Orlando, Fla.-Based Resort Developer Wants to Buy Travel Agency

By Douglas Hanks III, The Miami Herald
Knight Ridder/Tribune Business News

May 19–An Orlando resort developer plans to buy TraveLeaders, the Coral Gables travel agency doing battle with Expedia, Orbitz and the rest of the Internet sites luring away business from travel agents.

American Leisure Holdings, which is building a 2,000-room condominium hotel near Disney World, has acquired an option to buy the parent company of TraveLeaders, the companies announced Tuesday.

Last month, American Leisure acquired a 10 percent share in the privately held TraveLeaders’ stock in exchange for assuming about $22.6 million in debt. The option deal would complete the acquisition.

American Leisure Chief Executive Malcolm Wright said he needs TraveLeaders to generate cash flow for his young development company, which has yet to turn a profit and has delayed filing key financial disclosures.

Wright said he also wants the agency’s corporate clients to drive business to the resort as workers at places like IVAX, Greenberg Traurig and Tupperware use TraveLeaders to book vacations, too.

Travel agencies have seen corporate cutbacks and the convenience of Internet bookings rob them of many of their company accounts. Agents increasingly pursue leisure travelers who don’t mind paying transaction fees for personal service, said Gary Sain, chairman of the Association of Travel Marketing Executives.

“There’s no question there’s a shift toward the leisure side,” he said. “I think business travel will continue to dwindle” for agencies.

Orbitz and other online travel sites have launched their own corporate services, letting employees book business trips from their desks.

Companies can enforce travel restrictions, corporate discounts and other controls in the sites and typically pay less per booking than a travel agency would charge. Orbitz also offers call centers and travel agents — at a fee — for employees and executives.

“We’re seeing momentum,” Orbitz spokeswoman Kendra Thornton said.

(Knight Ridder, The Herald’s parent, has switched from TraveLeaders to Orbitz for its corporate bookings.)

The median TraveLeaders charge is $20, while Orbitz charges $5 per corporate booking. But TraveLeaders CEO Keith St. Clair said the Internet sites lack the kind of attention many execs demand.

“We’re never ever going to send the CEO of Lucent Technologies on a worldwide tour through Bangkok and Hong Kong and wherever and send him an e-ticket with no one to call if there’s a problem,” he said.

TraveLeaders relies on corporate clients for about 70 percent of its business, but St. Clair wants to pare that number to about 50 percent. Booking vacations brings higher profits since agencies aren’t forced to negotiate the kind of discounts companies demand.

TraveLeaders will stay in its Coral Gables office, which has about 300 employees with another 100 working at home, CEO Keith St. Clair said. He is to remain as a division president, in charge of TraveLeaders and related American Leisure companies.

Terms of the all-stock purchase of TraveLeaders’ parent, Around the World Holdings, were not disclosed. TraveLeaders, Wright said, generates between $3 million and $4.5 million in profits a year.

American Leisure hopes to exercise its purchase option in late July, Wright said, but auditors need more time to run both companies’ numbers.

In March, the company said it couldn’t file its yearly earnings on time. It also missed the first-quarter reporting deadline. Noting that the problem was with auditors in Texas, Wright said he plans to switch to one closer to home.

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