The merger of Travel Leaders Group and Altour, announced last week, will create a single, powerful joint enterprise whose annual sales -- $24 billion including Travel Leaders Group's nonowned agencies -- will give it greater leverage with suppliers, among other benefits.
"I think it's all about the power of the volume," said Barry Noskeau, Altour's executive vice president and COO, when asked about the merger's impetus. "The combined entity will now have $24 billion in sales, and I think that is the primary focus of what's happening in the industry, isn't it? There are all kinds of mergers, acquisitions of all kinds, not only in the travel industry but in industry at large. I think it has a lot to do with buying power and leverage with suppliers to get best-in-class deals and be able to deliver that to our customers."
The merger, announced on July 27, is subject to regulatory approval. Noskeau said the companies are hoping to close the deal at the end of August.
It will bring two powerful travel enterprises together. Travel Leaders Group ranked No. 9 on Travel Weekly's 2017 Power List, with $4.39 billion in annual sales. Altour ranked No. 14, with $2.58 billion. Together, their $6.97 billion in annual sales would eclipse No. 8 on the 2017 Power List, American Express Travel ($4.9 billion). No. 7 was Flight Centre Travel Group (USA) ($14.4 billion).
Travel Leaders Group pegged its total annual sales at more than $21 billion, which would mean that the newly merged companies would have $24 billion in annual sales.
(The discrepancy between the $21 billion in sales cited by Travel Leaders Group and the $4.39 billion figure cited in its 2017 Power List ranking arose because Travel Leaders Group's figure included sales from nonowned agencies, which cannot be included for purposes of the Power List ranking.)
Ninan Chacko, CEO of Travel Leaders Group, said the merger will result in better opportunities all around: for agents, suppliers and the traveling public alike.
"Just from a size and scope perspective, what we're really able to now do in business, luxury, leisure, etc., I don't think there's an equivalent," he said.
According to Travel Leaders Group, "substantive operating changes or name changes" are not expected as a result of the merger, and the leadership at both companies will remain the same: Alexandre Chemla will be founder-CEO of Altour, and Chacko will continue to head Travel Leaders Group. Once the deal closes, Chemla will become a shareholder and join the board of directors of Travel Leaders Group Holdings.
Noskeau said Altour will maintain its brand and staffing.
"Executives, management, staff, employees, agents -- we don't see any changes in that," he said. "And we don't see any changes in the near future in any of our relationships with our suppliers, vendors and so forth. We will maintain all our existing agreements."
However, supplier relationships will likely change over time, he said, as the larger, merged organization negotiates new agreements.
Chacko agreed, and said the merger will bring positives for both parties.
"Almost any supplier that we can think of will see this as a bigger opportunity in terms of what we can try and do together with them," Chacko said.
"I think first and foremost, that's what size and scale does: Give us more opportunity to work with our supplier partners to fashion, I think, even more win-win deals that ultimately involve economics on a performance basis that basically I think help us meet our objectives, help them meet their objectives."
Noskeau also predicted the merger will bring a "much larger business base in which to invest."
"So," he said, "as opposed to one company investing in a particular technology or product or process, you've got the ability to spread that same cost over a much bigger business. So you've got the efficiency of scale, if you will, more than anything else."
That will be particularly useful when it comes to travel technology, which Noskeau said continues to evolve at a rapid pace.
"I could see, in the future, leveraging the scale of the company to make it much easier to make those investments on an efficient basis, at the lowest unit cost possible," he said.
Altour notified employees of the merger on July 27 before making the official announcement. Later that day, Noskeau said initial employee reaction had been positive.
"When we say 'business as usual' at Altour -- Alexandre is here to stay, and he has a vested interest in the business going forward long-term -- I think the employees seemed to be really comfortable with this announcement," he said.
Chacko, too, reported initially positive feedback on the merger.
"I think there's a level of excitement and enthusiasm for what that future [will bring], but undoubtedly in all of these situations there are other opinions, and there will be a diverse set of voices that I'm sure our agents or other folks won't be shy to tell us about," he said. "But what little I've seen so far has been overwhelmingly positive."
Travel Leaders Group's brands are All Aboard Travel, Andrew Harper Travel, Colletts Travel, Corporate Travel Services, CruCon Cruise Outlet, Cruise Specialists, Nexion, Protravel International, Singles-Cruise.com, Travel Leaders Corporate, Travel Leaders Network and Tzell Travel.
Altour businesses, in addition to its travel management services, include Altour Air, Altour Tech, Altour Meetings and Incentives and the Altour Global Network.