|In a flurry of deals, the fast-growing Northstar Travel Group, of the US, this week bought: the UK-based Buying Business Travel from Panacea Media, and Meetings & Incentive Travel from CAT Media; and TravelPulse US and TravelPulse Canada from travAlliance Media, of the US.|
Northstar claims to be the world’s leading B2B information and events company serving the travel and hospitality industries, with more than 1m monthly website visitors and brands that include Travel Weekly (in the US, across Asia, and in China), PhoCusWright (digital-focused conferences and information), Inntopia (software), TravelAge West, and Business Travel News.
This week’s three deals (none of whose valuations has been disclosed) underline the company’s determination to become a truly global player in the travel, meetings, and hospitality industries.
A Reed fiasco
Northstar is owned by EagleTree Capital (formerly Wasserstein Partners), which is its third successive private equity parent since the US-based Travel Weekly group was acquired from Reed Elsevier by Boston Ventures in 2001. That deal had signalled the ignominious end of the Reed Travel Group which published the Official Airlines Guide and operated hotels bookings services in addition to Travel Weekly and a slew of once huge print directories, which it bought in 1989.
The US-based Reed subsidiary had invested more than £1bn in acquisitions. Its $825 million purchase of the Travel Weekly group from News Corp was no less than 17 x pre-tax profit – and a virtual lifesaver for the then highly-indebted Murdoch company. The Reed Travel Group once accounted for almost 10% of parent company profits. But the high-flying strategy was wrecked by a 1997 disclosure that it had inflated circulation figures used to sell some $800m of advertising revenues, principally on the group’s then largest earner, the Hotel & Travel Index directory.
The upshot was the payment of an estimated $250m compensation to advertisers and, eventually, an embarrassed withdrawal from a market which had promised so much. The 50-year-old UK edition of Travel Weekly was later sold, separately, to the independent Jacobs Media Group.
The Northstar CEO Tom Kemp – a B2B media veteran (ex Miller Freeman and Penton) who has also worked in private equity – has presided over 10 years of impressive organic and acquisition growth. This year, the company is expected to make $35m EBITDA profit from $115m of revenue – 14% revenue growth and a claimed CAGR of 22% over the past five years. Its 30% profit margin compares with 24% just three years ago.
Some 40% of the revenue is from events, with digital ads (25%), print ads (15%) readership (10%), software and e-commerce (10%).
It is significant that, while Travel Weekly (in the US and Asia) remains thecompany’s largest brand, it accounts now for only about 20% of revenue; less than 10 years ago, it was 60%.
Northstar is increasingly international. While 80% of revenue still comes from the US, it now gets 10% from Europe – about half of that from the UKwhere it has now made three acquisitions so far this year, including £9.25m for The Meetings Show and Business Travel Show from Centaur Media. You have to assume it intends also to grow its 5% share of revenues from Asia.
The New Jersey-based company, which now employs 450 people around the world (50% up in three years), represents a good case study of the transformation of what had been largely US domestic and print-based media. It has long recognised the global opportunity for integrated ‘narrow but deep’ B2B companies.
Private equity ownership means that Northstar will be sold again, perhaps in the next 1-2 years, either to a trade buyer or another investment company whose objective will be to build-out the global strategy. Some are speculating that B2B media specialists like Northstar may eventually be targeted also by the acquisitive global consulting companies.
Meanwhile, Tom Kemp will continue his acquisition strategy, perhaps to include either or both of the travel industry’s two increasingly international independent media groups. The sprightly US-based Skift looks at least possible while acquisition of Jacobs Media, of the UK, would: unify the Travel Weekly brand, boost Northstar’s portfolio of international travel events, and strengthen its hotels presence. Jacobs last week reported 2018 EBITDA of £1.1m on revenue of £11.4m (8% up on 2017). The revenue trends echoed those of the larger Northstar: 39% of Jacobs’ revenues were from events and 22% fromoutside the UK.
Reader revenue is worth more
Whatever the shortish private equity schedule of its owner, Northstar hasplenty of growth ahead. But, for all the drive to diversify geographically and across information, events and consultancy, all such B2B companies must also strive to become revenue-dependant on readers (whether as readers, delegates, customers or visitors). That’s the real lesson of so much traditional media whose once booming advertising revenues dislocated their relationships with readers and, eventually, allowed Google and Facebook to shatter their business models by snatching even the specialist ads. Generating profit from sponsorship, content marketing and advertising is fine but core revenues from readers – over the longterm – are worth so much more.
Northstar now operates some 85 events in 13 countries. Most are conferences including the Burba Hotel Network of 10 hospitality events around the world. The clear ambition (evidenced not least by the UK acquisitions from Centaur) are to expand more strongly into exhibitions. International travel trade shows have long been dominated by ITB, of Berlin – and Reed, which (fortunately) had always kept its exhibitions away from the Reed Travel Group. With continuing speculation that RELX will, at some point, sell its highly-successful (but distinctly non-core) Reed Exhibitions, Northstar must dream of the opportunity of buying the company’s international network of 20 travel shows including London’s 39-year-old World TravelMarket. Perhaps that is coming.
In the wider world, B2B media everywhere should follow the example of Northstar and ‘go deep and go global’ in their own vertical markets. There’s a lot of opportunity out there.
Northstar Travel Group