Melbourne-based VIP travel agency ETM Group has been purchased by ASX-listed Corporate Travel Management for $8.5 million in cash, with the company saying the buy will establish a scalable base for the city.
The acquisition is the second in as many years for CTM, after purchasing Travelcorp last year for an undisclosed price, with the industry undergoing some consolidation.
CTM managing director Jamie Pherous says the deal will allow the business to operate an improved and upgraded base out of Melbourne, along with adding more VIP and leisure services to its current line-up.
“One of our objectives is to be the alternative corporate travel provider to global companies and I think we’ve done that. So what this acquisition does is it really bolsters our Melbourne base, and we have a great scalability there.”
“There is a great opportunity here in the event space, in the meeting space, and also in high-end leisure. And we think we offer great services to our clients and this will be good for them.”
CTM announced this morning the ETM Group would be purchased for $8.6 million, at a multiple of five times net profit before tax for the 2011 financial year.
ETM was founded by Jan Upton, Leon Burman and David Hummerston in 2001, and turns over $70 million a year in sales.
A further earn-out of up to $4.1 million is payable for earnings above target performance goals in the nine months to June 30, 2012.
Pherous says part of the attraction to the deal was that ETM Group has a “renowned leisure team” focusing on VIP leisure services to executives. It also offers services for conferences, special interest tours and school groups.
“Never before has this been done under the one roof, both high-end leisure and corporate travel, so we’re offering complementary services.”
And despite the travel industry continuing to suffer under the high Australian dollar and rising fuel prices, Pherous says the company isn’t seeing too much of a downturn. Instead, he says the company is attempting to find new business and companies are responding to higher prices by buying “smarter”.
“Our model is about winning new business, and we continue to organically win new business. And that’s critical for us because even though the industry is in tough times, our activity among clients still remains very strong.”
“We’re seeing a lot of enormous projects in the 2013 calendar year and so forth. What we’re seeing is that customers are just buying smarter.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
