[UPDATE: Aug. 18, 2017: Direct Travel acquired S.R. Travel Service of San Francisco. Terms were not announced. A statement from Direct Travel West region president Helen Leon noted plans to expand “VIP and elite” services. Direct claims $4 billion in sales and offices in 60 locations.]
[UPDATE, May 26, 2017: Vision Travel announced it would make available to the Canadian market Direct Travel’s Direct2U app, powered by Mantic Point. Direct updated the app in late February with features including calendar sync, ticket invoice details and “quicker access to dedicated travel agent team.”]
[UPDATE, April 11, 2017: Direct Travel agreed to merge with Canada’s Vision Travel, which claims to be “the largest independent travel management company in Canada.” The pair revealed “a shared strategy to build a global company.” The companies employ more than 2,000 people across more than 60 offices and process more than $3 billion in travel sales, they announced. Direct Travel is a member of the GlobalStar network while Vision is part of Radius. “Each partnership will remain in place for the time being,” according to Direct CEO Ed Adams. “We both have had longstanding, wonderful relationships with both partnerships and as with all of our mergers, we evaluate all options and look for what is best for our customers and our future business.”]
Anyone who follows this space knows that Direct Travel is buying up travel management companies. Its purchase of MacNair Travel Management last October, though, flew under the radar. With it, Direct Travel since 2011 has closed 21 acquisitions of TMCs and meetings management firms.
President and CEO Mike MacNair and his wife Ellen founded MacNair Travel Management in 1989. It claims to be one of the largest privately owned TMCs in the Washington, D.C. area. Servicing small and medium-size companies, MacNair also focuses on managing travel for associations, NGOs and government contractors.
Government work was one of the attractions, said Direct Travel CEO Ed Adams in an interview today, along with MacNair’s penetration in SME event management. MacNair is “a well-run SME corporate travel company, profitable, with a good reputation,” Adams said.
MacNair hasn’t publicly reported sales volume. “We love someone right around $100 million in air sales,” Adams said. “That’s a perfect spot for us, though we are talking to much larger ones.” He said to expect more TMC acquisitions this year.
In 2016, Direct Travel also bought Colpitts World Travel of Massachusetts, Atlanta’s Georgia International Travel and Traveline Travel Services in Cleveland.
Some assume that after it completes the buying spree, the company will sell to a mega agency. That’s what Adams did with Navigant, when he rolled up more than 60 TMCs and then sold to Carlson Wagonlit Travel in 2006.
“I tell clients a move to Direct Travel may be a short play because the company could likely be sold to a larger TMC within two to three years,” said consultant Donald Swartz of Corporate Travel Buyer Resources.
Adams said he has heard that concern but sought to reassure prospective clients. He pointed to a 2015 transaction in which Silver Oak Services Partners sold its equity interest in Direct Travel to ABRY Partners, another private-equity firm. ABRY, Adams said, “has more resources and is a longer-term player. The intention isn’t to just drive the top line and flip it. I doubt ABRY is looking for a strategic buyer. The more likely scenario is a larger PE firm looking to expand.”
Direct Travel is focused on being one operating company. Adams said maintaining customer-facing activity in each region is key, as is retaining employees. With all the acquisitions, it now has more than 1,200 employees. They’re spread across 50 U.S. offices and two more operated by Colpitts in the United Kingdom. Overall annual sales volume surpassed $2 billion, blowing past Adams’ originally stated goal of $1.5 billion. He has no “magic number” in mind.
As for integration, Adams said Direct “slowly” is converting all 21 acquired companies to Sabre CentralCommand for back-office functions. After narrowing mid-office contenders to Cornerstone Information Systems and Concur GDSX Compleat, it selected the latter and continues to work on integration.
Meanwhile, the Direct2U mobile app hasn’t been updated for two years. Adams said he and CIO Darryl Hoover have been “going around and around” in trying to determine whether to build new mobile tech or white label. “We will probably end up white labeling,” he said.
According to its website, MacNair uses the Sabre reservations system and TripCase mobile app. It has an online booking tool powered by Sabre GetThere called MacNairport. The TMC also supports the Concur booking tool and TripIt app. (Direct Travel is a Concur preferred partner.) MacNair uses Cornerstone’s iBank reporting tool and, like Direct Travel, BookingBuilder for additional fare searching.
MacNair is a member of the American Express Representative Network. Will it stay in that group? “We’d like it to,” Adams said. “A lot of it is out of our hands. Many times the parent, or affiliate network, has a clause that [the acquired TMC] has to back out. We would love to be part of many different support groups.”
Direct is already a member of GlobalStar, the international TMC network. Adams said business has been flowing both ways. When a network partner’s client needs service in the United States, Direct Travel can step in. And when one of Direct’s few multinational clients needs service overseas, it can lean on GlobalStar.
But Adams said Direct’s sweet spot is SMEs. “We are not competing for the Fortune 100,” he said.