Agents have approached DTTAG looking for potential agencies to buy them out. Agents have approached DTTAG looking for potential agencies to buy them out.

Small travel agencies with dwindling margins are quitting while they are ahead and searching for bigger travel companies to buy them out.

With the effects of the  global economic downturn being felt in teh Gulf, some smaller travel agencies are feel  ing the pinch.

The added financial pressure of having to become IATA registered at the end of the year, with fines enforced for non-compliance, is a further strain on already worried agencies.

Rather than watching profits slow to a trickle during the coming months, certain agencies are looking to be bought out by their larger rivals.

And the feelers for buyers are already out in the Middle East market as  Dubai Travel and Tour Agents Group manager Leo Fewtrell explained to ATN.

“Some agents have been approaching me to ask if there is anyone who will buy them out,” he said.

“There are two single-shop agencies in particular; both have good reputations and loyal customers, but the managers are fed up with it all and want to be bought out.” 



However, while those agencies with cash to spend may want to pick up a bargain, they won’t be buying any old rubbish.

“Companies like Dnata and AlShamel would be looking to buy smaller agencies with a good corporate or leisure business and most don’t have this ,” Fewtrell said.

“A lot of the small ones that do have a strong corporate or leisure business only do so because they’re working on such low margins they are undercutting the big agencies. But the big companies won’t be interested in the agencies operating on a 1-2% margin.” 

But the size of the margin isn’t everything.  Dubai-based Al Reyami divisional manager Ranjith P.V said that the company was focused on the location of agencies.

“Negotiations are underway and we’re looking to buy out companies which are strategically located,” he said.
“We’re also opening travel offices in Abu Dhabi, followed by India this year.”

Team Travel & Tours, Dubai, managing director Narendra Bhatia recognised that the downturn could be a significant opportunity for larger companies.

“Anything can happen and it could be seen as an opportunity for  multi-national travel agencies and TMCs to consolidate,” she said.

“The larger companies are in the advantageous position of having funds available to look at expanding operations while the smaller- to medium-sized agencies are busy concentrating on survival by controlling what they’ve already got.”