Flight Centre enters strategic relationship with Interpid

Flight Centre Limited has announced that it is continuing its strategic expansion in niche sectors of the travel industry.

The company has today moved to capitalise on the strong ongoing growth in adventure travel by forming a joint venture with specialist Melbourne-based global adventure operator Intrepid Travel.

Together, the two companies will draw on their respective strengths to create and expand Australia’s largest specialist adventure and experiential retail travel chain.

The agreement will see:

Intrepid transfer its existing retail shops in Melbourne, Brisbane, Sydney, and Perth, along with the rights to participate in Auckland, to the joint venture; and

FLT provide $2.4million in growth capital to the joint venture to fast-track new shop rollout in the specialist brand, in addition to contributing its proven management expertise in retail travel.

The joint venture’s shops will continue to trade under the Intrepid banner and will offer Intrepid’s full product range, airfares and a broad selection of FLT travel product.

New shops will be rolled-out in key locations Australia-wide over the next 18 months.

FLT acting chief executive officer Shannon O’Brien said the investment was in line with the company’s strategy of expanding in niche sectors, while continuing to build its established travel businesses.

“Adventure travel continues to increase in popularity as travellers seek new experiences and to make the most of a limited amount of holiday time,” he said.

“The strength of the Australian dollar, near full employment and the availability of cheap international airfares are also contributing to the healthy growth in this sector.”

“Our partnership with Intrepid will allow us to build our presence in this specialised area, in addition to providing adventure travellers with an improved service offering built around Flight Centre and Intrepid’s respective strengths.”

Both companies will own 50% of the joint venture and will have two representatives on the business’s board.

As the agreement relates solely to Intrepid’s retail travel business, its dedicated wholesale operations are not affected. Similarly, the specialist adventure travel business’s expansion will not affect FLT’s wholesale business or its ongoing growth plans in its existing Flight Centre, Escape Travel, Travel Associates, Student Flights and Cruiseabout leisure travel brands.

Intrepid Travel cofounder and CEO Darrell Wade said the partnership would allow Intrepid to build on its success in experiential adventure travel.

“This joint venture will fast-track the Intrepid retail division’s growth and will deliver additional expertise, knowledge and retail best practice to the business,” he said. “Our agreement brings together two leading Australian travel industry players with similar corporate cultures and beliefs and an aligned vision of high service and quality experience.”

As the agreement is effective from today (August 1), it has no impact on FLT’s full year accounts for 2007/08.

As announced previously, FLT expects to report a $212 million pretax profit, a 40% increase on 2006/07, when it releases its accounts on August 26.

A report by The Mole