Flight Centre Travel Group (ASX: FLT) has secured a 25% interest in The Upside Travel Company in a bid to strengthen its presence in the global corporate travel sector.
Flight Centre started in the 1980s with a single shop and has grown since then to become a global business with more than 30 brands. It is one of the world’s largest travel agency groups, operating in 22 countries and employing more than 20,000 people globally.
The Upside Travel Company is a Washington DC-based, technology-driven business launched in 2017 by the founder of Priceline, now known as Booking Holdings Inc (NASDAQ: BKNG). Upside’s flagship product utilises technology to provide a corporate travel solution designed to benefit SME’s with an all-digital booking experience.
Why Flight Centre Is Investing In Upside
Flight Centre announced today that they will become Upside’s largest shareholder through their investment, gaining access, “to a travel technology platform and software development resources that will enhance its already strong SME offering.”
The two companies have also engaged in a commercial deal that will combine Flight Centre’s understanding of the corporate travel space with Upside’s technical assets.
Flight Centre managing director Graham Turner described Upside as, “an emerging corporate travel business with an innovative customer offering that has the potential to disrupt traditional offerings in the SME sector in the future.”
Flight Centre highlighted the growth of their corporate travel sector in their 1H19 report, which showed that the corporate sector currently makes up 37% of total transaction value.
The report also revealed that the American business generated 23% of Flight Centre’s revenue. This investment then seems like a natural extension into these two key areas of the business.
Mr Turner said that Flight Centre will be, “fast-tracking our (FLT’s) overall growth in this huge travel sector by offering customers the benefit of a new, blended on-and-offline offering.”
This offering is expected to be available in the Americas “in the near term” and later in the UK market.
What Does Upside Get Out Of It?
Upside will continue operating under their own brand and the deal is expected to boost their product offering to the small corporate market. They will also get access to Flight Centre’s supplier relationships and networks.
Upside CEO Jay Walker said, “FLT is the perfect partner for Upside as we get aggressive in serving small corporate clients.”
This investment follows Flight Centre’s recent investments in Bangkok-based 30SecondstoFly and the acquisition of the mobile app Sam (Smart Assistant for Mobile).
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Disclaimer: At the time of writing, Max does not own shares in any of the companies mentioned.