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.”