A commitment to IT investment and using that to innovate will be critical for ambitious leisure and corporate agency, the Online Regional Travel Group, as it embarks on a rapid growth strategy over the next two years
Innovation case study: Online Regional Travel Group
A commitment to IT investment and using that to innovate will be critical for one ambitious agency group as it embarks on a rapid growth strategy over the next two years.
Amadeus customer Online Regional Travel Group (ORTG) is an on and offline corporate and leisure travel specialist operating in the three UK Crown dependencies of Jersey, Guernsey and the Isle of Man. Turnover this year will be £46 million but chief executive Brian Kelly says he hopes to see that increase to more than £100 million within two years as the firm hits the acquisition trail.
Kelly believes technology holds the key if his firm is to avoid the perils of integrating systems that have dogged previous attempts to bring together disparate organisations under one group.
To aid its development, ORTG has developed a number of technology systems that have helped it to drive efficiencies and improve its profitability. One of these is back-office functionality for the travel arrangements it arranges for Guernsey’s health department.
This automates the raising of invoices, statements and the reconciliation of payments, taking a time-consuming task out of the hands of ORTG’s administration department. The system enables ORTG to take its payments directly from the dependency’s bank account, negating the need for lengthy and costly accounting bureaucracy.
This system is being rolled out to other government departments in Guernsey and eventually will be offered to ORTG’s other corporate clients. “What this does is provide spare capacity in our administration department, so as we acquire businesses we do not have to increase our cost base because we have used IT intelligently,” Kelly said.
Among other initiatives, ORTG is also preparing for cloud computing, which it hopes will allow it to reduce the capacity of servers in its various locations in the UK and reduce its risk profile. It also hopes to market a system it has developed that automates IATA Billing Settlement Payments to the wider industry, providing another source of revenue.
Crucially, given its expansion ambitions, ORTG has also upgraded its back-office system to Sage200, something Kelly claimed few travel firms have done despite the widely used Sage100 set to become ‘unsupported’ within 12 months. This development alone has cost £50,000 but it is one that should prove value for money as it will underpin the group’s expansion plans.
Kelly explained: “We can take a flat file dump and we have created a follow-on migration to Sage200 so we can bring data in from any front-end system. “This means we can buy any travel group using a known front-end system and we do not need to disturb it. We can keep their sales teams working in their own systems with no need to change the front end.”
Kelly said this dedication to IT innovation allows him to run a tight, and profitable, ship. He estimated he spends between £150,000 and £200,000 a year on IT, including a team of three in-house developers.
“Through the implementation of technology I have found our net profit margin is substantially higher, maybe three times higher, than the average in the UK travel industry. We are looking at buying firms with a net margin of 0.5% to 1%. Around 0.7% to 0.8% seems to be the average in businesses of all sizes but we are averaging 2.5% to 3%.”
Kelly believes his experience in the industry – 30 years, although he is still only aged 50 – and his relative youth in relation to contemporaries have helped him embrace innovation.
“I say we are now an IT company in travel rather than a travel company in IT, but you have to have knowledge of the industry. There are companies out there that have been enormously successful but they are really just IT companies.”
ORTG’s consumer-facing website – justtheflight.co.uk – is in its 10th year in 2011 and will sell 40,000 flights and turnover £15 million. It optimises the strides the group has made online, according to Kelly.
“Our 10 years of understanding how to successfully develop and operate a consumer travel website stands us in good stead. If you look at the average travel agency, it has not been able to make the leap. It might have a website but what actually does it do? We have created a brand in its own right that turns over £15 million a year – and it’s still growing.”
