CVC, Brazil’s Largest Operator, Acquires Grupo Trend Operator. Not Everyone is Happy.
Already the dominant tour operator/travel agency company in South America, Brazil’s CVC took a big step last week toward expanding its footprint in the Western Hemisphere by announcing its acquisition of Grupo Trend, one of Brazil’s largest tour operators. With headquarters in both São Paulo and Orlando, Grupo Trend had previously spoken of its own plans to grow; this apparently made it an attractive acquisition for CVC, which announced early this year as it closed on the purchase of educational-and-study tour operator, Experimento, that it had planned to continue to make further acquisitions. (In previous years, CVC had acquired Submarino Viagens, an online travel business, and Rextur Advance, a B2B travel gateway that supplies travel agents with airline tickets and hotel offers.)
The purchase price was $258.8 million reais ($81.2 million) for a 90 percent majority interest in the group, which has more than 800 employees and is divided into different companies that include, in addition to others: Trend Operator (national and international hotels and other products for corporate and leisure); Shop Hotel (a low-cost B2B company); Trend Travel USA; Trend Tech (technology); VHC, or Vacation Homes Collection (home rentals in the United States); and Trend Lazer, which includes in its portfolio products such as airline tickets, hotels and resorts, tickets, receptive service, maritime travel, travel insurance and much more.
To give one an idea of just how expansive CVC’s presence in Brazil is, consider this: according to the Brazilian Ministry of Tourism and IPC-Marketing Ltda, CVC and Submarino Viagens accounted for 13.9 percent share of total spending by consumers in the Brazilian leisure travel market in 2015. And in 2016, as the country was in the midst of its worst economic recession, it launched a three-year program to add 100 new agency locations a year for three years. It nearly met that target last year, closing out with just less than 1,100 total agencies.
For the first quarter of 2017, the company reported same-store sales growth of 13.3 percent—compared to decrease of 4.1 percent a year ago. For the quarter, bookings totaled 2,340 million, an increase of 11.9 percent a year ago. Boarded passengers were 1,094,000 compared to 1,017,000 a year ago.
What Some Experts Think: The announcement of the acquisition was regarded by the travel trade media as a major story—the most significant, in fact, since the May 2015 collapse of the Brazilian tour operator Nascimento. But there seemed to be some skepticism regarding the intent of the Carlyle Group, the Washington, D.C.-based private equity firm that acquired a majority share in CVC in early 2010.
Last August, the Carlyle Group and an individual investor—billionaire and company founder Guilherme Paulus—raised $394 million when they sold a combined 45 percent stake (60 million shares) in CVC. After the transaction, the two investors retained less than a quarter of the shares in the company. Even so, there is the lingering belief on the part of some that Carlyle plays a key role in CVC.
Asked about his thoughts on the acquisition, Silvio Cioffi, recently retired editor of the travel section of Folha de São Paulo—it is the largest circulation Brazilian newspaper and it has the nation’s most visited news website—told the Inbound Report: “CVC is today the largest operator in Latin America and one of the ten largest in the world! … They are light years ahead of any company in the industry in Brazil. They invest in the online sector and create 100 new travel stores a year. Currently, they have more than 1,100 travel stores throughout Brazil.”
Cioffi thought it curious and that it said something about travel-loving Brazilians that the company opened its 1,000th store in Piripiri, “in the interior of the state of Piaui, the poorest in the country,” adding, “it sold its first package to … Guess where? To study English in San Diego, California! Brazil is not for beginners.”
On the other hand, there was this from Celyta Jackson, who has her Miami-based marketing and communications and has worked the Brazil market for decades: “I understand that CVC’s compulsion to expand is driven by its majority shareholder, the Carlyle Group, who exist to swallow up the world. But what this acquisition means for Brazil? For the U.S.?”
She added, “I couldn’t say. More jobs? I doubt it. A green light for more foreign investment in Brazil? Maybe. To me, CVC is like the Walmart of tourism. Cheaper, bigger, but better? No. It leaves a wake of destruction in its path.”
Agreeing with Jackson was Tereza Lobo, who is the principal of Conecta2You, a luxury hotel marketing company with offices in Rio de Janeiro and São Paulo, who told us, “I can only see it as another play from the American fund that controls CVC. They’ll make the buy and then sell it to another interested fund and pocket the profit.”
“I do not understand why this huge conglomerate of all service sectors needs to grow even more to supply the current market and that of the near future,” said Lobo, adding, “I do not see—and am suspicious of—a consolidation of this size; that anything in the deal can benefit the end consumer. I see no benefit except corporate profit. So I do not see with good eyes—not that it is necessary to pare down or maintain the suppliers as they are, but not this consolidation.”
