Riviera Travel has been the company to watch in recent years, making headlines across both the trade and national press. Tom Parry speaks to managing director David Clemson about what we can expect from the rapidly growing tour operator in 2018.
I think the industry will see more private equity acquisitions in the coming months,” Riviera Travel’s managing director David Clemson states confidently.
He’s speaking to me just weeks after the booming tour operator was itself acquired by private equity for the second time in just under three years. Silverfleet Capital took majority ownership last month – in a deal understood to be worth more than £200 million – from Phoenix Equity Partners. Phoenix had acquired its majority stake directly from Riviera’s founder Michael Wright in 2014, who stepped down as director of the company following the latest deal. “We talk on a regular basis and share ideas,” explains Clemson. “He’s still involved, just a bit less than he used to be.”
Clemson believes the trend of private equity firms snapping up travel businesses will only continue. “I think they ask where the best home for their investment is, and the [best] opportunity to grow. And I believe they absolutely see that with travel – especially the generation of customers that we appeal to.
“So I’m not surprised at all that we are seeing a number of travel businesses being sold to private equity companies, and I think more will happen in the coming months.”
It’s not hard to agree the hunger for travel acquisitions is great, with the likes of Audley Travel, JacTravel and Travelopia all sold in the past few years. And Riviera was of obvious appeal after posting a turnover of £136 million in November 2016. It also holds a coveted place on the Sunday Times Top Track 250 list.
“I’m not surprised at all that we are seeing a number of travel businesses being sold to private equity companies, and I think more will happen in the coming months”
From a Riviera perspective, Clemson is unequivocal that the operator’s recent change in ownership will not impact its burgeoning trade sales, which since they began conducting in 2012 – following a history of national newspaper reader offers – now account for a fifth of overall business.
“We’re delighted to get Silverfleet onboard. They’re very supportive of the management team and of the plan we’ve put in place, and want to continue growing the business at the rate that we have,” he enthuses, adding that Riviera’s profits have risen “by up to 70%” since Phoenix’s takeover.
Riviera’s agency sales team, led by Joseph Grimley, grew business by more than 30% during 2017, with Clemson considering future expansion of the four-person outfit to “maybe even six” due to demand.
“We’ll always look for double-digit growth [in agent sales] as we see so much potential on the agent side of the business, so we’re absolutely looking to deliver that this year,” he says.
These average selling price rises have coincided with strong sales for the coming year. “We’re already very well sold for 2018 so our plan right now is to continue investing in our product range, develop more personalised programmes and become closer and closer to our travel agent partners – there’s bags of opportunity through working with the trade.”
Clemson is more qualified than most to look ahead at the bigger picture, and adapt quickly to the twists and turns often encountered by the industry. He has just entered his 30th year working in the over-55s sector – a decade of which has been spent with Staffordshire-based Riviera.
Just a year ago, with demand for Turkey having stalled, Egypt still feeling the impact of Sharm el Sheikh’s flight ban and Tunisia off sale entirely, even some of the industry’s most ardent forecasters may not have envisaged the “big resurgence” to North Africa that Riviera has experienced. Clemson cites the launch of a new Nile cruise “for the first time in a number of years” last summer as evidence of its renewed popularity.
“It’s really good to see the signs that more challenged areas are recovering and those green shoots of business are coming back,” he smiles, hinting that a potential Tunisia return may even be in the offing. “What we want to see is some of our bigger destinations – Morocco, Turkey – coming back first and then we’ll look to open up other North African products.”
Clemson adds that Riviera will always “try those lesser-known destinations”, with escorted tours to Romania and Namibia launched in 2017.
Naturally, with new programmes will come new marketing tactics. Clemson, formerly general manager at Wallace Arnold Tours and deputy managing director of Travelsphere, is cautious not to stretch Riviera’s proposition “too thin” in search of a younger clientele within its dedicated age bracket – Saga rebranded in July to better court the more youthful demographic.
“The [over-55s] market is one I really understand and I think we are absolutely set up to cater brilliantly for that customer,” explains Clemson. “Don’t get me wrong, I think there are opportunities out there for the younger end of the market – you don’t have to be 60 before you start to think about taking a cultural holiday – but it’s not where we focus on, and we don’t want to be all things to all men.”
He believes a strong factor in helping to drive both trade sales and brand awareness in recent times has been the operator’s TV campaigns, which first launched 18 months ago.
Clemson says that despite the TV ads – which this year feature escorting touring in India and South Africa and cruising on the Danube – bear Riviera’s “The World Within Reach” tagline, considered as a direct-sell technique by many, “the biggest growth from that activity comes through the trade”.
“We’ll always look for double-digit growth [in agent sales] as we see so much potential on the agent side of the business”
“The biggest impact that it has is through our travel agent sales, and that’s a big message that Joseph [Grimley] and the team are sending out there to agents,” Clemson explains.
“It’s very easy for people in the industry to look at Riviera and believe we’re spending money direct, but in reality we’re helping agents, because customers will book however they feel most comfortable. We’re bringing new customers to the brand and if they’re booking through an agent then that’s absolutely great with us.”
In addition to simply bringing customers to agents’ doors, giving the trade an opportunity to immerse themselves with Riviera’s product is “absolutely key”, Clemson adds, recalling hosting delegates onboard the line’s Emily Bronte ship during Clia’s River Cruise Conference in Amsterdam last November.
This offered Riviera “huge value”, according to Clemson, given the operator’s growing cruise programme. The 167-passenger Robert Burns launches in April and Douro Splendour follows in July, taking its fleet to 12, with two more vessels coming in 2019.
“It’s a constant growth story for us, and one that we want agents to come with us on,” adds Clemson. “We’ve virtually doubled our business size in the last five years,” he smiles, “and I see no reason why we can’t do the same in the next five.”