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Listed travel agent Helloworld (ASX: HLO) has agreed to snap up a 40 per cent stake in Adelaide-based travel agency Phil Hoffmann Travel (PHT) from its founder, with the option to acquire a further 10 per cent over the next three years.
Founded in 1990, PHT has grown to become one of South Australia’s best-known travel brands with more than 200 staff across its outlets in Nurioopta, Gawler, Hyde Park, Modbury, Norwood, Semaphore, Stirling and Victor Harbour.
Under the agreement, PHT CEO and director Peter Williams will retain his 50 per cent stake in the business, with HLO having the option to acquire founder Phil Hoffman’s remaining 10 per cent stake.
The buy-out will be funded from HLO's existing cash reserves and represents an FY23 EBITDA multiple of about six times forecast earnings for PHT.
Phil Hoffmann said he was delighted to see HLO taking a stake in the business and would continue being involved with PHT in the years ahead.
“PHT has been my professional life for the last 33 years and I am delighted to see HLO now partner up with myself and Peter to continue developing the business into the future,” Hoffmann said.
“I see this new formal partnership between Helloworld and Phil Hoffmann Travel as an exciting opportunity for our respected brand, which will ensure both our clients and our fantastic team continue to enjoy the service, creativity and professionalism that they have been used to for over 30 years.”
The fresh deal comes six weeks after Helloworld acquired a 34 per cent stake in Oslo-based Australiareiser, the largest specialist travel wholesaler from Scandinavia to Australia, New Zealand and the South Pacific.
Based in Melbourne, Helloworld has 700-plus staff located across Australia, New Zealand, Fiji and Greece, as well as more than 2,000 members of its travel agency networks in ANZ.
The company recently increased its underlying earnings guidance for FY23 by $10 million amidst improvement to both its own profit margins and demand across the broader travel industry.
Helloworld reported a 150 per cent rise in total transaction volume (TTV) for the March quarter and lifted its underlying EBITDA guidance of $38-42 million for the full financial year – up 36 per cent and 31 per cent at the upper and lower ends of the range respectively.
The company noted leisure travel demand continued to hold up despite challenging economic conditions both domestically and internationally with a trend towards longer trips and longer lead times to overcome global supply constraints.
Helloworld’s latest acquisition of PHT is expected to be earnings accretive in FY24.
“We are delighted to announce our investment in PHT. They have been one of the most iconic brands in retail and corporate travel for many years and throughout that time have supported Helloworld as part of our Associate network and through our Viva Holidays, Sunlover Holidays, CruiseCo and Ready Rooms wholesale operations,” Helloworld CEO and managing director Andrew Burnes said.
“Both Phil Hoffmann and Peter Williams are extraordinary travel professionals and have a vast knowledge of leisure and corporate travel customers in South Australia.
“We have been closely involved with them over many years and are looking forward to an even closer involvement through our stake in the business.”
The transaction is expected to settle in early July 2023.
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