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Profile: Alpha Prospects
Thursday, March 27, 2008
Two years ago at an ITT dinner, a comedian wrote a song about the institute’s chairman, Steven Freudmann. It joked about him being so devoted to the travel industry that he was unable to pass a committee, organisation or board without sitting on it.
The joke has evidently had no influence on Freudmann. Already holding key positions at the ITT, Abta, Triton and Advantage, he went on to add yet another interest, becoming chairman and 20%-plus owner of travel investment company Alpha Prospects.
For once, however, he is not the front man. Leading the business is chief executive Christopher Foster, former director of the Wiggins Group which operated airports including Manston. He is a major shareholder in Alpha Prospects and, so far, also the spokesman.
Growth
Foster has spent the past 25 years in the corporate world of mergers, acquisitions and takeovers.
He appears, therefore, well-qualified to run the new travel firm which has already floated on the Plus market and aims to grow rapidly through acquisition of product – and of retailers to sell it.
Foster was number two at Wiggins, driving its turnaround from an £80m annual loss to being worth £330m. There he worked with Steven’s brother, Tony Freud-mann, who ran the airport’s retail and travel division for 12 years.
“It’s a great feeling making the people working around you rich. I want to do it again,” Foster claims.
Alpha Prospects’ strategy hinges on the travel knowledge and doors Steven can open as chairman, and the business acumen of Tony who will run the day-to-day operation.
“Tony will run it and Steven will tell the world how well we’re doing,” laughs Foster.
The trio established the business initially under the name Alpha Prospects plc, but its first takeover, of Seligo and Carefree Italy parent, Unpackaged Holidays, last month, gave the group not only its first product to sell but also a trading name. The Unpackaged Group aims to become a major online accommodation-only force. Foster believes it can increase the 18,000 hotels on its website to 25,000 in the next six months.
Foster wants to offer exclusive properties to discerning clients, with transfers or car hire but no flight seat guarantees. He is confident the company will soon be worth much more than the £3m he says it was valued at on day one.
“And I would also be surprised if we didn’t make three more acquisitions in the first year,” he adds.
Being a public company makes it easier to raise cash, according to Foster, who insists there is a huge gap for a company of Alpha’s size.
“You’ve got the huge companies like InterContinental, Thomas Cook and Carnival UK, then there’s virtually nothing smaller. That’s a big opportunity,” he says.
Foster wants Alpha Prospects to become renowned in niche sectors, such as Italian villas, of which he aims to feature 500.
“There’s a danger of trying to be all things to all men, so we might have differentiated branding for parts of the business to appeal to different markets,” he says.
Share structure
Central to the company’s strategy is its ownership structure. Foster wants to base it on the John Lewis “partnership” model, where employees become shareholders and shareholders are offered holidays at special rates.
“I want to offer lots of incentives. We’ll set a minimum shareholding at which we’ll give shareholders a discount off their holiday,” he says.
“If you give something away, you buy people’s loyalty: they don’t sell and the share price goes up and their next holiday might effectively be half-price. If it works, it’s a nice way of everyone benefiting, but you have got to be profitable to do it.”
Foster continues: “I’ve never seen an industry that has such high turnover and low profitability. The trick is to channel profitable turnover into an efficient computer system and call centre, with real people to hold customers’ hands.
“But the great thing about travel is the cashflow. There’s no stock as such. People pay the money before they travel and you don’t have to pay the supplier until after the event. It’s a state of affairs other sectors can only envy.
“I know there are pressures on margins and overheads but I am very excited about this sector.”
Foster believes giving staff share options also makes them feel more passionate about the success of the business. John Lewis recently announced a 20% bonus, while a cleaner working for Google since its inception hit the headlines for receiving a $700,000 payout.
“My staff will get access to an employment benefit trust, share options and discounts,” he adds.
Buying distribution
Unpackaged will sell mainly online following an overhaul of the website currently run by Seligo. It will have consumer and trade sections.
“The power of the internet is just awesome,” says Foster. “You’ve got to ensure your product is readily available and not just through an agent who may not have your brochure. Retail agents have a huge opportunity to serve those who prefer not to book via the internet and so we must offer the right prices, products and technology to do so. But for most, the web is the future.”
Foster insists Alpha’s acquisition strategy is “not out to destroy other people’s business models”.
“In fact, I want to offer them an exit strategy,” he says. “We are talking to agents who perhaps haven’t invested enough in new technology and who may just not have the appetite to face up to the challenges that lie ahead.
“But they have a network of great customers and we’ll offer them cash and a stake in our plc. We’ll probably move their businesses to Birmingham but we may well offer outgoing owners consultancy retainers because we don’t want simply to write off years of accumulated knowledge.”
Marketing
Unpackaged has also just signed its first major deal with paradors in Spain. It’s a tactic it plans to employ elsewhere.