TUI and DER both Claim “We’re Number One” in Germany
Both TUI, DER Lay Claim to being Germany’s Top Long Haul Operator: Two of the three largest tour operators in Germany—TUI and DER Touristik—are waging polite but intense combat as they try to lay claim to the title of Germany’s top long-haul operator.
In one of the key battlefields of the combat, the German trade press, the volleys are fast and furious. And they are factually correct; it seems that both combatants choose which facts they want in order to make their case.
As the major trade publication, FVW reported, “Both companies are right. TUI is now the largest single long-haul brand, ahead of Dertour, Neckermann, FTI and Meier’s Weltreisen. But at a group level, counting all brands, DER Touristik (Dertour, Meier’s, Jahn) is still number one ahead of TUI (TUI, Airtours, 1-2-Fly), Thomas Cook (Neckermann, Thomas Cook Signature) and FTI.”
TUI also pressed its case last week in Germany’s other major trade publication, Touristic Aktuell, which reported “TUI is now also the number one among the German organizers in the booming segment of long-distance travel. In the current figures of market research Hannover (where TUI is based) has overtaken the previous market leader on the long-distance, the Frankfurt brands of DER Touristik,” noting that one out of every four bookings at TUI is for long-haul travel.
Why it Matters
Being Number One always helps any company’s marketing and public relations campaign. In its broadest context, this would suggest that TUI should not have much to worry about. Overall, it has long been Germany’s top operator as measured by market share. In the most recent data available, TUI is tops with a market share of just under 17 percent and DER Touristik ranks third with a share of about 12½ percent. Thomas Cook (Germany) is second with a 13.2 percent share.
During the past two years, however, the sale of travel overall has flattened. Because of safety and security concerns, more Germans are staying home and are booking holidays in Germany or in nearby destinations in continental Europe. Leisure travel to longtime favorites such as Turkey and North Africa has dropped precipitously in the wake of terrorist attacks—some of them aimed specifically at tourists.
At the same time, TUI is on a mission to become a global brand, as it has shed some of its non-core business and country brands. Meanwhile, DER Touristik—it is part of the REWE Group—last summer acquired Kuoni UK together with Kuoni tour operations in Switzerland, Scandinavia and the Benelux region as it focused on expanding its position as a long-haul operator throughout Europe.
All of the above should translate into increased outbound, long-haul travel, especially as airfares are expected to remain stable—indeed, they have decreased for some key routes as low-cost carriers in Europe have forced legacy carriers to compete for share—for the next several years.
In the midst of such an intensively competitive marketplace, then, who owns the claim to being number one matters very much.
Air Canada says “Bring It On” to New “Ultra Low Cost Airline(s)” Entering the Market
Air Canada, the country’s largest airline, is not taking lightly the recent announcement by WestJet—it is Canada’s second-largest carrier—that the latter is launching a new ultra-low-cost airline by later this year or in early 2018.
Two weeks ago, Calgary-based WestJet, which was founded in 1996 and grew from a charter and regional carrier to an airline that now serves 100 destinations in Canada, the U.S., Europe, Mexico, Central America and the Caribbean, announced that it would launch the new airline which, it hopes, will replicate the success of similar air carriers in Europe. There, WOW airlines, Norwegian and airberlin have fueled a large increase in lift capacity in 2017.† And another European entry into the fold is scheduled for next month when LEVEL airlines, a unit of IAG, which operates British Airways, Iberia and Aer Lingus, begins service from its base in Barcelona.
In the ultra-low-cost model, the cost of a flight’s components are unbundled; the consumer pays one price for a seat, with add-ons charged for seat location, checked baggage, carry-on baggage, food, beverages, and other items for which there was no charge or were considered amenities that were included in the cost of an airline ticket.
Bring it on! Air Canada, which is headquartered in Montreal, does not seem daunted by the prospect of having to compete with WestJet in the ultra-low-cost segment. It already has a low-cost subsidiary, Rouge, which launched in 2013 with flights to Europe and the Caribbean.
The airline’s top officials say that it is in a better position than it has been in more 10 years to respond to WestJet’s move. “We actually have many more tools at our disposal, which gives us a much better feeling and confidence that we are well-positioned to respond to whatever gets put in front of us,” Ben Smith, Air Canada’s president of passenger airlines, told CBC News.
And Air Canada’s chief executive, Calin Rovinescu, said that the carrier will have no problem with WestJet’s plans to expand its main service on international routes by adding at least 10 Boeing 787 Dreamliners beginning in 2019, telling business analysts in a May 5 conference call: “The addition of incremental competition is something that at this stage is not troubling to us.”
