Emirates-owned dnata is making waves in the UK, with the recent acquisition of Gold Medal adding to its previous purchase of Travel Republic. Senior vice president Iain Andrew spoke to Lee Hayhurst in Dubai
Gold Medal and Travel Republic parent dnata continues to be interested in growing by acquisition, but says potential sellers ought not to see it as a stereotypical moneybags Middle Eastern investor.
Iain Andrew, the Emirates-owned company’s senior vice-president of travel services, said he is presented with acquisition opportunities every week. But he said dnata was looking only to buy businesses that made commercial sense and at the right price.
“People who think we are moneybags find out very quickly that’s not the case,” he said.
“We will buy what’s right for us as an organisation for a fair price.”
Having taken Gold Medal off Thomas Cook’s hands for £45 million earlier this year, Andrew appeared relaxed about any further consolidation among its competitors.
Asked what dnata’s view would be should the parent of its main rival Travel 2, the Australian private equity firm CVC, decide to exit the UK business, Andrew said: “There is a lot of overlap with Gold Medal. We are very happy with Gold Medal and if someone else has it [Travel 2] we are very happy to compete against them. We have a bit of a war chest to invest in Gold Medal. Good competition keeps you on your toes.”
Andrew said the main competition for mergers and acquisitions in the UK travel sector was private equity rather than trade buyers.
“There are not too many trade buyers at the moment. Some people like to sell to the trade, so they need to come to us.”
As well as being advised in the UK by BDO, dnata is building up its own team in Dubai to help it assess opportunities.
Andrew said although dnata had made two significant acquisitions in the UK, it also had to be conscious that there were other markets with potential targets.
“We have invested quite a lot in the UK but that’s driven more by the capabilities of the companies than a deliberate strategy to buy in the UK.”
A recent non-UK acquisition was Mind Pearl, a contact centre set up by Swissair that specialises in South Africa, Fiji and Spain.
In addition to revenue growth, Andrew said the specialities of potential targets were also key. An example is Travel Republic, which brought web and technical know-how to its new owner and whose technology now powers the dnata Travel website.
“Everyone thinks that the company that buys ‘does it’ to the company that’s bought. With Travel Republic it has been the other way round,” he said.
“They have done a huge amount for us and are very much driving that business forward with a relatively small team here. We will do the same with Gold Medal.”
Although not a consumer-facing brand in the UK, dnata is keen to raise its corporate profile following the acquisitions.
“People in the trade do not understand exactly who dnata is. We will make sure we get that message out there,” said Andrew.
Dnata employs 23,000 people, of whom fewer than 3,000 work in travel. It turned over 829 million Emirati dirhams (£134 million) last year.
“We would like to get over the magic 1 billion dirhams,” said Andrew.
Gold Medal aims to expand into cruise sector
Gold Medal is poised to start broadening its portfolio of product in response to agents’ demands, with cruise at the top of the hit list.
Iain Andrew said: “Gold Medal is now getting the right number of people on the road who understand the independent agents and getting them the right things that they need.”
Dnata hosted a dinner for 20 agents at Atlantis The Palm (pictured)ahead of last week’s Advantage conference in Dubai, and Andrew said the feedback was very positive.
“It was useful to talk to them and to talk about the acquisition. They like the fact Gold Medal is now separate from Thomas Cook,” he said.
“They want to see us getting into new products like cruise. It is one area we are looking at.”
He added dnata might do this either by looking to acquire an established cruise retailer or by sourcing its own product.
However, Andrew ruled out any prospect of dnata creating its own cruise operator, and also insisted there was no prospect that Gold Medal could follow rival Travel2 into the short-haul sector.
Since the buyout, dnata has allowed the existing management team at Gold Medal, including managing director Steve Barrass and marketing product and commercial director Robin Parry, to run the business without any distractions.
Andrew said Gold Medal had gone through an unsettled three-year period during which it was either integrating with Thomas Cook, being sold and coming out of Cook.
Andrew said dnata’s experience of its Travel Republic purchase suggested Gold Medal was as likely to enhance the way dnata operates in non-UK markets as the other way around.
“We are talking to them about how we bring some of their capability to this region, such as the way they do specific brochuring and the professional way they engage with independent agents,” he added.
“We have been servicing the independent trade here for many years, but we do not offer the same level of support here that Gold Medal does.”
Travel Republic plans first offline marketing
Leading UK online agent Travel Republic is poised to launch its first offline marketing push.
The Kingston upon Thames-based retailer, which was bought by dnata more than two years ago, has until now grown purely through online marketing.
The shift to also include offline comes after other major web brands such as Booking.com and Skyscanner.net launched high-profile TV campaigns.
Iain Andrew, senior vice-president of travel services at dnata, said there were plans to launch something “very soon” but would not reveal details although he indicated various options were being assessed including television.
“Google will always be an important part of the market but there are a lot of other channels now,” Andrew said.
He added that it was vital Travel Republic also has a strong app marketing strategy and mobile offering.
Moves into other overseas markets, in particular in the Middle East to countries such as Saudi Arabia, are on the table.
But Andrew said dnata was keen to consolidate the retailer’s position in countries in which it is already active: the UK, Ireland, Spain and Italy.
The firm recently announced the departure of its final remaining founder, chief executive Paul Furner, who is to explore new opportunities. Chief commercial officer Chris Roche is also leaving this summer.
Andrew said the next generation of Travel Republic management were experienced.
“It’s over two years now since the buyout and we have been quite focused on making sure that the next level down is strong.”
Supporting them is a new Travel Republic India office with 25 IT developers based in Bangalore, which Andrew said doubled the size of the unit. Andrew said dnata was recruiting for three key roles: an international director to drive overseas expansion and two more commercial positions.