How I rode the new trend in travel
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With Wales hammering England at rugby on a regular basis in the 1970s, it wasn’t easy growing up in Cardiff with an England scarf tied around your neck.
But the hardship of backing a losing team was nothing compared to the woes Yorkshire-born Chris Mottershead faced in the years following September 11th 2001. Mottershead was head of TUI, the UK’s largest tour operator, a group that included Thomson. The accountant had already proved himself a shrewd businessman: Airtours’ US unit was losing $35m a year until he stepped in and it began taking a $30m profit in 2001.
Running a holiday firm in the downturn after the terrorist attacks was hard enough. But the travel industry was facing a far more dangerous adversary. The internet enabled customers to source their own hotels and their holidays, rather than being dictated to by big operators.
“All of a sudden our industry was in turmoil, margins were being eroded and there were all these other tour operators doing incredibly well, when here was I – running the biggest holiday company in the UK – struggling to maintain the level of profitability that I had.” Redundancies came hard and fast. With 1,000 people gone and a third round of lay-offs looming, he said “enough is enough. How can you look those people in the eye and say ‘now it’s your turn’?”
Unable to beat the new breed of holiday firms, Mottershead decided to join them. Looking around, it was clear to him that small players who catered to specialist tastes were doing well. These “non-risk businesses”, unlike a traditional tour operator, didn’t own accommodation, or pay for flights in advance. They simply sold concepts – be that trekking in Nepal or cycling through Provence. So in 2005, Mottershead began looking for a cash shell to launch a series of acquisitions.
He found VFB Holidays, which sold gîte holidays in France. VFB had been “sitting on Ofex for two or three years and doing nothing. It was a break-even business and I saw the opportunity to take it to profitability very quickly.” By April, he’d changed the name to Travelzest, moving it to Aim because he needed greater access to funding. But it was harder than he’d expected.
“When I was MD of TUI, I was essentially a buyer of services. Running Travelzest is totally the opposite. It was a culture shock switching from buyer to seller, knocking on people’s doors, persuading [them] that I knew what I was talking about. To get financial backing, support and understanding, even an hour of someone’s time is quite a challenge.” But with the help of private client broker Merchant Securities, he raised £5m through the Enterprise Investment Scheme. Mottershead used this Government scheme, which provided tax relief to investors, for some high-level acquisitions, including Holiday Express, which owned the vital website domain name, Holiday.co.uk.
Heading a business that now boasts a market cap close to £40m, Mottershead says he works as hard as ever, but finds being his own boss more satisfying. “Anything I do is about how to get the business to a more successful position, rather than going to a meeting someone else has called that turns out to be fruitless. As an entrepreneur, you set the agenda and taste the rewards of success.”
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