The trade reaction to the buyout of Travel 2 parent Stella Travel Services yesterday was guarded, but bosses who spoke to Travel Weekly said they saw opportunities.
Existing trade customers of the two biggest consolidators in the market agreed the deal which brings them together under common ownership could open doors for smaller rivals.
But the deal has raised many unanswered questions, top of the list of which was ‘what is next for dnata?’, the Emirate’s Group-owned acquirer of Stella.
Although a significant entity overseas in retail and aviation logistics, dnata was relatively unknown in the UK two years ago.
But since the purchase of online agent Travel Republic, it has quickly become a significant player in the UK and shown a considerable appetite for snapping up the travel industry’s prized assets.
Alistair Rowland, Midcounties Co-operative group general manager travel services said: “It [the deal] been widely rumoured for a while – but what I didn’t know was whether it was going to be all of Stella that dnata would buy or just part of it.
“We’re generally supportive of it as big customers of both Travel 2 and Gold Medal. As long as they are broadly supportive of us, then we will be broadly supportive of such a big player now in the market.
“They are very powerful now, and for me, it’s how they will attempt to differentiate the two brands [Travel 2 and Gold Medal] that will be the big question.
“I don’t think dnata will bring them together in the short term. It would be a brave business to do that. You don’t just add one and one and immediately get two-and-a-half. You are much more likely to add one and one and get just one-and-a-half, which dnata won’t want.
“Both companies are now doing the rounds to settle their key trade partners down and tell us it’s business as usual at the moment.”
Miles Morgan, owner of Miles Moran Travel, described the deal as “fascinating” and “huge”.
“What a colossal company now. From an agent’s perspective there are more questions than answers.
“Each [Gold Medal and Travel 2] have their strengths. Generally they do the same things and there is lots of duplication. They have two excellent bosses who have done great jobs and they’re both in strong positions.
“Where do you go down to after them in terms of consolidators for agents – JTA, The Holiday Team? They are nothing like on the same scale.
“They are probably looking at this and saying there are opportunities for a smaller guy to take a jump up. For agents it’s an absolute wait and see. We have great relations with both [Gold Medal and Travel 2].”
Amanda Matthews, managing director of Designer Travel, agreed: “From an independent agent’s point of view, it’s an interesting move.
“Has dnata done it to merge the two largest consolidators in the Middle East market? It will be interesting to see what transpires. Will dnata have one big supplier or will it have one company up against the other?
“If it has just one, then it will open the door for the smaller suppliers and consolidators to grow their business through independent agents. We like having the choice of two big suppliers as it means we don’t have all our eggs in one basket.
“Independents could feel uncomfortable about one big, merged company but that would then leave a big opportunity for the smaller ones to make hay while the sun shines.”
Rowland said the latest consolidation in the industry is likely to mean smaller travel firms will have to work harder to differentiate themselves against the big players.
“What this deal does do is consolidate the market in terms of scheduled air and I just hope that results in it supporting the B2B arena rather than challenging it.
“This is the largest prize for dnata – knocking together the flying sectors which will enable it to negotiate even better and everyone should win.
“It might mean the smaller guys have to become even more niche and offer even better customer and agent service as a result to make a difference, because ultimately this market is about price. You’ve got to have the best prices and those come with having the best volumes.”
Commenting on dnata’s retail ambitions, Rowland said: “Of the acquisition, the Global Travel Group bit seems to fit the least and so it will be interesting to see whether they will look to build on that business or dispose of it.
“All the other consortia are looking at becoming accredited bodies and it’s a lot of effort for relatively notional reward so there’s a question about whether dnata needs to own a consortium.
“But if I was a Global member, I would look at the other acquisitions that dnata has made which appear to have had no negative implications or fallout for the businesses acquired, and so I would be pricking up my ears at this stage, thinking that a big new wealthy owner might be a good thing.
“The Sunmaster bit and the Travelbag bit are less of a worry for us. It will give them power in the OTA space, but Sunmaster is at the lower end of mainstream (like Travel Republic) and Travelbag is at the upper end. If dnata planned to open a big shop in Birmingham though, now that would be a concern.”
Morgan agreed that the retail divisions of Stella would probably see this deal in a positive light.
He said: “These are new businesses to dnata and they will gain from being part of a larger group with its buying power. So if you are in Travelbag or Global Travel Group you would be delighted now being part of a larger group with that greater buying power and access to product.
“It begs the question what’s next? They [dnata] have access to fantastic product but not retail, so is a retail chain next on its shopping list?”