Growth and acquisition

It’s all about shared values

BOB MOWAT

In the second part of CTP’s three-part series on the Merit Travel Group, the conversation turns to the company’s growth and acquisition strategy, shared values and product.
With all of the pieces seemingly falling into place following its deal with Japanese-based H.I.S. Co., the obvious question for Merit Travel is a pretty simple one: What’s the next step?

Mike Merrithew.

Company founder, Michael Merrithew is quick to answer: “We’re interested in talking with people in Canada or the US – that’s going to be our primary focus. [Companies] who are in either the corporate or leisure space in particular. Who in some respects are thinking about the same things that we did – about the future of their businesses. And who are interested in exploring what opportunities might be out there for them in this growth strategy.”
Some of those discussions have already been initiated, with Merrithew telling CTP: “These are people, in some cases, who could be [in their] late 40s, early 50s [and they] have built their businesses, [but] they’re not ready to retire.”
Merit Travel’s founder continues: “After we talk about H.I.S. and after we talk about our business strategy and our growth strategy, so on and so forth; you start with how would that work; how would my business be valued; and would I have to sell all of the business or could I sell part of the business; could I stay on; is there a role that I could play; I’ve always felt that my forte is sales or operations or whatever – and the answer is Yes.”
It’s yes, explains Merrithew “because you can’t build a business from where we are today to $1 billion or more over the next three years and not retain those people who have been very successful in building those businesses – whether it be leisure or whether it be corporate in particular. We’re not here to sort of buy them out and kick them out – that’s not what we’re doing.”
Underlining the point, Merit Travel president, Jason Merrithew said: “You want to maintain the intellectual capital, the skills and passion that made their businesses as successful as they are.”
In this respect, Mike Merrithew revealed that in some of the discussions with other companies that he had before doing the deal with H.I.S. Co. that definitely wasn’t the case.
“It came out sort of bluntly in the discussions we had with other companies about what the plan [for acquiring Merit] would be. So here’s a hypothetical. The plan would be they would buy our business. There would be a transition period where basically we do a hand-off, they take over the business,” he said.
Call it a meeting of cultures or minds or whatever, but at the heart of its deal with H.I.S. Co. is a similar view of how to do acquisitions.
Merrithew told CTP that in talking to H.I.S., they wanted to know what he wanted to do and when he wasn’t initially prepared to give a commitment as to how much longer he wanted to continue working, they said that was fine.
“What has come out of this is that I have become re-energized. I have become enthusiastic again about our industry and about our business and about the opportunity. And, as far as they’re concerned, I’m going to be around for 10 years and when I’m done, Jason is going to take over because Jason has been part of the discussions with them since day one, in every aspect of our conversations.”
As Jason Merrithew sees it: “The point that we really valued as our part of the conversation with [H.I.S.] was that employees matter; that the clients of the company matter. And I think that that is something that we’ll look to highlight, as we have those conversations with other companies.”
He continued: “We’re not looking to run a slash & burn strategy because we don’t believe that retains the value in businesses. We want partners. We want to help retain the people that helped make those businesses successful. And we value the employees that brought them there.”

Jason Merrithew.

And, as the Merit Travel Group sets a course to become a global player, Merit Travel’s new president will clearly be playing a critical role in helping to grow the company.
Jason Merrithew told CTP that: “My mandate is to lead up the growth in our leisure business. That’s our Merit Travel brand. That’s our travelcuts brand. And our Exclusive Tours wholesale brand.”
He continued: “We believe that growth in those businesses is going to come in Canada, but [we] also [want] to be able to grow out of Canada [because] we think [that] is the hallmark of what makes a tourism business in 2017.”
As for how he’ll be growing the company’s leisure business, Merrithew explained: “We’ve always been a specialty player, so [we’d be] looking at sort of the niche areas that I would say are potentially being underserved by other areas of the market. People who are looking for that unique type of experience. That off-the beaten path type of thing. That thing that’s hard to research online on your own. Or even just somebody who’s looking to talk to an experienced travel consultant and get some advice on their trip.”
And he continued: “Studies show us, increasingly, that people are using travel consultants at a higher rate than they were five years ago. And I believe, and I think our organization believes, that that’s because of the high quality of service that our [knowledgeable] consultants – and that [knowledgeable] travel consultants all over the world – are providing.”
Merrithew said that when he explains this to people, “The first question that you get is ‘are you [Merit] taking on the Internet?’ The Internet has a place. It’s part of our model. It’s part of every business. It’s part of the biggest travel agencies in the world. It is, in effect, that spot market, instant transaction type of booking. And it’s an area where we haven’t been highly focused on because we feel that there is more longevity and that there is a different value and that we can add more value to the segment where our experienced travel consultants can help people plan dream vacations.”
Merit’s founder, Mike Merrithew noted that this isn’t a case of “either or,” rather “it’s both and it’s all of the above in terms of multi-channel. If we look at the existing business of H.I.S., for example, with their resources, they have developed a global, online booking platform called www.hisgo.com and if you take that global, multi-lingual, multi-currency technology platform add to it our specialty product, our customer focus to broader, non-Japanese market segments, we all of a sudden have a global platform from which we can develop our business.”
That’s on the leisure side, but he said that “part of our mandate – is to develop a platform and a business model that will effectively enable us to take our corporate business and turn it into a global TMC [travel management company] utilizing infrastructure that’s already there.”
As for Merit Travel, Jason Merrithew observed that: “The way that we delineate the businesses is Merit Travel is the consultancy and flagship specialty brand. I think it is a brand that focuses so highly on that consultancy aspect that we don’t really offer an online booking solution [for Merit Travel because] that’s not what that brand means.”
On the other hand, he said that the travelcuts brand “is much more highly focused on an online marketing, on an online content-based type of travel business and it does offer consumers the ability to book instantly.”
Merit’s president added that: “It acknowledges that there are people who are up sometimes at 2 a.m. who just want to book, and we’re there for them as well. And the technology that H.I.S. Co. has developed to be in different countries, in different currencies, in different languages, gives us the ability to expand businesses like travelcuts outside of Canada quite a bit faster than I think we might be able to do just based on our own internal priorities.”
He continued: “The exciting thing for us is the ability to leverage that [H.I.S.] global, e-commerce platform and the ability to transact; to accept payments; calculate taxes; communicate with suppliers properly in different currencies and in different countries. That is something that for a Canadian-centric business would take us the most time to be able to develop.”
So, an obvious question is will the travelcuts brand be expanding its customer base as a result of this?
Jason Merrithew responds: “I think expanding is a good way to [look] at it. But the way we really view it is that travelcuts is a brand that speaks to that segment of the market that is looking for more information on travel. We have lots of information – everything from articles to blog posts to photo galleries to social media – all the elements that people interact with online when they’re planning their trip.”
And he continued: “So, yes, we have expanded the travelcuts brand outside its original focus which was sort of that four-year university period because people do travel after they leave university. We’re able to build that base of trust with university travellers for their first trip overseas, and we believe and we have seen the success of the travelcuts brand grow as people have stayed with the brand…”
In truth though, the key for Merit’s president is that “at its core, it’s about being easier to do business for that individual consumer. So we’re talking about travelcuts being available online, but you also see it in our Merit Travel brand being open longer hours on the weekends.”
As Merrithew sees it, it is about “acknowledging that people don’t just want to book their trip during working hours, so we need to be there when they’re home and talking with their families. It’s about making our leisure brands more accessible to a wider range of consumers and whether that is purely offline, purely online, Merit has a brand that can speak to you.”