Also in the skies over Canada is New Leaf Airlines, which launched in 2015. Based in Winnipeg, it has a small fleet of aircraft that primarily serve destinations in the western part of the country.
Already on Board: Even though the new airline does not yet have a name, it has in place two key officers in it leadership team. WestJet has appointed one of its own, Bob Cummings, as executive vice president of the new venture. Cummings will have accountability for all aspects of this new venture, including planning, branding, pricing, product development and operationalization. He has been with WestJet since 2005, with almost 11 years at the executive vice president level with a variety of responsibilities.
WestJet has also appointed Ed Sims as executive vice-president, commercial, with responsibility for all aspects of the commercial function within WestJet including sales, marketing, product, network planning, revenue management, corporate development, airline partnerships and WestJet Vacations. Sims will join WestJet on May 29, 2017. Sims’ career spans more than 30 years in the tourism and aviation industries, encompassing airlines and tour operators, as well as air traffic control. He has worked in the European and Australasian markets, holding senior commercial and general leadership positions within: Tui, Thomas Cook, Virgin Groups and Air New Zealand where he headed up the international wide-body business. His most recent role was as CEO of Airways, New Zealand’s air navigation service provider.
† See “European Low-Cost Carriers Driving Increase in Lift Capacity between Europe and USA” in the March 9, 2017 issue of the Inbound Report. (https://www.inboundreport.com/2017/03/07/european-low-cost-carriers-driving-increase-in-lift-capacity-between-europe-and-usa/)
Active America China Summit Photo Follow-up
Up in the Air—New Flights from Aeromexico, United, Condor, El Al, and Air Canada
—Following last week’s approval by the Mexican government of an agreement that will ultimately give Delta Air Lines a 49 percent stake in Aeroméxico, it was announced that—according to the schedule of share purchases and other steps that will have to be taken—the two carriers plan to grow their daily flights by 42 percent, reaching 100 flights a day between Mexico and the United States starting in the first months of 2018. More details later …
—On Oct. 28 this year, United Airlines will start to fly daily from New York/Newark to Buenos Aires in a new route that is still subject to government approval. United has also announced extra service to Bogota, Colombia (also from New York/Newark) from June 8 to August 14, totaling two daily flights during the period. With these new flights, United will be the North American company with the largest volume of services to South America, with a total of 14.
—Beginning this month, Condor has launched service from its base at Frankfurt to San Diego, California, as airline expand the number of its North American destinations to 16 this summer. Other new cities, where service has yet to start, include New Orleans and Pittsburgh. The three new destinations will supplement Condor’s existing North America 2017 collection, adding to Austin, Baltimore/Washington, Las Vegas, Portland (Oregon), Minneapolis-St. Paul, Seattle-Tacoma, Anchorage, Calgary, Fairbanks, Halifax, Toronto Pearson, Vancouver and Whitehorse †
—Israeli flag carrier El Al is coming back to South Florida with the announcement that it will resume nonstop flights from Israel to Miami in November with three flights a week. The airline last served Miami in 2008. El Al also flies to Boston, New York JFK, Newark and Los Angeles. “This decision is part and parcel of the strategy in which we recognize the importance of trans-Atlantic routes and our desire to expand EL AL’s presence in North America,” said David Maimon, El Al’s CEO.
—On May 1st, Air Canada began three new cross-border routes between Toronto Pearson Airport and: Memphis; San Antonio; and Savannah. The 2,290-kilometer (1,423 miles) flight to San Antonio in Texas is the longest of the three routes launched last week, while the distance to Memphis is 1,305 kilometers (811 miles), and the distance is 1,291 kilometers (802 miles) to Savannah. All are daily flights, according to OAG schedules, and none of Air Canada’s three new routes will face direct competition. †
† Source: anna.aero
What Could Possibly Go Wrong on her Paris Flight? It landed in San Francisco
A Good Receptive Would Never Let this Happen to a Client: Just several weeks after an April 9 incident in which United Airlines had a 69-year-old doctor dragged off a plane for refusing to give up his seat on a fully booked flight—it created a public relations disaster and cost the carrier and untold sum in both funds, as well as its reputation—the carried suffered another hit to its customer service standing.
Last week Lucie Bahetoukilae boarded a United flight at Newark’s Liberty International Airport, believing she was going back to Paris, expecting to land at Charles de Gaulle Airport in Paris. She eventually made it there, but it too more than a day to do so.
