What will stay and what will go? Post-CCAA TravelBrands aims to streamline

What will stay and what will go? Post-CCAA TravelBrands aims to streamline

TORONTO — It’s a transformative time for TravelBrands, fresh out of creditor protection, and the ideal opportunity to reinvigorate iconic brands while building the confidence of agents, and consumers, in its product.

Over the next 10 months TravelBrands will pay out millions of dollars to some 3,000 creditors ranging from hotels and cruise lines to travel agencies and tour operators. It’s the latest development in a story that hit back in May 2015, when the company filed for protection under the Companies’ Creditors Arrangement Act. TravelBrands put the blame on three factors for its decision to seek creditor protection – dwindling margins, lease obligations at 75 Eglinton Ave. East (where TravelBrands was paying $3.6 million a year in rent on an empty building) and the Amended Sears Agreement.

In fiscal year 2014, the company’s net operating loss was $4.5 million. At the time the forecast for fiscal year 2015 was a net operating loss of $11.6 million.

Then TravelBrands disclaimed the lease on 75 Eglinton Ave. East, and reached an agreement with Sears Travel. Former ACV leader Zeina Gedeon was appointed CEO. And the company successfully stared down the unexpected $3.9 million Gibralt claim, a claim fuelled by an old dispute dating back to the Skyservice days. The pieces fell into place and just a few weeks later TravelBrands announced it was exiting CCAA protection.

Agents stuck with TravelBrands throughout the CCAA proceedings. By all accounts the company did an effective job communicating with its agent partners and that may prove to be the key to its survival going forward. Said one agent: “I am relieved that TravelBrands is coming out of bankruptcy protection. We received constant updates from our TravelBrands rep and I felt that there were open lines of communication. We continued to book TravelBrands during the bankruptcy proceedings as they had a trust in place to protect our clients.”

She added, “the truth is competition is good for the consumer and we need another player in the market to keep costs down.”

TravelBrands’ holdings include Sunquest, BelAir Travel, Wholesale Travel Group, Last Minute Club, Holiday House, Fun Sun Vacations, Encore Cruises, Boomerang Tours, ALBATours, Exotik Tours, Intair, Carte Postale Tours and Sears Travel.

TravelBrands plans to streamline its product into Air, Car, Hotel, Packages, customized packages and Cruise. The move comes in response to feedback from agents. “Our travel agent partners have complained about not knowing where to go, or which brand to buy from,” said TravelBrands CEO Zeina Gedeon.

TravelBrands is a “one-stop company”, said Gedeon. “We have every product ourselves. We are the only company in Canada that has this strength and expertise.

“We are looking into going into product line management.”

A new travel agent portal is scheduled to launch in the spring. Selling the company’s products “will be straightforward and much easier on one platform,” said Gedeon. “We are truly a company dedicated to our travel agent partners and we make sure to keep listening to them.” A new logo is also in the works.

One theory is that post-CCAA TravelBrands will get even leaner, jettisoning several parts of the company. What will stay and what will go? “They have any number of retail brands all pumped through the same retail call centre. There’s no reason why this business should not be successful,” said one industry insider, adding that Sears Travel “was a bad deal from the get-go and a dying model. Agencies in stores in a chain that is shrinking and closing stores all the time … [no] upside.”

And then there’s Sunquest. “An iconic brand with a new concept: dynamic packaging where you can fly with any number of airlines offering more choice than other tour operators … a great model but they’ve had a tough time getting agents to understand it. Perhaps they can make a success of this. It is more profitable to do it this way with far less risk as they have no charter air they are on the hook for.”

There’s a long road ahead. But the support is there and agents say they’re happy the company is getting back on its feet. Tim Morgan, VP, TPI said TPI “has had a solid relationship with TravelBrands … for many years.” Throughout the CCAA process TravelBrands kept its preferred partners “incredibly well-informed”. “We trusted that this day would come and are not surprised that their very capable team is moving forward positively.”