Dubai: BCD Travel, the Dutch corporate travel services firm with $20.8 billion in sales, is taking on a more direct exposure in the UAE. It has just formalised a direct equity participation in its local partner BCD Travel LLC, owned by Khalid Al Rostamani (who is also Vice-Chairman at AW Rostamani Holdings).
The local entity, which has been representing BCD Travel since 2006 and operates three offices in the UAE, recorded revenues of $57 million last year. Now, with the equity participation, the platform has been set to reach out for something more substantial, says Joop Drechsel, CEO at BCD Travel, who was in Dubai last week to put the finishing touches to the deal.
Gulf News: Does the upgrade to an equity alliance suggest the possibility to develop new markets from the UAE? (BCD Travel has picked up a minority stake in the UAE firm, though the percentage and the value of the transaction have not been revealed.)
Joop Drechsel: The equity deal is something we would do for very important areas. The Middle East will become a much more important area for us and that’s why we made the step up.
This is such an important growth area in itself and we have seen that our corporate customers are more and more focused on Dubai.
For now there is enough to explore right here, but I will never say that with this partner Dubai will remain big enough.
Gulf News: Is there a provision in the deal to raise BCD Travel’s stake in the local partner at a later date?
Joop Drechsel: It is very much a philosophy of ours to have a meaningful stake but – at the same time – make sure the local partner remains in the lead. They know the area, the customers and circumstances. I never would like to control that. They have skin in the game, as they say, and it’s always good to have the local partner run the show.
Gulf News: Isn’t there a concern in the global travel industry that growth is kind of showing uneven patterns. That you have strong growth in some areas offset by less than stellar returns elsewhere?
Joop Drechsel: That is one of the advantages of being a global company. We are there in more than 90 countries. Europe has not been pulling its weight except for Germany and the US is stepping out of recession. I’m so glad that the Middle East – Dubai in particular – has been growing. Add Asia to that and we have the booming South American continent.
Just talking about recession is not right, the world itself is not in recession. Fortunately we cover the global.
Gulf News: BCD Travel came into its present form through a series of mergers and acquisitions. Is that streak likely to continue?
Joop Drechsel: We are a large player in the business travel arena and we are also a growing player in online consumer ticketing area with Travix with labels like CheapTickets, which is big for us. It is growing extremely fast and in 24 countries. It is developing into a $2.5 billion business.
With consumers more interested in buying tickets online, I think that is very much booming. I would expect more growth and acquisitions there.
On the business travel side, we have seen major consolidation. But there may be a few more companies taken over because this is a scale business.
Gulf News: And does BCD Travel have the cash reserves to make it happen?
Joop Drechsel: Of course cash is never sufficient. You might want to do it differently. In mergers, there are sometimes the earn-outs and having a cashflow positive operations. You can actually fund acquisitions from the cashflow.
Gulf News: BCD Travel is part of a closely held group. Does that make stock markets a distant area?
Joop Drechsel: Our holding will always remain not listed. It will be a family-owned enterprise.
Different parts of the portfolio could be considered for the stock market. A company like Travix could be potentially a candidate for a flotation. The online ticketing market is growing so explosively and that is why I might benefit from a stock market float.
Gulf News: Will Travix extend its footprint to this region?
Joop Drechsel: With good penetration of mobile and internet broadband along with strong economic growth I expect people to use the web for everything, particularly for travel. It’s an interesting thing I’m looking into.
