Entretien exclusif avec Jamie Pherous, PDG, CTM

Le consultant et directeur de GBTA en Australie et en Nouvelle-Zélande, Tony O'Connor, a eu l'occasion de poser plusieurs questions au PDG de CTM, Jamie Pherous, suite à l'acquisition de Travel and Transport par CTM.

TOC:  You’ve paid around 7 times T&T’s 2019 earnings for the purchase. It’s a large transaction. CTM must have an underpinning view on the recovery. How do you see business travel panning out over 2021 and 2022?

JP:  Like the best businesses in the industry, T&T moved early and swiftly to take out structural costs that will never come back. So most of the synergies are already baked in. On that basis, we paid 4.3 times. It is a large transaction but in our view, T&T was the very best business left in the world that was stand-alone. Our very strong financial position afforded us this opportunity; one that would not have arisen without Covid-19.

Notre conviction est que les voyages vont reprendre. Ce n'est pas "si" mais "quand". La preuve en est nos expériences en Nouvelle-Zélande et dans plusieurs États d'Australie où nous avons vu des récupérations complètes de voyages intérieurs où il n'y a pas de restrictions de voyage. En fait, la Nouvelle-Zélande est au-dessus de l'année dernière !

Given the diversity of the CTM business, and the high proportion of domestic  travel in CTM (which T&T also shares), we believe we can break even very quickly and run a profitable business centred around domestic-only travel until international returns. I don’t think many if any other travel companies can make that claim. So we are well positioned to be profitable on domestic-only business, and sit tight until international opens up.

 

TOC:  With T&T comes the Radius network. Do you see this as strengthening CTM as a truly global travel manager? How does this network of independent agents fit with your fully owned model? Are there plans for Radius?

JP:  Yes we do. The Radius hotel program is one of the very best corporate accommodation programs in the world. We plan to keep the Radius brand as a stand-alone business, but enhance the value to Radius partners though an enhanced hotel program. For example, we are one of the largest TMCs in APAC. And we believe our strength in distributing our Asian hotel deals will be beneficial to the Radius network.

Du point de vue du réseau, nous encourageons les partenaires Radius à continuer à collaborer à travers leur réseau. Et s'ils le souhaitent, ils peuvent désormais également se mettre en réseau avec CTM là où cela a du sens. Mais nous n'imposerons pas cela aux partenaires Radius. C'est déjà un groupe qui réussit et nous voulons seulement améliorer la valeur pour tous les membres. Dans le cadre de cet examen, nous réévaluerons à la baisse les frais d'adhésion et de réseautage d'affaires pour nous assurer qu'il n'y a pas d'obstacles pour les partenaires actuels. Nous ne voulons pas diluer l'impact positif que nous pouvons avoir sur Radius.

 

TOC:  The purchase is a big investment in the US market. The recovery will likely vary per region. How does CTM now sit now with these possible future shifts in regional activity?

JP:  On calendar 2019 basis, total annual transaction value for the entire group will be just shy of $11billion, making us the 5th largest TMC in the world, with North America representing just under half the global annual volume.

Les États-Unis sont un marché nourricier mondial pour les voyages d'affaires. Nous pensons donc que c'est la bonne pondération pour être une véritable TMC mondiale et une marque challenger des 3 méga-TMC traditionnels.

C'est notre diversité géographique et de clientèle qui a été notre force pendant le Covid 19. Nos revenus mondiaux fonctionnent à des taux de récupération beaucoup plus élevés que ceux de nos pairs pour cette raison. Par exemple, nous avons des régions qui ont déjà été rentables au cours du trimestre juillet-septembre. C'est cette diversité qui sous-tend notre solidité financière et notre confiance dans le fait que nous pouvons revenir très rapidement à la rentabilité, même avec la plus petite amélioration de l'activité des clients. Nous n'avons tout simplement pas besoin de voyages internationaux pour rouvrir et gérer une entreprise très prospère. Étant donné que nous n'avons aucune dette et une liquidité nette d'environ $300m, nos clients peuvent être très confiants que nous serons là demain, l'année prochaine et au cours de la prochaine décennie.

 

TOC:  You’ve identified $25 million in potential cost reductions and efficiencies in the new operations. T&T was regarded as a fairly high-cost TMC. Do you think this fairly conservative figure might increase?

