A Pint of Knowledge About Acquisitions Goes a Long Way:
The Top 3 Questions Travel Agencies Should Ask Themselves When Consolidating
What do beer and travel agencies have in common? Mergers and acquisitions leading to massive consolidation. In late 2016, AB InBev bought SABMiller in a deal that makes the company the producer of one-third of the world’s beers supply. This move leaves mid-sized beer companies (of which there are relatively a few left, no doubt) sandwiched between the giants and a spate of small craft brewers. Most of the consolidation has been a growth move intended to expand geographic reach, to capture new markets.
The travel agency landscape looks surprisingly similar with some amount of consolidation among the top tier agencies (American Express, BCD Travel, etc.) and boutique agencies on the other end of the spectrum, with a group of medium-sized agencies in the middle trying to determine how to thrive in the current market. Most of these agencies are turning to acquisitions to extend their geographic reach by purchasing agencies in other countries, for example. However, without the resources of the top-tier agencies, acquisitions can be bumpy.
The technology issues inherent in acquiring and expanding a travel business or a brewery or any industry, for that matter, are often overlooked. Managers tend to focus on legal issues and financial audits in lieu of IT infrastructure and compatible technology practices. A thorough consideration of how you will handle technology across companies can make or break your ability to manage the entire enterprise from day one, though. Here are the top three tech questions you should consider if you are among the medium-sized travel agencies looking to grow.
1). Are you going to adhere to on single IT platform or allow for regional differences? Further, will you use on-premise technology or cloud-based/SaaS? There are benefits to both; however, much of the consideration depends on how much you want to preserve the culture and practices of the newly acquired company.
2). How will you handle data integration? No matter the answer to the above questions, data integration is essential to getting a transparent picture of the acquired company. Should you choose to keep companies on different systems, data integration is essential to an enterprise-level understanding of the agencies. Otherwise, information retrieval across various applications and systems is extraordinarily difficult. Consider who will handle the integration as well as challenges to execution.
3). Compliance regulation. Policies, guidelines, and contracts should be consistent across companies. Rarely do two companies have any overlap in this regard. Will you ask the acquired company to adopt yours or does this infringe on a strong company culture to such a degree that it become a setback? If you do move to create one cohesive compliance structure, how will you handle training and regulation?
These questions just graze the surface, but they are essential to moving the enterprise forward from day one, which means having consistent and clear reporting capabilities as well as the ability to continue doing business seamlessly. With mergers and acquisitions on the rise in 2017, there’s never been a better time to consider growth, but be sure to enable a tech foundation that will support the expansion.