80 Pacific Highway, Level 13
North Sydney, New South Wales 2060
Telephone: (+61 2) 8229-4000
Fax: (+61 2) 8920-4009
Web site: http://www.helloworldlimited.com.au
Founded: 2002 Jetset Travelworld Group
Sales: $245 million (2017 est.)
Stock Exchanges: Australian Stock Exchange
Ticker Symbol: HLO
NAICS: 561510 Travel Agencies
Helloworld Travel Limited is an integrated global travel distribution company based in North Sydney, Australia. It maintains retail travel businesses, destination management services, air ticket consolidation, wholesale, corporate, and online entities. The company operates Australia's largest network of franchised retail travel agents under the Helloworld Travel banner, as well as Helloworld Business, the country's largest network of independent corporate travel agents. Helloworld operates the Helloworld.com .au website, a retail portal for flights, hotels, cruises, tour packages, and destination activities; Air Tickets, a provider of international airfare distribution and ticket center services in Australia; and SmartFares, an airfare database used by travel agents to search for up-to-the-minute airfares from more than 100 international airlines. Helloworld also offers travel management services for both corporate and government clients. It is the largest inbound tour provider in Australia/New Zealand, operating through the AOT Inbound, Experience Tours Australia, and ATS Pacific units. Helloworld acts as a travel wholesaler through Quantas Holidays, Viva! Holidays, Insider Journey, Sunlover Holidays, and Territory Discoveries. In addition, the Rail Tickets subsidiary sells rail tickets and passes around the world and ReadyRooms.com acts as an online hotel aggregator in the Australian market. Helloworld is a public company listed on the Australian Stock Exchange. Quantas Airways is the largest shareholder with a nearly 30 percent stake.
Helloworld's origins can be traced to the Australian businessman Henry Krongold. He was born in Poland in 1909 and was working in insurance when Nazi Germany invaded his country. He enlisted in the Polish army, but the army was no match for the Germans and was quickly crushed. Krongold managed to escape the Germans in December 1939 and a month later the Russians, fleeing to Lithuania. He made his way to Japan in 1941 and then to Australia before the attack on the U.S. naval forces at Pearl Harbor, Hawaii, that triggered war between Japan and the Western powers.
Krongold sold Jetset to Air New Zealand in 1997. In 2002 the airline sold Jetset to Heartlink Limited, a medical technology investment company that had become involved in travel retailing the previous year by acquiring the Jetset competitors Travel World and National World Travel. The latter had been a subsidiary of the Ansett Australia airline, which divested the operation after declaring bankruptcy during the fall of 2001. The various agencies continued to operate under their own names but were now part of the Jetset Travelworld Group.
Jetset Travelworld became more vertically integrated in 2004 with the launch of National Ticket Centre Pty Limited, which served as an in-house ticketing operation. In April 2007 it added a wholesale business by acquiring Orient Pacific Holidays Pty Limited, which was renamed JTG Wholesale Pty Limited. The following year Jetset Travelworld acquired the Quantas Holidays and Quantas Business Travel divisions of Quantas Airways. The latter was the largest corporate travel management company in Australia. Quantas was paid in stock and as a result gained a 58 percent controlling interest in Jetset Travelworld.
Australia's travel sector consolidated further in 2010 with the AUD 351 million merger of Jetset Travelworld and Stella Travel Services, a travel agency that in addition to Stella Travel included the Harvey World Travel and Travelscene brands. The combined operation included more than 2,000 travel offices across Australia and was now better positioned to compete against the country's market leader: Flight Centre.
The Stella Travel Group was established in 2005 by MFS Limited, an Australian investment and fund management company that owned a portfolio of hotels in Australia and Europe and believed the tourism industry offered significant opportunities. MFS acted aggressively, sometimes overpaying for assets to gain scale. Its deals included the £262 million purchase of S8, the parent company of Harvey World.
Harvey World Travel was a well-established travel agency brand. It began in 1951 as an outgrowth of the real estate business of John Harvey. In 1971 Harvey and his son Scott launched Harvey World Travel and within a few years the company consisted of six offices. Because the Australian tourism industry was still in its infancy, it was a number that made Harvey World the largest privately held retail travel brand in the country. Emulating the U.S. travel franchise model, Harvey World began expanding across the Pacific in 1978 and a year later formed Harvey World Travel Franchise Holdings. Within five years, the network increased to about 70 agencies and even stronger growth followed. Harvey World became Australia's most prominent travel agency brand until it was supplanted by Flight Centre.
