What The Travel Corporation Sale Means for Tour Operators and Travel Agencies

Expect more private equity deals in the tour operator and travel agency sectors.

That was the view of a source familiar with The Travel Corporation’s operations in the wake of news it would be acquired by Apollo Global Management. The source added that multiple private equity firms had also expressed interest in the Travel Corporation.

“And one of the themes all of these PE guys are talking about is the next generation of tour operators, which of course, are digital natives and connected from a data perspective,” the source said, who predicted that there will be plenty of private equity deals to come in these areas.

Travel agencies with a luxury clientele are attractive targets post-Covid, the source added.

Not A Fire Sale

The Travel Corporation is a family owned business and one factor driving the sale was that there was no heir apparent, the source said.

“We know globally that some of the old school tour operators have seen growth slow, but by no means was the business [TTC] in a terrible place. The business was in a strong place,” the source said.

The source didn’t comment on the value of the deal but wouldn’t characterize it as a “fire sale.”

The Tollman family opted to retain ownership of the Red Carnation Hotel Collection, which generated a big chunk of the group’s profits, but well under 50%, the source added.

What Apollo Might Do

“I imagine one of the things Apollo is thinking is in line with what all the other VC firms are doing,” the source said. “Can you take these traditional businesses, put in a better technology stack, which both potentially reduces the cost of customer acquisition, and increases operating margin. And then all of a sudden, you take a business that has OK margins, and turn it into a business that has pretty good margins.”

The source predicted that Apollo might consolidate some of The Travel Corporation brands — it owns 18 brands — and/or merge them with other Apollo assets. Over the years, Apollo has owned or invested in the Venetian Las Vegas, Great Wolf Resorts, American Express Global Business Travel, Oceania Cruises, Norwegian Cruise Line, Caesars Entertainment, Diamond Resorts, Expedia and Atlas Air, among other holdings.

World Travel Holdings Co-CEO Chimes In

Brett Tollman, CEO of The Travel Corporation, declined to comment on the deal.

But another CEO of a major family owned business in travel, Jeff Tolkin, the co-CEO of World Travel Holdings, one of the largest cruise and vacation sellers in the U.S., spoke to Skift Wednesday about the implications of the Apollo-The Travel Corporation deal.

“As for the future of family owned businesses, I don’t think this portends anything but a bright future because this deal clearly evidences a successful conclusion for the Tollman assets sold,” Tolkin said.

Tolkin, who said he didn’t know the sale price of The Travel Corporation deal, added he doesn’t believe there will be many similar deals for acquisitions of family owned tour operators because there aren’t many big ones left.

Tauck’s Take on The Travel Corporation Sale

Tauck is one of the few large family owned tour operators that remain, and the company has been public about not being for sale, the source familiar with The Travel Corporations’ operations said.

Tauck CEO Dan Mahar confirmed that the company is not for sale, adding: “Every family and every family business is unique and one transaction does not represent a broader trend.”

He said Tauck is “thriving” as it approaches the beginning of its second century in business, adding that the company has “zero debt and robust family-capital to power our new strategic plan and [we] require no outside funding.”

“We love what we do,” Mahar said. “We are in great businesses, serving a growing market with a strong outlook in the decades ahead. Our guests are engaged with our brand and more loyal than ever. Our team is exceptionally strong and engaged by our business purpose and opportunity. We have respectful, deep relationship with partners around the world and we are united to bring the very best experience to our guests.”

Mahar added that the Tauck family is deeply engaged and has a strong governance system with involvement of multiple generations of the Tauck family, and all are united for the long term.”

Tolkin’s Take on Private Equity

Tolkin said the sale of The Travel Corporation would have no impact on World Travel Holdings.

Family owned travel agencies could be acquisition targets, though, Tolkin said.

“Private equity firms often use a rollup strategy or increase profitability in other ways,” Tolkin said. “Travel agencies are clearly here to stay and a growth sector in the travel business.”

He added: “The underlying fundamentals are there.”

Tolkin said family owned businesses are “the backbone of the American economy. Private equity is one exit strategy that many family owned businesses eventually employ. This is a natural progression where both sides win.”

Note: This story has been updated to add comments from Tauck CEO Dan Mahar.