“People are flying to airports and creating markets where there wasn’t one before. These regions are getting marketing budgets to advertise their accommodation. I have identified a number of companies for takeover so that they are promoting their region and our product at the same time.”
Image
Foster says image is everything and insists Unpackaged will be instantly identifiable. “You can spell it, pronounce it, know at once that it’s synonymous with travel and what it means. I want people to remember our name.”
With the seemingly omnipresent Steven Freudmann helping to steer the ship, that seems guaranteed.
Seligo parent bought by Alpha Prospects
TTG, Wednesday, February 27, 2008
“The Steven Freudmann-backed Alpha Prospects plc has made its first acquisition, bringing the Unpackaged Group, including Seligo, into its ownership.
Last month, Freudmann, an Abta director and chairman of the Institute of Travel and Tourism, floated Alpha Prospects on the Plus Markets stock exchange, a junior version of the Alternative Investment Market.
Today, the company announced the acquisition of the Unpackaged Group in a deal which values Alpha at around £3 million.
Alpha Prospects was set up specifically to acquire travel companies. It expects to drive consolidation in the accommodation-only sector by being able to acquire a number of travel companies on extremely favourable terms.
The venture is targeting privately-owned travel firms without a sustained record of profitability which are now finding they need to invest in IT systems as retail shifts online but are unable to raise the funds.
Chief executive Christopher Foster, said further acquisitions in the accommodation sector were being sought, and he hoped to secure three more this year.
He added that there are relatively few travel companies, aside from the big two, that are publicly listed and have access to the capital markets to raise funds.
“Being listed gives us the ability to grow and raise additional funds and that’s what the stock market is for,” he said.
“We have gone public because we do not mind the scrutiny; in fact it will help us because it gives us that respectability in that we have to abide by the rules.
“We can buy other accommodation-only companies with cash and shares, so they prosper with us.”
Alpha plans to invest in Unpackaged Group’s IT systems, to rebrand and relaunch the company’s wholesale and retail operations, improve back-office support available to retail agents and broaden the range of accommodation offers through its Carefree Italy brand.
Unpackaged, which started trading 17 years ago, contracts more than 19,000 hotels worldwide, has offices in Birmingham and is an Abta member. It operates three websites: unpackaged.com, carefreeitaly,com and seligo.com.
Its chief executive is Tony Freudmann, the brother of Steven.”
Freudmann sets up venture firm
TTG, Monday, January 25, 2008
Steven Freudmann chairman of the Institute or Travel and Tourism, has launched a venture to acquire or invest in independent travel firms.
Alpha Prospects has floated on the Plus Markets stock exchange in London. It is listing with a market capitalisation of £2.47m.
The firm is “aggressively seeking” to consolidate in the independent travel sector, with a particular focus on the online booking market.
Freudmann, non-executive chairman of Alpha Prospects, and a former president of Abta, said “I am looking forward to putting all my years of experience in the travel sector to good use for the benefit of Alpha Prospects.
“We look to use the Plus platform to deliver our strategy by acquiring or investing in independent companies operating in the travel sector.”
Alpha Prospects’ chief executive Christopher Foster said: “We believe there are opportunities to act as a consolidator in the travel sector.
“Several companies are in our sights and due to diligence will start shortly. We hope to make an announcement in the near future.”
In November a consortium led by Steven Freudmann’s brother Tony, a City lawyer, bought accommodation-only provider Seligo and Italian villa specialist Carefree Italy. Both companies were owned by David Cockerton who founded Seligo in 1990.
Freudmann consortium buys Seligo bed bank
TTG, Thursday, November 22, 2007
A consortium led by Tony Freudmann, brother of Abta board member and ITT chairman Steven, has bought accommodation-only provider Seligo and Italian villa specialist Carefree Italy.
The deal for the companies, both of which were owned by David Cockerton, was completed last week for an undisclosed sum. Tony Freudmann, a lawyer in the City and international travel consultant for the last 20 years, confirmed: “I am part of a consortium which has acquired The Unpackaged Group from David Cockerton and Rafael Melis, which trades as Unpackaged, Seligo and Carefree Italy.”
Cockerton, who retains ownership of ticket specialist Attraction World, will be employed by the consortium on a consultancy basis for three years.
Tony Freudmann revealed ambitious plans for Seligo, which he said was the “oldest and most established” player in the bed bank market.
“We would hope to increase the market share of Seligo but not in the mainstream sector,” he said.
“We will put more focus on specialist, niche and luxury accommodation.”
He added that they were looking at a number of options for expansion and that further announcements could be expected in the coming weeks.
Cockerton, who founded Seligo in 1990, said: “Tony Freudmann has very exciting plans for the business. We took it so far, but they will now be able to take it to the next level.”
He added that Seligo had been the “pioneer of accommodation-only” becoming a worldwide bed bank and leading transfer company.
Steven and Tony Freudmann have been chairman and a director of Seligo for the past 12 months.”