JP:  What has impressed us about T&T is just how pragmatic their wider leadership team has been. We are all aligned on being the best we can be. And the timing gives us the opportunity to reset and focus on what “best practice” client delivery and solutions should now look like, and then move rapidly towards that. I’m fact, nearly all key decisions have already been agreed across the wider team. This is an outstanding achievement this early, and only reinforces our combined commitment to being the best TMC in the market.

En conséquence, nous attendons non seulement une entreprise combinée plus efficace, mais une entreprise qui disposera de solutions améliorées pour les clients, complétant la réputation de service élevée des deux entreprises.

 

TOC:  The capital raising was substantially more than was needed to fund the acquisition. Is further expansion in the wings? Or are you maintaining a very comfortable cash buffer to protect CTM from a lengthy downturn?

JP:  It is a combination of both. There are a few smaller acquisition opportunities that will no doubt come to fruition. We have worked hard to find ourselves in the enviable position of strong financial liquidity. In this environment, it is prudent to raise a little more than required to protect this position.

 

TOC:  CTM has taken the less travelled and costlier road of in-house development of IT. Can this be sustained over a depressed 2021 and maybe beyond? Does the acquisition affect your IT strategy?

JP:  One thing we have not stopped investing in is our technology hubs and sales team. The T&T acquisition enhances this opportunity as we create a larger team spread over a much larger client base. Our unique philosophy is to develop in each market to capture the specific market nuances, and to work with our clients to capture their individual needs. This strategy has been particularly successful for us with our Lightning booking tool and SMART suite, which are truly global. In fact in calendar 2019, Lightning was used in over seven million transactions globally.

De plus, nous avons développé nos propres couches de contenu et plateforme qui permettent à nos clients d'accéder au contenu de n'importe où, y compris le contenu provenant de GDS, d'API et de NDC, le tout livré de manière transparente dans une seule interface. Désormais, le programme hôtel Radius peut également être livré via cette interface. Ainsi, les décisions que nous avons prises il y a cinq ans pour développer en interne et en région nous reviennent certainement.

 

TOC:  Do you see the role and the services of the TMC changing due to Covid? With all the new complexities, do you think there will have to be a shift back towards human services?

JP:  There is no doubt we will be more valued in the supply chain, particularly around safety and security. In the new environment, the expert advice needed to enable travel will often necessarily be more complex. We have already seen large growth in our charter and logistic services, especially where regular commercial schedules have not allowed clients to operate their businesses.

Again, having our own client facing technology suite has been advantageous. Being in control of their development, we already had supplier Covid-19 safety features and product updates built into our tech suite and Lightning booking tool as of May. The enhancements gave travelers up to date critical information specific to their travel plans. Some of the traveler tracking features and ticket credit features we have been reinforcing to clients for many years are now seen as critical in this new environment.

Notre philosophie demeure… Simplifiez la collaboration avec nous et automatisez autant d'informations que possible pour les clients en fuite. Libérez nos conseillers en voyages pour les clients de grande valeur qui auront plus que jamais besoin de nous pour effacer les listes d'attente et les faire entrer et sortir en toute sécurité des pays dans les plus brefs délais.

 

TOC:  Do you think that the travel distribution chain will change due to the downturn? For instance, there’s talk of surviving airlines pushing harder for direct corporate sales. Do TMCs need to further consolidate and scale-up to protect their market position?

JP:  There is no doubt that when an industry like travel has all participants in the supply chain losing money, there has to be both consolidation and new ways of doing things. The longer this goes on, the more players will become insolvent. So that creates opportunities to acquire and to win market share. But to do this, you need a flexible model, and at the risk of repeating myself, our technology strategy coupled with our strong liquidity puts us in the box seat.

TOC:  What advantages will the acquisition bring to your existing clients?

JP:  Good acquisitions deliver great strategic rationale to our combined client base and prospective clients. For CTM, our clients can enjoy the Radius hotel program. And they will see a “doubling down” of technology investment corresponding with the larger scale of business that we have created. For T&T clients, they will be able to enjoy the Lightning booking tool and NDC content that we add. And they can now participate in how we develop locally for the North American market, as we have done in Europe and APAC. Global travel programs have historically struggled with services in Asia. For T&T’s customer base and other new clients, we offer integrated strength across the APAC region, underpinned by our SMART technology suite which operates across CTM offices.

 

Tony O'Connor est un consultant indépendant en achats de voyages. Il est membre du groupe PTC et dirige le cabinet de conseil Butler Caroye depuis 1998. Il est PDG de la société d'audit de voyages Airocheck et directeur régional de GBTA en Australasie.