The AOT Group looks set to become the latest travel company to list on the Australian Stock Exchange, according to informed sources.
It has appointed broker Ord Minnett – which oversaw the successful float of SeaLink – to manage its potential transition from private to public company.
Neither party would confirm details of their arrangement, news of which comes just five weeks after acquisition talks acrimoniously broke down between AOT and listed retailer Helloworld, in which AOT owns 10.2%.
AOT co-owner and CEO Andrew Burnes (pictured) blew up after Helloworld initially denied the parties were talking and then issued a release saying “the strategic and financial merits of the acquisition were insufficiently compelling.
“The terms of the transaction would have resulted in the vendors of AOT becoming significant minority shareholders in HLO.”
Mr Burnes was furious, telling the Australian Financial Review: “It’s a fairly extraordinary and disingenuous statement given that the terms they are talking about are their own terms.
“Terms that they proposed. Terms that we had not even been given an opportunity to respond to.
“This business has such a poor track record of under-performance and these types of attempts to re-write history are very unimpressive.”
Industry scuttlebutt suggest Mr Burnes, who runs AOT with his wife Cinzia, wanted to replace outgoing HLO CEO Elizabeth Gaines, for whom a replacement has yet to be found.
Based in Melbourne, AOT Group is best-known for being Australia’s biggest inbound tour operator and domestic wholesaler, employing 570 staff servicing more than 750,000 travellers each year.
But its jewel in the crown is managing the Whole of Government accommodation contract – worth an estimated AUD126m per year.
All Federal Government employees are now obligated to book their rooms through AOT, which was recently re-awarded the lucrative contract.
On the inbound side, AOT is particularly strong in Europe and also North America, while its market share of the emerging Asian markets, especially China, is perceived by some to be a weakness.
In Australasia AOT owns Sunlover Holidays, Australia’s largest domestic travel wholesaler, and operates Air New Zealand Holidays in partnership with Air New Zealand.
It also has a three-year licence agreement with Tourism NT to operate Territory Discoveries – the largest seller of travel product in the Northern Territory.
In addition it owns NeeditNow which although it’s a relatively small consumer site, has disproportionate industry clout because AOT group is using it as a platform to distribute dynamic (as opposed to pre-contracted) accommodation rates to its clients.
NeeditNow also provides AOT’s dynamic hotel rate offering to all Federal Government employees.
It’s understood at this stage the vast majority of AOT’s government bookings utilise static, pre-agreed net rates that the company marks up by, say, $15 to $20 while absorbing transaction costs.
Logic suggest by increasingly transitioning this government business to online at 15%, AOT stands to make more money per booking.
AOT inbound and domestic wholesale commissions remain much higher at 25%+.
Travel is hot right now among investors who have bought into the argument that it’s a long term growth story.
AOT has been on investor’s radar for some time but the Burnes’ have so far resisted all approaches.
However, it now appears they have decided to take a different tack.