Adelman Travel Group Acquires Great Southern Travel
by Harvey ChipkinWith its acquisition of Great Southern Travel last week, Adelman Travel Group is diversifying into leisure travel as well as expanding its corporate travel base.
The acquisition is the largest in Adelman’s history and will result in a 25% increase in revenue for the Milwaukee-based TMC, which had sales of more than $400 million in 2011. The deal is expected to be completed by Dec. 3.
Brings leisure into the mix
While noting that Adelman has always been 95% corporate, Adelman COO Steve Cline said Great Southern, the travel agency division of Springfield, Mo.-based Great Southern Financial Corp., is evenly divided between corporate and leisure.
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“Bringing in Great Southern Travel opens up a new market for us within corporate travel and greatly expands our vacation travel business,” he said. “We have always been a strong player in the business and corporate travel sector, but we knew we had to round out our line of services.”
Name will change but not locations
A decision has not been made on rebranding Great Southern, but a name change will be necessary because the agency has been part of a publicly traded company. Cline said. Adelman was founded in 1985 and remains a family-owned business with Craig Adelman as CEO and chairman.
Adelman has roughly 200 employees and Great Southern Travel, which was founded in 1977, has about 92, all of whom will remain in place and in their current offices. Great Southern has 13 locations in Missouri and nearby states.
“Great Southern was such an attractive offering because there are virtually no redundancies as far as territorial coverage or employment,” Cline said.
Stronger business climate
The primary motivation is not for Adelman to become a mega agency, Cline told Travel Market Report. “Our objective is to diversify our business model which helps broaden our services which gets us more customers.”
Even after this merger, Cline noted that, with roughly 300 employees, the company “will remain a fairly moderate-sized organization.”
Neither is the merger likely to mean a dramatic shift in Adelman’s target markets.
“We don’t target any particular vertical as far as type of corporate customers,” Cline said. “We still service the mid-market and slightly above that – Fortune 500 and 1000 customers with accounts of $500,000 to $15-$20 million in air volume.”
Consolidation trend
With Adelman’s acquisition of Great Southern marking the latest in a recent flurry of TMC consolidations, Cline told Travel Market Report that the trend reflects “pent-up demand” stemming from the economic downturn.
“When the economy turned down in 2008 agency owners didn’t want to sell in that time – they wanted good value for the equity they had built up,” he said. “If the economy had been somewhat normal, we would have seen the more normal pace of consolidation.”
Because of the soft economy, the Great Southern acquisition was Adelman’s first in a number of years, according to Cline.
2012 sets records
Now, however, business is looking strong with “the pipeline pretty active for corporate business,” Cline said, adding that 2012 has been a good year for Adelman.
“We’ve had a record-breaking year in bringing on new corporate customers, primarily due to integrating account management and consulting services and by offering flexible technology solutions,” he said. “Our customer retention level is also at a record for us, trending at 100%.”
Co-branding agreement
The acquisition of Great Southern was not Adelman’s only move to diversify this week. The company also announced a marketing and co-branding agreement with Summit Performance Group, a San Diego-based meetings and incentives company.
While Adelman has had some meeting experience, Cline said the agreement allows the company to “draw on SPG’s expertise in this area.” While SPG’s meeting services will be Adelman-branded, Cline said this was not a deal that involved the exchange of money.
New call center, videoconferencing
Earlier this year, Adelman opened a second state-of-the-art call center at their corporate headquarters to accommodate reward travel redemption, a new line of business for the company.
Adelman has recently begun offering a managed videoconference solutions trademarked VideoTravel™ as an alternative to traditional travel. (See: Agency Makes Videoconferencing Part of the Program, June 21, 2012).
