Travelstart in South Africa buys business travel agency Club Travel

Skift take

Travelstart takes another logical step in expanding its core business from leisure travel to business travel through an acquisition.

Richard Holmes, Skift

In a game of technology and an attempt to strengthen itself in business travel, Travelstart, Africa’s largest online travel agency, has announced plans to purchase Club Travel Group.

Founded in 1987, Club Travel is one of South Africa’s leading travel brands, growing from a department store favorite to a key player in the business and government travel markets.

As such, it’s a good choice for the leisure-oriented and tech-savvy Travelstart.

“Travelstart is strong in the consumer segment, and we want to bring consumerization to the corporate and government sectors, where Club Travel is an emerging star,” Stephen Ekbergh, founder and CEO of Travelstart, said in a statement.

For Club Travel, access to Travelstart’s technology is probably the sweetener of the deal.

“I saw a few years ago that we needed to become a technology company selling travel, and I have immense admiration for what Travelstart has done in the online leisure space,” said Wally Gaynor, Founder and Managing Director of Club Travel. “In partnership with businesses and governments, we want to disrupt the market with technology. We spend a fortune on technology, so it makes sense to combine our spending with Travelstart. Together we can move forward much faster.

While Travelstart is at the cutting edge of technology, Club Travel Group has more expertise in “the normal day-to-day running of a travel business, maximizing revenues from various suppliers,” Ekbergh said.

As part of the deal, Thebe Tourism Holdings will sell its majority stake to Travelstart, with Club Travel Group continuing to operate as a stand-alone company. However, Thebe and Travelstart will also jointly invest in and own Club Travel Corporate, a division of Club Travel Group.

This is a key benefit of the agreement, allowing Travelstart to leverage Club Travel Group’s Black Economic Empowerment (B-BBEE) broad-based credentials.

In an effort to correct the country’s economic imbalances, a large portion of business and government spending in the South African market is directed towards companies with good B-BBEE ratings. Together, the annual business and government marketplace is worth over $ 1 billion, providing a rich new vein of travel bookings for Travelstart to tap into.

Without disclosing the value of the acquisition, “shareholders on this side seem very happy with the deal,” Ekbergh said.

The deal is subject to approval by the South African Competition Commission.

The past few weeks have been busy for Travelstart, headquartered in South Africa, with both new investors and acquisitions.

In late May, Travelstart announced that Boston-based investment firm HarbourVest had bought a significant stake in the company, buying out the stake formerly held by South African mobile operator MTN.

Although the value of the deal has not been disclosed, the media estimate it to be around $ 80 million. UK-based Amadeus Capital Partners “was and is the lead investor in Travelstart,” Ekbergh explained. Amadeus invested $ 40 million in Travelstart in 2016.

While the sale is tied to the divestiture of its non-mobile assets by MTN, Travelstart welcomed an investor with global exposure, said Ekbergh: “What is important for us is to have an active dialogue with the investor community. We want to know what’s going on in the world and in doing so we improve ourselves. We find out what our competitors are doing, what new emerging technologies are. The bigger and more active the investor, the better off we are as a company. “

The new investment also opens doors to capital for future expansion, said Ekbergh: “HarbourVest is an active investor and could provide us with capital for further acquisitions in the future. So instead of having to go to the market for additional capital, we have an investor we can turn to. “

And Travelstart certainly has an eye on expansion. In addition to announcing the Club Travel Group deal, in 2017 he bought a majority stake in the accommodation booking site SafariNow.com.

Willie R. Golden