Analysis: Hays just keeps on growing

Hays Travel’s addition of Millington Travel this week and Polka Dot Travel at the end of last week took its acquisitions this year to four.

 

The company picked up Midlands-based Millington’s 14 branches and 77 employees for an undisclosed sum and will allow the long-haul, cruise and tailor-made specialist to continue trading as Millington Travel.

 

More: Hays Travel buys Millington Travel in fourth acquisition of year

 

Dame Irene Hays described the company as “a natural fit for us”.

 

Hays acquired Polka Dot Travel for its 15 branches in the Midlands and North Wales last week, having bought Cruise.co.uk parent Victoria Travel Group and Spear Travels Group earlier this year.

 

That followed its acquisition of Just Go Travel, Travel House and Miles Morgan Travel in the last two years, taking the agency’s retail portfolio to about 530 branches and 4,500 employees.

 

The company’s approach to integrating acquisitions must certainly be honed by now.

 

Industry reaction has been almost wholly positive. Alan Bowen, advisor to the Association of Atol Companies, said: “Clearly, Hays sees value in the high street.

 

“People keep saying the high street is finished. This shows that is not true at all. The high street has a lot of life in it for the travel industry.”

 

Bowen noted that for smaller tour operators it could mean “if you want to deal with Hays, you’ll have to pay a high commission, but then tour operators worry if they’re dealing with a small agency. With Hays, you know you’re going to be paid.”

 

Simon Oram, director of The Travel Shop, said: “It’s another great acquisition for Hays.” However, he noted: “Independent agencies will be guided to Hays preferred suppliers, I’m sure.”

 

Gabo Quiros, Inside Travel Group head of trade, noted: “We work with a number of Hays’ other recent acquisitions [and] Hays’ model allows us to continue operating as normal with the brand and commercial partnerships largely unchanged.”

 

Kirker Holidays managing director Ted Wake said: “The Hays Travel team has an impressive track record of acquisitions. It’s good news for consumers if it helps retain a wide network of independent-minded retailers open for business across the UK.

 

“It’s also good news for independent tour operators if Hays uses this opportunity to reinforce its commitment to provide customers with a broad spectrum of products and services including specialist, niche suppliers who focus on nurturing a more discerning traveller.”

 

Wake noted: “In larger businesses, it isn’t easy to maintain a balance between delivering the high volume of mass-market products that make up a majority of sales with the more unique, specialist operators which enable agents to engage with a more sophisticated consumer purchasing higher value holidays.

 

“The Hays Group has demonstrated it can manage this balance with the purchase of Mile Morgan Travel and Spear Travels. These businesses maintain a degree of autonomy that has allowed them to continue to grow with their portfolio of specialist operators whilst having the benefit of the Hays infrastructure.”

 

‘We ensure colleagues joining feel welcome’

Irene Hays told Travel Weekly: “Whenever we acquire a new business, we put a team together to ensure colleagues joining us feel welcome and supported in their transition to the Hays Travel group.

 

“We offer training in practical matters such as systems, and opportunities to develop through our in-house learning and development team.

“The main priorities are ensuring new colleagues feel welcome and supported. Then we’ll begin to explore how the business and team work, and what we can learn from each other.”

 

She said: “We have no plans to re-brand Polka Dot Travel. We have a successful strategy for maintaining the integrity of the brands joining our group now.

 

“These are established businesses with an excellent reputation and loyal customers. Being part of Hays Travel is more about what we can bring through our scale and systems to help the team and business thrive.”

 

Hays added: “We’re proud to collaborate with hundreds of suppliers. This is all about ensuring agents have access to the right holiday for their customer.

 

“When company owners decide the time is right for them to step away from what they have built, we would rather keep that business trading on the high street, caring for customers and employing talented and experienced agents.”

 

Transformed by acquisitions

Hays Travel was found in 1986 in Sunderland and grew within a decade to 20 branches. By 1999 it had also established the Independence Group of agents with 44 members. But how did a regional maniple grow from just 20 outlets to 500-plus in 30 years?

 

For a time, tour operator First Choice Holidays held a significant minority stake which was repurchased by Hays when First Choice merged with Tui in 2007.

 

By 2001, Hays had 27 branches and three call centres and had grown to 31 outlets and more than 500 employees, with 108 Independence Group members, by 2004 – increasing to 34 branches, two cruise lounges, three call centres and 127 Independence Group members in 2008.

 

Within two more years, and despite the financial crisis, Hays had grown to 43 outlets with two call centres and almost 600 staff in the northeast along with 233 Independence Group members, recording a group profit of £1.2 million from gross sales of £471 million.

 

But it was the acquisition of Bath Travel in October 2013 which took the company to another level, adding another 58 outlets in the southwest and taking gross sales in 2014 to £775 million.

 

Hays began to acquire other, smaller companies. In 2014 it purchased 40% of Just Go Travel which 14 agency outlets in the northwest. By than Hays had more than 900 employees.