Bahetoukilae, who doesn’t speak a word of English, told San Francisco’s ABC Channel 7 news what happened. Her niece, Diane Miantsoko, translated her conversation with a Channel 7 crew, taking them through her hectic, mistake-ridden journey.
Bahetoukilae’s boarding pass read: “Newark to Charles de Gaulle.” She went to the gate stamped on it and said a United representative scanned it. So she boarded the plane and headed for her seat, 22C.
“When she went to sit someone was sitting there already,” Miantsoko, said. But, she added, the flight attendant looked at her boarding pass and instead of questioning it, sat her somewhere else.
Bahetoukilae never realized United Airlines made a last minute gate change. She said United never made the gate announcement in French or notified her by email.
“If they would have made the announcement in French, she would she have moved gates,” Miantsoko said. “Of course, because she speaks French she would’ve moved to another gate.”
So instead of flying from Newark to Paris—a 7½ hour flight—Bahetoukilae flew 2,565 flight miles (about 6 hours and 15 minutes) in the wrong direction, to San Francisco. There, she experienced an 11-hour layover in the airport. By the time United got her rerouted home to France, she had been traveling for more than 28 hours.
But what concerned Bahetoukilae’s family more than the inconvenience, was the apparent security lapse on the part of United. “With everything going on in this country people have to be more careful,” Miantsoko said. “They didn’t pay attention. My aunt could have been anyone. She could have been a terrorist and killed people on that flight, and they didn’t know they didn’t catch it.”
Miantsoko contacted Channel 7’s On Your Side news to help get answers. She said she was not seeking a refund. “This is not about money, this is about United getting serious with their employees,” Miantsoko said.
Channel 7 contacted United and the airline admitted fault, saying it: “mistakenly put her on the wrong flight.” And even though Bahetoukilae wasn’t seeking a refund, she got one along with a voucher for another trip to visit her beloved God children in the future.
United Airlines apologized and also paid for accommodations it hadn’t offered Bahetoukilae, when she was waiting for her return flight in San Francisco. Also, an airline representative said United is working with their team in Newark to prevent this from happening again.
Perhaps the carrier should consult a receptive tour operator to develop a best practices program for airline staff serving international passengers.
Bytes from Britain
Among the intriguing items of interest from the USA’s largest overseas source market for inbound tourism that reached the inbox of the Inbound Report during the past week:
—UK tour operator Jet2holidays has hired private detectives to help the company in its battle against false holiday sickness claims. In a statement, the company said that its investigators will be stationed in resorts, “looking out for touts and claims management companies attempting to lure holidaymakers into making false claims.” The announcement came in the wake of advice put out by the UK Foreign Office warning of a rise in companies encouraging holidaymakers to submit claims for gastric illness during their stay.
Travel Weekly UK had previously revealed that some Spanish holidaymakers were considering dropping all-inclusive to the UK market as a result of a sharp spike in claims, which it says are unfounded.
A Jet2holidays spokesman said: “These touts and companies are peddling fraud and are brazenly handing out leaflets telling British holidaymakers that they can cover the cost of their trip by just filling out a form, irrespective of whether they have been ill or not … Top of Form
The detectives we have recruited have one purpose and one purpose only – to prevent this dishonest behavior from ruining the holidays of our customers.”
“This is fraud and if caught they personally could bear the brunt of the law – not the claims firms. No-one cares more about our customers’ holidays than us, which is why we have decided to invest in measures to tackle the holiday sickness touts in our major resorts this year.”
—UK airlines have called for duty-free drinking on flights to be made illegal. Airlines UK, which represents several major airlines including British Airways, easyJet and Virgin, said the move would reduce the number of air rage incidents. According to Sky News, Airlines UK chief executive Tim Alderslade said airlines are asking for an amendment to the Air Navigation Order to make it illegal for passengers to drink alcohol they have bought in duty-free while on a flight.
The action by airlines followed an incident in April during which 23 passengers from two different stag parties were removed from a flight at Manchester because of disruptive behavior. A Department for Transport spokesman told Sky News, however, that it had no plans to change the rules around drinking alcohol on flights.
—Travel spend by Brits up year-on-year, says new report. Spending on air fares was up more than 8 percent in the first quarter of this year compared with the same period of 2016, according to new data released by Cardlytics—it is an Atlanta, Ga., firm that provides marketers and banks with purchase intelligence—which analyzed the spending behavior of more than three million bank customers, and finding that consumers spent 4 percent more on travel overall, and hotel spending rose nearly 10 percent in the first quarter.
