Buying Power

1134

The second half of 2014 will see the XL Travel Group celebrate 10 years as a consortium, which started with 15 shareholders and is now made up of 150 members. Rod Rutter is the group’s chief operating officer, and he sat down with editor Dylan Rogers over a coffee in Johannesburg, to chart the group’s history, expand on what it has to offer, and touch on some of the travel industry’s most pressing issues.

As one of the biggest travel consortiums in South Africa, XL Travel has buying power, serious buying power, and this is one of the biggest attractions for travel agencies looking for a ‘big brother’ partnership to give them an edge.

Throw in a big network and footprint, along with associations with international big-hitters, and you can see why it’s a compelling proposition.

Obviously, Rod Rutter agrees.

“People join XL Travel because the procurement benefits are huge, we’re transparent in how we communicate with our members, and we engage with those members – it’s not a universal decision made by one person,” he says. “You cannot run a consortium and be dictatorial. You have to get the buy-in from the members.”

So, what are the benefits of a member-based consortium?

“The beauty of XL Travel is that it’s run by owner-managed travel agencies, and that makes a big difference, because it’s the owners who are the entrepreneurs driving the business, and it’s the owners who make a success of delivering to their customers,” says Rutter.

So, are there different types of members in the XL Group?

“There are two,” says Rutter. “One is a full member that enjoys our intranet facilities and everything else we offer. Then there are associated members – the likes of Thompsons Travel, Pentravel, Duma Travel and the German Travel Group. Associated members are members who have more than five IATA offices or more than five retail offices. Then there are franchise arrangements, whilst Egencia and Radius are global alliance partners. The group is very diversified in its particular membership base.”

Rutter has been in the travel business a long time, so I’m interested to get his thoughts on how his industry has changed and what the current talking points are?

“In the corporate world, it’s transparency,” he says. “You’re earning a living and you’re disclosing what you’re earning. If you’re not earning enough, go back and say so, or you exit. Don’t try and hide things in your pricing, as some consortiums do. Then there’s a workable travel policy, and employees need to buy into it. Thirdly, the accounting procedure, which I consider this to be the most important aspect. It’s something we are constantly looking at.”

Rutter is emphatic when I quiz him on the future of his industry.

“Mobile technology is the future of travel,” he says. “It’s all going online. We’re a bit behind here in South Africa, in relation to Europe, but we’re catching up. Once we start using it, it becomes a tool, and soon everything is going to be done on our handsets.”

As a result, XL has formed global alliance partnerships with Egencia and Radius. The former is a division of online travel giant Expedia and the fifth-largest travel management company in the world – XL Travel is Egencia’s sole preferred partner in Africa. Radius is a global TMC with representation in 70 countries.

So, there’s some serious international clout, in terms of XL Travel’s partnerships. Added to that, the group is obviously incredibly strong in the South African market. But what about the rest of the continent?

“We have stayed out of the rest of Africa, but our Novo Mundo guys have just gone into Mozambique and set up an operation, as they have done in Angola. We’re looking at Kenya and maybe Rwanda. In terms of who to watch, I think you’re going to get Francophile countries becoming more and more prominent, as the mining and communications people get in there. Also, watch Zambia. We’re dipping our toe in the African market. But we’re not going to go where angels fear to tread,” says Rutter.

Wise words, perhaps, although plenty of opportunity exists north of South Africa’s borders. If XL Travel’s growth over the past decade is anything to go by, don’t bet against Rutter and co sniffing out the next big opportunity, even if it exists in the likes of Lagos, Accra or Kigali.