Reed & Mackay takes over rival Hillgate Travel

Ian Taylor

Reed & Mackay acquired rival travel management company (TMC) Hillgate Travel for an undisclosed sum last week in one of a series of deals demonstrating the growing importance of private equity to the sector.

The Reed & Mackay takeover of

Hillgate will propel the combined business into the UK TMC top 10 with a UK staff of 600 and UK turnover of almost £500 million. The merged business should handle more than one million corporate travel transactions a year in the UK. However, Reed & Mackay has expanded globally since its acquisition by private equity firm Inflexion in 2016 in a deal valuing the business at £170 million. Reed & Mackay acquired Chicago-based Gray’s Travel Management for an undisclosed


Combined turnover of Reed and Hillgate

sum in January 2017. It took a stake in German TMC Moll Travel, based in Frankfurt, in April last year and acquired French corporate travel firm Frequent Flyer Travel Paris last December. Its takeover of Hillgate follows the acquisition in late May of London-based TMC Key Travel, which operates in the not-for- profit sector, by private equity firm Elysian Capital. Elsyian bought out investment

firm Livingbridge, which backed the management buyout of Key Travel in 2013, in a deal giving Livingbridge 3.2 times its £9 million investment. Key Travel founder Ajay Sodha

stood down as chairman of the company at the time of the MBO

SODHA: Served as Key’s head of industry affairs until last month

but retained a “substantial” stake and acted as head of industry affairs for the company until last month. Saad Hammad took over as Key Travel chief executive in November 2017. A former chief executive of UK

regional airline Flybe and chief commercial officer at easyJet, Hammad said: “With Livingbridge’s backing we have grown to be the largest international TMC focusing on the humanitarian, faith and academic sectors. We look forward to ramping up our global growth.” Private equity firms have

previously identified corporate travel as a sector ripe for consolidation.

The deals came in a week when

Livingbridge also bought online leisure agent Loveholidays.


w Inflexion: Acquired Reed & Mackay in 2016. Bought travel technology group Atcore in November 2017 and acquired UK luxury tour operator Scott Dunn in 2014. Previously held controlling stake in OTA On the Beach, which floated in 2015.

w Elysian Capital: Midmarket private equity firm founded in 2007. Has a mixed portfolio, and acquired its first travel firm, Key Travel, in May.

w Livingbridge: Backed Key Travel management buyout in July 2013. Acquired Love Holidays last week to add to UK vacation rental business Sykes Cottages (acquired 2015) and online ferry ticket aggregator Direct Ferries (2016).

w Vitruvian Partners: Acquired Travel Counsellors last week, to add to SkyScanner (December 2015). Sold JacTravel August 2017.

w Equistone Partners: Bought into Travel Counsellors in October 2014. Sold Audley Travel to private equity firm 3i in December 2015.

Airlines demand to be part of Heathrow construction firm

The government was poised to issue a policy statement on

Heathrow expansion as Travel Weekly went to press. It did so as airlines demand more

say in the runway’s construction and amid expectations that a substantial number of MPs will oppose expansion in a parliamentary vote due in the next month. The National Policy Statement by

transport secretary Chris Grayling was expected to set out the requirements for a third runway on noise, air quality and costs.

HEATHROW: IAG boss Walsh calls £14bn runway budget ‘ridiculous’

However, airlines, led by British

Airways parent International Airlines Group (IAG), have proposed removing the runway construction

project from Heathrow’s control. They want a separate company set up to build the runway, of which they would be part-owners. The Heathrow Airline

Operators’ Committee, which represents almost 90 carriers at the airport, and airline association Iata have submitted documents to the CAA proposing “a separate company be responsible for the construction and delivery of the expansion programme”. They propose: “[Heathrow], the airlines and any interested third

parties would buy a stake in the ‘Buildco’” and the runway be sold to Heathrow upon completion. The airlines argue this would keep down costs. IAG chief executive Willie

Walsh has denounced Heathrow’s £14 billion budget for the new runway as “ridiculous”, suggesting: “Costs are out of control.” Walsh told a parliamentary committee in February that he had “zero” confidence Heathrow would

deliver the project on budget. › Talk Back, page 15

7 June 2018 63

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