The Flight Centre Travel Group (FLT) has today outlined plans to create a new global business that will provide in-destination services to travellers as well as provide arrangements, transfers and excursions for meetings and incentive groups.
The initiative, which is being implemented in partnership with Vietnam’s Thien Minh Group (TMG), will see the companies create a larger Asia-based DMC business by combining TMG’s Buffalo Tours business in Vietnam with the smaller joint venture DMC businesses the two companies currently operate across 10 other countries.
FLT Managing director Graham Turner said the deal – which has seen FLT agree to take a 58.5% holding in the expanded Asia business – represented the first significant step towards the creation of a global DMC.
“We believe that there are huge opportunities in the in-destination sector and it has become one of our key strategic growth areas for the future,” he said.
“Today’s agreement will fast-track our growth in this sector and establish the foundations for a global DMC that will deliver essential and valued services to travellers when they arrive at their destinations.”
“We are also delighted that TMG will maintain an equity interest because it allows us to draw on the business’s proven expertise in Asia and in the DMC sector as we develop our global network.”
Further acquisitions and diversification are planned, with FLT previously signalling its intention to consider hotel management opportunities or joint ventures in key markets in the future.
Over the net month, TMG will transfer the Vietnam business into the JV to create a larger Asia-based DMC.
TMG will retain a 41.5% holding in the larger business, while FLT is set to increase its holding from 49% of the current JV to 58.5% of the new business.
Agreements are in place for FLT to increase its holding further in 2018 and for TMG to invest in the global DMC offering that the companies plan to create in the short to medium term.
The new Asia DMC is expected to turnover about $US70million and generate in the order of $US5million in earnings before interest and tax during the 2017 calendar year.
The agreement is expected to formally come into play within the next month