 

In 2016, Hays opened 15 new branches, giving it 120 outlets and three call centres while the Independence Group had 226 branches. Staff numbers were by now 1,080.

 

Then in November 2016 Hays bought corporate travel agency Christine Nugent Business Travel in Gateshead along with leisure agency 3D Travel.

 

The company continued to open branches and in 2017 signed a deal to open concessions in WH Smith shops, expanding to 130 outlets while also acquiring the trade and assets of CAS Travel.

 

In 2018, Hays surpassed £1 billion in sales and 1,300 employees, reporting a pre-tax profit of £10.1 million.

 

Then in October 2019, the company made another step change, acquiring a temporary licence to occupy 555 former Thomas Cook Retail shops for £7.4 million after Thomas Cook went into liquidation. 

 

Some shops closed almost immediately but the acquisition left Hays with 579 outlets for a time and an additional 2,500 staff on top of its existing 1,465.

 

‘We’re committed to the high street’

Founder John Hays had ceded overall control of the company to Dame Irene in May 2018. Sadly, he died in November 2020.

 

When Hays next reported its accounts, for the 18 months to April 2021, the company had been forced to cut costs due to the pandemic but still reported having 5,229 employees. But it had also set up a franchise homeworking business with 353 homeworkers and acquired a business, Explorer Travel Franchise Systems, to operate it.

 

The company had also bought the trade and assets of Tailor Made Travel which was in administration, and it subsequently acquired the trade of Explorer Travel.

 

Inevitably, Hays closed many former Thomas Cook outlets while retaining a retail estate of between 400 and 500 shops and a workforce of about 3,500.

 

Hays paused its acquisitions for a year, presumably to re-order the business after such a growth spurt. But in 2023-24 the acquisitions resumed. It acquired Just Go Travel, in which it had long held a stake, in September 2023, the former Holiday With Us Group and its three shops in Cambridgeshire and Lincolnshire in January 2024, and then Miles Morgan Travel and its 19 outlets in May 2024.

 

The company also opened shops in Newbury, Leeds, Bromley, Gainsborough and Sutton in 2024, taking its network to 500.

 

Speaking at Abta’s Travel Convention in October 2024, Hays travel group finance director Ken Campling insisted there were still “plenty of opportunities” for growth on the “much-maligned high street”.

 

He said: “Growth is not a given but I don’t think there is any reason for it to stop in the short to medium term. We’ve spent £40 million on acquisitions in the last three to four years. We’re very committed to the high street.”

 

How many of the former Thomas Cook stores does Hays retain? The company has not said, but one senior industry figure suggests no more than 100-150. That is clear both from the number of stores Hays retains and the size of its workforce – 3,535 at the time of its most-recent accounts for the 12 months to April 2024.

 

However, Hays had only acquired a licence to occupy the outlets for nine to 12 months following Thomas Cook’s collapse.

 

‘Consolidation is natural’

Asked about Hays acquisition of Polka Dot Travel this week, an Advantage Travel Partnership spokesperson said: “Consolidation on the high street is a natural part of any retail sector [and] recent acquisitions reflect the strength of the high street.

 

“The fact that Hays Travel continues to invest in retail agents demonstrates there is still real value in face-to-face service and the expertise of travel professionals.”

 

The spokesperson added: “We see a strong pipeline of start-ups and new members across the Advantage network with turnover increasing year on year. The sector will continue to evolve in our view without fear of monopolisation.

 

“Consolidation creates opportunities for independent agents and suppliers, ensuring customer choice and a vibrant, diverse high street.”

 

Derek Jones, the former head of Der Touristik UK and now a non-executive director, industry advisor and investor, said: “There are strong commercial reasons why Hays would want these businesses.

 

“If you’re an agent, this [selling to Hays] is a quick and easy way to move out of the market. Hays is privately owned and can move fast.”

 

He suggested: “It’s opportunistic rather than strategic, but not in a bad way. Irene has said she is in the market for opportunities.

 

“The acquisition of Polka Dot makes commercial sense. [It offers] foreign exchange revenues [and] that doesn’t work online, you need walk-in customers. In most cases, agencies will be under-optimising foreign exchange sales whereas Hays has economies of scale.”

 

Jones added: “High street consolidation is not new. When Hays bought Thomas Cook Retail it changed the face of high street retailing.

 

“Now you have a big four in the market: the Co-ops, Tui, Hays and Barrhead. There have always been around four big players and they’ve always acquired smaller players, then a [new] smaller set of players emerge. There is always space in the market.”

 

He argued: “Hays is a national brand that wants to leverage the brand. Agencies will be contacting them [wanting to sell] and they’ll be judging each case on its merits.”

 

One senior industry source noted: “Hays has cracked how to make money on the high street. If you have a winning formula, why wouldn’t you expand?”