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The acquisition of Agiito,
announced by BTN Europe last week, indicates
the intentions of purchaser Clarity’s parent company – the Saudi Arabian-owned
Portman Travel Group – “to be a more significant, perhaps dominant, player in
the UK corporate travel sector”, according to one travel industry analyst.
It is also “a positive
market sign” for corporate travel in the UK but may disrupt the market for
corporate rail.
Chris Photi, head of
travel and leisure at travel advisory experts White Hart Associates, said the deal is a
continuation of consolidation in the sector and also a sign that the corporate travel market is recovering from the
pandemic.
“Capita has
been looking to sell its travel businesses for some time, and the fact that it
has finally found a buyer is a positive market sign. It also underpins the
growing importance of technology in the corporate travel market. Agiito and
Evolvi are both known for their innovative use of technology, and this will be
a valuable asset to Clarity Travel,” said Photi.
He says that the deal is not about margins,
which tend to be lower in corporate travel than other sectors.
“Premium travel product tends to attract the
higher deal ratios. When you buy a corporate travel business you are really
buying a customer database albeit this deal has the added bolt-on of good tech
and of course there are always synergies to be had when consolidating.”
Nevertheless, he believes the deal is a win-win. “Clarity gains two well-respected brands with
a strong track record in the corporate travel market whilst Agiito/Evolvi gains
access to Clarity’s wider network and resources, which will help them to grow
their business,” he says. “The sale is also likely to have a positive impact on
the UK corporate travel market as a whole.”
Photi also believes that the acquisition
indicates the intentions of the Saudi Arabian-owned Portman Travel Group to be
a more significant player in the UK corporate travel sector.
“I believe the sale will position Clarity
Travel well for the future and enable it to compete with the larger players in
the corporate travel market. I expect it to continue to grow in the coming
years,” he said.
The deal is the culmination
of almost two decades of mergers and acquisitions.
Capita entered the
business travel sector in 2005 when it acquired Lonsdale Travel. Eighteen
months later, the company acquired Harry Weeks Travel and its rail technologies
Evolvi and Travelpackonline, rebranding at the same time as Capita Business
Travel. In 2017, Capita added NYS Travel to the portfolio. In 2021, Capita plc announced
it would sell off its travel management businesses to focus on core government work and rebranded them
as Agiito ahead of the sale.
Meanwhile, the Co-operative Group
formed a travel management arm in 2006, operating it as a joint venture from
2011 with Thomas Cook before it was sold to Saudi Arabia’s Mawasem Travel and Tourism in 2014. Two years later, the company
– now known as Clarity Travel Management – acquired Portman Travel, keeping the
Portman Travel Group name to hold its various travel businesses. The group continued
its acquisitive streak in 2019 with the purchase of Ian Allan Travel and sports
travel business Inspiresport. The Portman group also includes luxury travel brands
Elegant Resorts and If Only.
The Clarity-Agiito deal
is expected to be finalised by the end of September.
Clarity CEO Pat
McDonagh told BTN Europe, “We have two businesses who understand each other
which is absolutely crucial and we operate in similar markets and have strong
reputations in those markets.”
McDonagh says each
acquisition has a different rationale. “The Portman acquisition
was definitely a volume play and we had a great opportunity to acquire a large
business at a very good price at the time. Ian Allan strengthened our credentials
in some of our key markets – higher educations, charities and NGOs.”
Clive Wratten, CEO of the Business Travel
Association (BTA), welcomed the Agiito deal.
He said, “Mergers and acquisitions are a
normal part of the business cycle for our industry, he said. “This strengthens
the whole travel management sector, ensuring ongoing high-quality service for
business travellers. The acquisition should also secure the jobs of
many travel management professionals alongside offering opportunities for
employee development within the new combined organisation.”
Many, including McDonagh, see the deal being about the tech, including the
meetings management product Meetingspro and rail distribution platform Evolvi.
Evolvi is one of the jewels in the Agiito crown and will give
Clarity a competitive advantage when it comes to servicing rail. Other providers
may be forced to cut their margins on rail in order to stay in the game.
McDonagh says Evolvi will continue to be run at arm’s length, as Agiito
and Capita have done with the platform.
“Over the years they
have kept very strict rules of engagement around commercials with TMC partners
and we intend to do the same,” he
said.
One senior
TMC executive who did not want to be named said many clients of Evolvi may
choose to stop using the rail platform because of the concerns over the
visibility of commercials, although many smaller TMCs may be unable to do so “because
they don’t have the ability/skillset to bring on another supplier”.
The executive added
that the market was polarising into two main streams. “In restaurant terms are you McDonalds – high
volume, but lowest cost operator – or The Ivy – high touch, high staffing
levels and delivering a value proposition that isn’t predicated on being the
cheapest. If you’re a ‘McDonalds’ client… this is
probably OK news. Whilst there is less choice, buyers want value.”
The executive said that CTM, which has plenty
of UK government business, notably the £1.6 billion contract for managing the
Stockholm Bibby barge for asylum seekers as well as handling quarantine hotels during Covid, is likely to be the TMC that feels the
biggest impact of the Agiito deal.
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