Airtours to buy Hogg agencies

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The Independent Online
AIRTOURS is buying Hogg Robinson's leisure arm for pounds 25m cash in a move that will create Britain's second largest travel agency, writes Gail Counsell.

Last September the tour operator paid pounds 16m for the 334- branch Pickfords travel division. It said it wanted to boost the number of branches to at least 550 to ensure it had a nationwide chain through which to sell its holiday packages.

The Hogg Robinson deal, due for completion at the end of the month, will add 214 branches to the chain, fulfilling this objective, although further modest expansion is likely.

With 548 outlets it will be within a whisker of Lunn Poly, Britain's largest travel agency network, which has more than 600 branches, and considerably larger than Thomas Cook, with only about 350 outlets.

The chain will get a new name in due course, although Airtours has a two-year licence on the Hogg Robinson brand and a four-year licence on the Pickfords name which it intends to use in the meantime.

Airtours, which earlier this year failed in its attempt to take over its rival Owners Abroad, is paying pounds 20m for Hogg Robinson Leisure plus around pounds 5m for its net assets.

Hogg Robinson Leisure's management accounts show a wafer-thin profit in the year ended March of pounds 47,000. Pro forma net assets, after allowing for the disposal of its business travel operation, were pounds 5m.

But economies of scale, plus the advantages of being able to sell its own packages through the network, should mean Airtours will be able to boost profitability significantly. Last year Lunn Poly, part of the Thomson package tour group, made profits of around pounds 23m.

Airtours shares rose 5p to 323p. Hogg Robinson shares added 5p to 190p.

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