David Radcliffe: Change is 'relentless and ugly', but it's steady as she goes in corporate travel

The chief executive of Hogg Robinson tells Sheridan Winn how he has steered a course through the problems buffeting the industry

Few industries have taken the drubbing suffered by travel in the past few years. Just as business had begun to pick up again after the terrorist attacks of 11 September 2001, the Sars virus and the war in Iraq knocked it back down. Rising oil prices and airline deregulation have caused it to wobble further.

And for agents that specialise in corporate travel, the problems don't end there. For they also face the challenges of online booking and the use of low-cost carriers. Recently, the chief executive of Hogg Robinson - the services group that runs Business Travel International (BTI) - described the pace of change as "relentless, global and ugly". But David Radcliffe remains optimistic.

"Cheaper does not necessarily mean best value in business travel," he says. "Online fares may seem a good idea, but what happens if the aircraft does not show up and the traveller is stranded without a back-up plan? Most frequent business travellers will not mess around with the cheapest fares; they'll go for best value."

Another factor is the need for security data. "We play a huge role in something that, 10 years ago, wasn't a big issue," says Radcliffe. As well as managing corporate travel plans and expenses, BTI identifies trouble spots and keeps tabs on where its travellers are, even when they change their bookings. It can tell a corporation how many of its employees are feeding through an airport at any given time.

"It's valuable information in today's world, and one reason why large corporations are starting to buy their travel globally. Terrorism recognises no boundaries - but neither do large corporations."

Around the turn of the millennium, Hogg Robinson was a business that hit or exceeded its financial targets. Then, suddenly, that was no longer enough. "It was a good company, but the City lost patience," says Radcliffe. "We could not compete with the apparent return offered by technology. We were a secure stock, but not exciting."

A 3 per cent stake taken in the business by Active Value shook things up, as the activist fund put together a takeover proposal. Radcliffe could not see the value in this, "and at that point we decided to go out to venture capital".

In one of the UK's largest public-to-private deals, Radcliffe led a £232m management buyout funded by Schroder Ventures. Hogg Robinson still retains "plc" in its title, to keep its options open, though it does not trade publicly in the shares. The ambition had been to re-emerge as a much larger company but 9/11 changed all that. "We are now actively considering how we move forwards - not so much as a cohesive unit, but as separate entities."

Will Hogg Robinson, whose turnover in the financial year to 2003 stood at £2.1bn, come back to market? "I believe there would be a case to do so if we were large enough and if there was an exciting story to tell," replies Radcliffe. When pressed for a timescale, however, he will concede only that he's talking, "some time down the road". He continues: "There is a lot of interest in our business travel company. It's global and it has the resource scale that interests investors. At that stage, we would have to consider options for the rest of the group."

Founded in 1845, Hogg Robinson is based in Basingstoke, Hampshire. It opened its first business travel offices in 1945; this part of the group now trades as BTI UK.

Today, Hogg Robinson employs around 7,300 people in two divisions - financial services and travel. The company has produced overall growth of 4 per cent for 2003-04, as compared to a 3 per cent increase in 2002-03.

Incisive, affable and amusing, Radcliffe was once stopped in his tracks when he heard himself described as an "autocratic democrat". "I see myself as an arch-democrat," he says. "I'm not a person to live with indecision or decisions by committee, but I'd like to think that everyone has their fair shout here."

At weekends, he goes power boating, clay-pigeon shooting, or messes around with his family on quad bikes. He was six when his father died; his mother "fought her way out of Hackney" to see her three children gain places at grammar school. But then Radcliffe broke her heart at the age of 14, when he walked out of school one week before his mock O-levels. A rebellious child, he was determined to prove he would not be the abject failure his teachers predicted. "I've spent the rest of my life trying to prove a point," he says.

Various jobs and a punt at running his own business led him to Hogg Robinson in 1978, where he began his rise up the corporate ladder as manager of the travel branch in Waterlooville, Hampshire.

"I'm driven by a will to win and by a desire to see the people around me succeed," he says. "We pride ourselves here that the board is mainly made up of people who have worked their way up through the company." Does the drive lessen as he gets older? "No," he smiles. "It gets worse. I've got to prove it to all the people coming up behind me."

He understands the merit in not rushing into business deals but waiting for the right moment. As BTI's competitors went straight into China, it held off. "We like to be pioneers, but some pioneers get arrows in the back," says Radcliffe. "China was going to be one of those."

A firm believer in building long-term relationships, Radcliffe eventually found the partner he was looking for. In August this year, BTI announced the completion of a joint venture partnership with Jin Jiang International, China's largest hotel/travel agency conglomerate, co-owned by the government. This formed the country's first foreign majority-owned travel management company and marked a milestone in BTI's history.

Radcliffe wanted a player that had clout in the Chinese domestic market. "China is all about licences," he says. "We didn't pretend we were experts. We knew from the outset we wanted to control the business; BTI has a 51 per cent share.

"The price we paid was a couple of years' wait. It was very brave, but it turned out to be the right thing to do. China is like riding a tiger - it's great if you can stay on.

"I've heard the horror stories," he adds, "but so far that's not been our experience. The challenge is in making sure you've got the right-shaped cost-base for the speed at which the market is developing - and the right skills. In hindsight, it was the best thing we did. Jin Jiang are turning into incredibly good partners."

India, Radcliffe believes, will be the next big travel market. "It's already starting - curiously on the back of the call centre business.

"Where India has the benefit of language, China has discipline. Whatever one has, the other has in equal measure. I wouldn't like to say who'll win this game, but the Chinese have got off to a cracking start."

BIOGRAPHY

Born: 1953, Hackney, east London.

Education: St Alban's grammar school - left before he took O-levels.

Career (1978): manager, Hogg Robinson Travel, Waterlooville branch.

1980-89: held various posts including promotions manager, retail development manager, and leisure marketing manager.

1989-93: appointed to main board of Hogg Robinson Travel as marketing director, later becoming director for business travel.

1993: managing director of Hogg Robinson BTI, then chief executive.

1997: chief executive of Hogg Robinson.

2000: led MBO of Hogg Robinson.

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