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Travel agent Flight Centre Travel Group Limited will team up with Vietnam’s largest privately owned travel and hospitality group in a joint venture to target Asia.

Flight Centre KarryOnAnnounced on ASX this morning, Flight Centre and Thien Mihn Group (TMG) will create a destination management company (DMC) that will offer tours, excursions, transfers and destination services across the region.

Initially, both companies will contribute $US1.5 million in capital with Flight Centre holding a 49 percent interest in the joint venture.

For Thien Mihn Group’s existing Buffalo Tours businesses in Thailand, Laos, Cambodia and Myanmar will be operated and expanded under the joint venture.

Established in 1994, Buffalo Tours offers customised and private guided tours to Vietnam, Laos, Cambodia, Thailand and Myanmar. Buffalo Tours is also expected to progressively launch in Indonesia, Malaysia, Singapore, Hong Kong, China and Japan.

Buffalo Tours Vietnam is not included in the new venture, although Flight Centre will work to grow sales for Buffalo Tours and, in return, will receive a share of profits generated.

Flight Centre Managing Director, Graham Turner, said destination management is a natural extension of the company’s travel business. “This move is aligned with both our acquisition strategy of expanding vertically into capital-light travel industry sectors and our aim of owning more of the product we sell, rather than always being an agent or middleman,” Mr Turner added.

Flight Centre Travel Group lifted its net profit to almost $111 million in the first half of the 2014 financial year.  Last week, Flight Centre release a statement on ASX saying it expects to achieve record profits for the 2013/2014 tax year, in the order of $370 million to $380 million.

The agreement announced today is subject to certain conditions being met but the Thailand, Laos, Cambodia and Myanmar businesses are expected to be formally transferred into the joint venture late in the first half of the 2014/15 financial year.