Overall, consumer spending remained steady, despite earlier fears of a slowdown. Cardlytics said this was driven by a boom in eating out, with the amount spent in fast-food outlets rising by 18 percent year on year.
OUR ADVICE FOR FIRST TIMERS AT IPW
Brief Tips and Advice for Inbound Report Subscribers Attending IPW—from NAJ, publisher of the Inbound Report and Host of the TourOperatorLand website (www.touroperatorland.com):
Q: Which collateral is best to leave behind for your appointments at the IPW?
A: One page (front & back) summary w/ photos and captions and e-mail them a pdf after the show
Q: When meeting a new buyer at IPW, what should you do?
A: Three things we recommend are:
- Inquire about destinations they currently near you and the gateways cities
- Determine which receptive tour operators they use and record that info for future use.
- Provide them with a list of Receptive Operators along with IPW booth numbers who are currently selling your product.
Q: If you meet an operator at IPW trying to sell you advertising in their brochure, what should you do?
A: If you don’t know them, act like a media buyer and ask them about distribution, price, reach, CPM, etc; and, if you’re at all interested and the price is right, try to negotiate for additional free space. If the operator is well known dropping subtle hints about excluding you if you don’t pay to play, ask them for numbers–room night or ticket sales data– as part of the deal.
Q: How soon should you expect to see business materialize from a “traditional” tour operators you are meeting for the first time?
A: Normally 2-3 years. You’re meeting them while they are preparing to release their 2017 brochures, promoting tours that will be sold in late 2017-early 2018 that will operate in summer 2018.
Q: When meeting with someone already familiar with your product or destination, what are the most important features you should to highlight?
A: What’s new/what’s changed in the past year that can help them make money
Q: You’re a hotelier and buyer requests rates for 2016-17 season, which you do not yet have, how should you respond?
A: Provide them with an estimated range of % change based on most recent industry forecasts and tell them
Q: What should I do if I encounter a buyer who’s English is not understandable?
A: Download the free “Speak and Translate” app. It has good voice recognition so you can speak a sentence into it and it will provide you with a voice translation.
Q: What else?
A: Visit NAJ’s TourOperatorLand booth (#1208) at IPW.
HODGE PODGE: Shifts, Shakeups and Occasional Shaftings in the Tour and Travel Industry
Claudia Baino, who had experience with the Latin American market while serving with Tourico (2004-2006) and GTA (2010-2013), was appointed CEO of Meeting Point North America and held the position for three months when it was mutually decided that she would step down. This episode demonstrates the difficulty of staff transferring from one corporate culture to another. Baino’s resumé also includes tenures with Traveltek, lowcostbeds and MSC Cruises.
In Brazil, TBO Holidays—it is a B2B portal for travel agents, hoteliers and other tour and travel industry suppliers—has announced the hiring of André Affonso for the position of account executive in São Paulo. The company says that the appointment of Affonso, an eight-year veteran of the tour and travel industry sector, is part of its plans to expand its profile in Brazil.
Roselle Masse, who was the west coast marketing manager for TeamAmerica for nearly six years, has accepted a position as west coast marketing manager for Meeting Point North America. She replaces Ken Schwartz, who passed away in December 2016. Prior to her tenure at TeamAmerica, Masse, who has a graduate degree form L’Université Paris Sorbonne, had served as a director at AlliedTPro for nearly 16 years.
Marco Guaramonti has left his post as general manager at Albatravel France. Guaramonti, who had been with the company since 2005, said in a message announcing his departure that he wanted “to focus on new projects.”
Stacey Cohen, a veteran of more than 25 years in the tour and travel industry, is the new Northeast manager for Meeting Point North America for the East Coast. She replaces Helen Woodward who moved on to a similar position at UK-based Miki Travel. Before joining Meeting Point, Cohen had worked at Travalco, a receptive tour operator in Hallandale Beach, Fla., as senior market manager. Previously, she served at AlliedTPro/Kuoni for nearly 15 years. She began her career in the industry in 1987 with AlliedTPro’s predecessor company, Allied Tours, as a senior group coordinator.
After 12 years at MMTGapnet and just over a year at Consolid, the incoming division of the operator belonging to the Flytour Group, Jorge Souza is looking for new opportunities. Souza, who spent seven years in operations and five in marketing at MMT, can be contacted at [email protected].
David Alexander recently joined the team at Visit Orlando as director of travel industry sales. Most recently, he had been a regional director at Hotelbeds (his second tenure with the company, having served there from 2006-2010). In between his time at Hotelbeds, he worked for nearly eight years at the Orlando office of TUI Travel as director of destination development—Americas.