
So, how do you complete a successful acquisition? With nearly 600 deals completed by Innovative Travel Acquisitions, I have been able to identify five items associated with most successful completed transactions. And, for the record, I call a “successful” transaction one where both parties shake hands and walk away from the deal each feeling that they were treated fairly and received a god value for their investment.
- Use an expert to represent you in selling your business. Practice what you preach to your clients.
- Do not limit your buying pool. It is a big world out there—explore it.
- Keep the negotiation confidential. A leak will doom most deals.
- Have your CPA prepare monthly income statements a year prior to listing in order to have a good, clean offering package for buyers.
- Keep your head out of your heart–business has no room for emotions.
If you are interested in buying, selling or simply are interested in knowing what your business is worth today, please contact us.
Innovative Travel Acquisitions, Inc. president Bob Sweeney and staff have completed 514 acquisitions of tour and travel related businesses since their inception in 1991. He is a proud member of ASTA,IBBA, NTA and many other known industry affiliations. Known as “the Matchmakers for the Travel and Tour Industry” they are available to answer any questions you may have by contacting them via phone 800-619-0185 or by sending an e-mail to firstname.lastname@example.org.