Harvey World spurred expansion by becoming a public company. In 2000 it acquired the Thomas Cook local retail travel agency business. Thereafter, its annual revenues increased to more than AUD 1.3 billion. Two years later Harvey World established a subsidiary in the United Kingdom. The venture was still in the investment stage when the parent company found itself the subject of an unsolicited takeover bid by S8, which already owned the trade-only operator Travel2/Travel4. Headquartered in Queensland, Australia, the property management firm hoped to use Harvey World to crosspromote its 50 Gold Coast properties, which consisted of 3,500 apartments. In December 2004, S8 purchased 4.9 percent of Harvey World shares on the open market, an amount that was just shy of disclosure requirements. During the summer of 2005 S8 entered into friendly merger discussions while it increased its stake in Harvey World to 19.9 percent. When talks broke down in September 2005, S8 pressed a hostile takeover offer of AUD 1.9 a share, or AUD 78 million in total, which Harvey World's board rejected as inadequate. About a week later, however, the two parties agreed on a price of AUD 2.05 per share, or AUD 86.5 million, and the acquisition was subsequently completed.
Even as S8 was making plans to expand Harvey World, it was being targeted by MFS, which made a £262 million takeover bid during the fall of 2006. When that offer was accepted and a deal completed later that year, Harvey World became part of MFS's Stella Travel Group. Thereafter, its agents were able to book hotels in the MFS portfolio, which included Europe's Golden Tulip Hotel network, the Park Hyatt Sydney, and Sheraton Mirage Port Douglas. All told, Stella Travel consisted of Stella Travel Services and Stella Hospitality Group and maintained operations in Australia, New Zealand, South Africa, and the United Kingdom.
In February 2008 MFS sold a 65 percent controlling interest in Stella Travel to the private equity firm CVC Asia Pacific for about AUD 400 million. MFS remained a passive investor, but Stella Travel was no longer a subsidiary. Like other companies in the hospitality industry, Stella Travel was adversely impacted by the downturn in the global economy during the fall of 2008. A few months later the company reorganized its assets. The hotel and resort operating interests and retail operations were split into separate divisions, as was the U.K. business. Moreover, the company engineered a major recapitalization plan with its bank, USB, in 2009. The following year Stella Travel Services and Jetset Travelworld joined forces.
As a result of the Stella Travel and Jetset Travelworld merger, Quantas's interest in the combined business was halved to 29 percent, but it became the largest shareholder. CVC held a 26.9 percent interest and USB retained a 17.9 percent stake. The enlarged company kept the Jetset Travelworld name and was listed on the Australian Stock Exchange. It was headed by Jetset's chair, Tom Dray, and Stella Travel's CEO, Peter Lacaze, who retained his title and assumed the day-to-day responsibilities.
The new Jetset Travelworld launched an effort to eliminate redundant costs, and in about two years achieved more than AUD 50 million in cost reductions. The company also began work in September 2012 with the Boston Consulting Group to review its stable of brands. In July 2013 the company announced it would adopt a single retail brand, Helloworld, and Jetset Travelworld would change its name to Helloworld Travel Limited. In conjunction with the adoption of a new contemporary brand, the company signed a 10-year strategic alliance agreement with Orbitz Worldwide, a leading global online travel company listed on the New York Stock Exchange, to power helloworld.com .au. The website was launched in late 2013. The rebranding effort also impacted Jetset Travelworld's network of franchised retail travel agency offices. Franchisees would not, however, be responsible for the cost of new Helloworld signage. They would also be presented with three options: to become a fully branded Helloworld agent, an associate, or an affiliate.
The new Helloworld brand did not have an immediate positive impact, and several of the company's major shareholders began selling their interests. In contrast, Quantas proved more patient and held firm until Helloworld had time to establish the new brand. Until then, Helloworld had a bitter pill to swallow. For the fiscal year ending on June 30, 2015, the company was forced to book an impairment charge of AUD 205 million, more than double its market capitalization. Much of the charge was related to intangible legacy goodwill and other assets that came with the 2010 merger. As a result, Helloworld recorded a AUD 198.4 million loss in fiscal 2015.
Helloworld enjoyed a strong rebound the following year, which was highlighted by the February 2016 acquisition of AOT Group Limited, an Australian-based provider of travel services in the inbound, corporate, government, and leisure sectors. Hence, Helloworld became the second-largest integrated travel distribution company in the Australian and New Zealand markets. For the year, Helloworld returned to profitability, netting AUD 3.5 million.
Air; Australian Operations; Inbound; International Operations; Travel Management; Wholesale.
American Express Company; Flight Centre Travel Group Limited; Holidaybreak Limited; Thomas Cook Group plc.
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