Australia's Corporate Travel Management on Wednesday announced plans to acquire a controlling interest in Asian travel management company Westminster Travel, effective Jan. 31, 2014. Westminster has offices in Hong Kong, Singapore, China, Macau and Taiwan, and its acquisition, according to CTM founder and managing director Jamie Pherous, "fast-tracks our entry into the Asian travel market."
A CTM investor presentation noted the company's five-year plan to "ultimately be a truly global company" and win "global" clients.
CTM is buying a 75.1 percent stake in Westminster for A$49.2 million (US$46.3 million). According to CTM, part of the rationale for the move is that clients in Australia, New Zealand and the United States "demand presence in Asian markets."
The Australian TMC in July 2012 bought Denver-based Polk Majestic Group (which rebranded to Corporate Travel Management and remains a Tzell Travel Group affiliate), and this year acquired TravelCorp, a corporate travel agency with operations centered in Texas and Louisiana. On Wednesday, CTM's investor presentation indicated that its U.S. operations are "performing well with strong new client wins, integration going to plan." The TMC expects a "stronger" second half of its July 2013-June 2014 fiscal year "due to new client wins not yet trading" and what it said was is "seasonal skew" in the United States to that period.
The Westminster acquisition "was a natural step to maximize regional business opportunities," according to Pherous, who noted that management teams from the two companies for several years have worked together "on networking clients and joint tenders."
With a head office in Hong Kong and about 700 total employees, Westminster operates eight offices across the region, including locations in Beijing, Guangzhou, Shanghai and Shenzhen. Its website lists "regional alliance partners" located in another seven: Bangkok, Ho Chi Minh City, Jakarta, Kuala Lumpur, Manila, Seoul and Tokyo.
Westminster offers corporate travel, risk management, expense management, consulting and meetings management services. It uses the Abacus distribution system and Abacus VirtuallyThere technology. Pherous also cited Westminster's "client-facing solutions created through in-house development platforms."
For its part, CTM executives this past summer told The Beat that the company is using more resources to internally build proprietary technology solutions and has been planning to introduce a new business intelligence tool in the U.S. market. In August it claimed 1,000 corporate clients and a 9.5 percent share of the Australian corporate travel market.
According to CTM, Westminster during its 2013 fiscal year handled total transaction value of about A$740 million (US$696 million), posted revenue of A$38.7 million (US$36.4 million) and net profit after tax of A$7.3 million (US$6.9 million), and has achieved a five-year NPAT compound annual growth rate of 19 percent. More than half of its fiscal 2013 revenues came from corporate travel, with the remainder generated by leisure travel and wholesale.
"For our business to continue to grow in the coming years, it was clear to us that we needed to have an international partnership in place," according to a statement attributed to Dato Wong, one of two major Westminster Travel shareholders that together would retain 24.9 percent of the business.
The acquisition is conditional on final Westminster shareholder approval and approvals from Singapore Exchange Securities Trading Limited, the Travel Agents Registry of Hong Kong and the Travel Industry Council of Hong Kong.
CTM is funding the acquisition through an entitlement share offer to its shareholders.