Will AmaWaterways’ New Ties to Travel Leaders Create Uneven Playing Field?

by Marilee Crocker


News of the purchase by investment firm Certares LP of a minority share in luxury river cruise line AmaWaterways has stirred muted concern in the travel agency community.

Last week AmaWaterways announced that New York-based Certares had been brought onboard as the cruise line’s fourth investor. Certares is majority owner of Travel Leaders Group, raising the question of whether shared ownership will disadvantage non-Travel Leaders agencies in their dealings with AmaWaterways. Certares also owns 50% of American Express Global Business Travel.

“It is a little weird to the industry and non-Travel Leaders agencies that there’s a tie between AmaWaterways and Travel Leaders,” said Ensemble co-president Libbie Rice. “I see where people have that concern.”

But Rice and other retail travel executives said they felt confident of their relationships with AmaWaterways. For their part, both the cruise line and Certares asserted that AmaWaterway’s new ties to Travel Leaders will not affect its agency partnerships.

Certares also said it had no intention of creating a vertically integrated travel company.

A valued partner
“Clearly Travel Leaders is on my mind, and the parent company and what they’re doing is on my mind. But from the Ama perspective, I don’t have a deep concern. I don’t think any non-Travel Leaders agency should be concerned,” Rice said.

Kimberly Wilson-Wetty, co-president of Valerie Wilson Travel, a Virtuoso agency, shared that view. “AmaWaterways has loyal partners that extend past Travel Leaders Group and American Express Global Business Travel, and I do not see them wanting to jeopardize those relationships. I do not believe that will change because they have a new financial partner.”

Matthew D. Upchurch, chairman and CEO of Virtuoso, likewise said he didn’t expect his group’s relationship with AmaWaterways to be affected by the Certares investment.

Virtuoso has its own history of overlap with Travel Leaders Group. Travel Leaders owns Protravel International, a Virtuoso agency based in New York. Earlier this year Travel Leaders Group acquired UK-based Colletts Travel, also a Virtuoso member.

“AmaWaterways has been a valued partner since 2010. I see no reason for that to change with the Certares’ investment, any more so than it has for the Virtuoso member agencies they have acquired,” Upchurch said. “Our relationship with Ama remains as strong as ever, as does our trust in them as a partner.”

Business as usual
Founded in 2002 by three families, AmaWaterways this month christened its 20th vessel, the 156-guest AmaKristina, named for co-owner and executive vice president Kristin Karst. The cruise line also recently announced plans for its largest ship to date, a “new concept” vessel due out in 2019 that will be twice as beamy as traditional European river ships and will feature an open-water sports platform.

AmaWaterways president and co-owner Rudi Schreiner said the Certares investment “will not bring any changes to the running of AmaWaterways.”

The current leadership team of Schreiner, Karst and co-owner Gary Murphy, vice president of sales, will stay in place, “with no change to our roles, responsibilities, or authority. Certares representatives will not be taking any leadership role at the company,” Schreiner said.

Reassures agency partners
The cruise line reached out to its key agency accounts last week to answer questions about its new investor. “We took the opportunity to reiterate the important role that a widespread travel agent distribution channel has played in AmaWaterways' success to date and how critical this strategy continues to be in our future growth plans,” Schreiner told Travel Market Report.

He noted that a preferred partnership agreement between AmaWaterways and Travel Leaders was in place before the Certares investment.

That partnership was in the spotlight at the recent Travel Leaders Network conference in Orlando, where member agents learned that AmaWaterways is giving them access to blocked space on more than 50 departures in 2018 and will pay them 25% commissions on those departures.

Travel Leaders Group referred all questions about the Certares-AmaWaterways deal to Certares.

The investment firm reiterated what the other key players were saying––no supplier relations will be affected by the new shared ownership. “We respect and value the partnerships that each company has across the industry and have no desire to do anything but support, grow and strengthen those relationships,” said Certares managing partner Colin Farmer

What’s ahead for Certares?
Some observers wondered whether Certares’ investment in a cruise line signaled the start of a new vertically integrated travel company, along the lines of Germany-based TUI Group, whose businesses include travel agencies, online portals, tour operators, cruise lines and hotels.

Absolutely not, Farmer said. “We have no intent to consolidate our portfolio company investments into a vertically integrated travel company.” He emphasized that Certares manages each of its investment entities independently “and any commercial relationships between portfolio companies are on an arms length basis.”

That said, Certares is likely to acquire interest in other sectors of travel. “Certares is a private equity firm focused on the travel and hospitality sectors, so we are always looking for attractive investment opportunities in those segments,” Farmer said.

Douglas Quinby, senior vice president, research, for PhocusWright, observed that in the U.S., in contrast to Europe, vertical integration in travel “generally hasn’t worked out too well.”

The Certares investment in AmaWaterways “is probably a tuck-in to secure key supply in a growing segment,” Quinby speculated. “I would liken it more to Expedia and Classic, or AAA and Pleasant.” Expedia purchased Classic Custom Vacations in 2002 and the Automobile Club of Southern California purchased Pleasant Holidays in the late 1990s.

Farmer said the investment makes sense for Certares because river cruising is an attractive growth sector in leisure travel. He also said Certares was drawn to AmaWaterways because the line’s focus on the travel agency sales channel “lines up perfectly with our view of the industry.”

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