Due Diligence Travel Agency Acquisition Process

The due diligence review (DDR) is a critical part of the travel agency acquisition process.

There are five key objectives:

1. Identify deal-breakers, which, if unresolved could preclude pursuing the transaction any further:

• Company personnel engaged with conflicting, outside interests

• Financial commitments – employment contracts, leases from previous acquisitions, liens, etc.

• Legal/Regulatory issues- lawsuits, client complaints

– Quality of work

– Questionable accounting

– Questionable expenditures

2. Verify representations received from the seller, such as key assumptions made about employees, compensation, systems, key statistics.

3. Obtain a more detailed understanding of the business:

• Types of clients

• Business mix

• Sources of revenue

4. Obtain information vital to negotiating the transaction:

• Salary and benefit information for employees

• Inventory of furniture and equipment

• Inventory of computer systems and software

5. Identify potential transition issue or areas of focus:

• Compensation and benefit issues

• Technical and workflow process issues

• Other

The DDR is designed to assist the Due Diligence Manager (DDM) in efficiently planning, executing, and reviewing the planned transaction. Following a standardized DDR is critical to the successful completion of the review and will ensure that:

• A consistent approach is used by all due diligence team (DDT),

• A standard output (format) is created for each DDR, and

• The duplication of information gathered or requested of the owners is eliminated.

The DDM is responsible for the overall planning and final review of all work and the development of the final report.

PHASE I: Meeting/conference call with Deal Owner, Acquisition Manager and DDM


• Communicate overall vision and strategy of the DDR.

• Share information that has already been obtained to eliminate the duplication of data- gathering efforts.

• Identify DDT members.

Reporting: Recap the discussion/decisions and provide a copy to each party.

PHASE II: Meeting/conference call with Acquisition Leader, DDM and DDT Members


• Share new information.

• Review the need for confidentiality with acquired firm contacts and external sources (i.e., media).

PHRASE III: Meeting with DDM and Firm Owner and/or Main Contact


• Review the DDR.

• Provide the list of items that the firm will need to produce.

Reporting: The DDM will complete the recap of each call.

PHRASE IV: Data gathering process begins with the DDM, Team Members, and Firm Owner & Contacts


• Complete the due diligence data gathering (DDM, Firm owner/firm department contact).

• Complete the “Summary Report” memo (support team member).

PHRASE V: The DDM completes the Final Report and provides it to the Deal Owner and Acquisition Leader.

Book Review: Dark Star Safari by Paul Theroux

Dark Star Safari by Paul Theroux is the story of the author’s overland travel from Cairo to Cape Town with all the adventures, people and places he encounters throughout the continent.

Paul Theroux travelled Africa from north to south in the first half of 2001. Beginning in Cairo, he travelled down the Nile in Egypt, through Sudan, Ethiopia, Kenya, Uganda, Tanzania, Zambia, Malawi, Zimbabwe, Mozambique, South Africa and Swaziland. He travelled mostly by public transport including trains, boats, bush taxi, buses, cattle truck, rented Land Rover, canoe and hitch-hiking. As a young 20-something-year-old, Theroux had come to Africa to teach in rural Malawi as a Peace Corps volunteer and so this trip 40 years later was partly a sentimental journey but also to see how much has changed since.

The book starts in Egypt’s capital Cairo and heads south into the land of the Nubians, Sudan. Theroux travels all the way down into Kenya and then heads west to Uganda. He catches up with friends in Kampala where he had lived several years earlier. He takes a ferry across Lake Victoria to Mwanza in Tanzania and then the train to Dar es Salaam. Another train gets him to Mbeya in southern Tanzania before entering Malawi where he visits the school where he taught as a young man. This is probably the most demoralising point of the whole trip as he assesses the impact of foreign aid over the 40 years since he was there. After the treatise on development (or lack thereof), he travels via the Zambezi River into Mozambique. The next country is Zimbabwe where he experiences the effects of Mugabe’s regime on white farmers. Finally he reaches South Africa and the luxury of the Blue Train between Johannesburg and Cape Town. Theroux’s summary after this journey reveals a disappointment in the “help” foreigners have thrown at the continent but also the joy he experienced in meeting people as he travelled:

Africa is materially more decrepit than it was when I first knew it, hungrier, poorer, less educated, more pessimistic, more corrupt, and you can’t tell the politicians from the witch doctors. Not that Africa is one place. It is an assortment of motley republics and seedy chiefdoms. I got sick, I got stranded, but I was never bored. In fact, my trip was a delight and a revelation.”

Dark Star Safari is an interesting account of Theroux’s travels, especially as he travels in Africa by means not dared by most. He is very negative about the work of foreign development organisations, which is not entirely unfair I will agree. Throughout the book however, Theroux’s style remains witty and entertaining.

Paul Theroux’s account of his overland journey from Cairo to Cape Town in Dark Star Safari follows his other stories of epic overland trips such as Riding the Iron Rooster in China and two books about the Silk Road. You may enjoy contrasting Theroux’s wit and insight with Sihle Khumalo’s Dark Continent My Black Arse. Khumalo also travelled the length of Africa from Cape Town to Cairo by public transport, but he has quite a different perspective being a native of the continent and focuses more on the travelling than the impact of foreign intervention.

The Development and Improvement of Ayia Napa – Sustainability of the Ayia Napa Hotel Industry

Ayia Napa is the most popular tourist destination of Cyprus. Every year more than 700,000 tourists from all over the arrive and enjoy the experience of Ayia Napa. Ayia Napa is not a clubbing destination, clubbing and partyinh are part of it, but do not represent the resort. Ayia Napa offers variety and quality, and is the place for all types of tourists, families, couples, upscale tourists, sports tourism and of course clubbing. Ayia Napa has been smartly transformed into areas dedicated for each type of tourist and in a way that they do not interfere with each other. That is one of the main reasons behind the success of the resort. The resort successfully managed to remove the label of the clubbing destinations and was re-branded as the place for all types of tourists.

Significant improvements and investments took place the past ten years, such as the refurbishment of many hotels and bars and an improved municipality infrastructure. Moreover, the future planning which includes, projects such as an 18 hole golf course and a 500 capacity marina, will contribute significantly to the re-branding of Ayia Napa as an upscale destination.

80% of the accommodation consists of 3+, 4 and 5, star hotels, the hotel apartments and low quality accommodation are decreasing and being taken out of the tourism market. Furthermore, the low quality accommodation has been transformed into residential or rooms for hotel employees.

Neither the government, however, or the local authorities had any contribution to this upgrade process. Cyprus has entered the European union as a rich country and no subsidies were available for the hospitality industry, unlike Greece where for each refurbishment they were subsidies available for up to 40% of the total cost.

The hospitality industry in Cyprus and in Ayia Napa faces a number of challenges and problems. the first is the seasonality, others include the expensive high airport charges, which discourage the planning of new flights (even though there is an incentive plan used currently by Ryan Air) and the lack of any incentives or help to tour operators (which represent 95% of our tourism product)

Ayia Napa, before 1974, was a small fishing village who experienced uncontrolled and rapid development. Immediately after the Turkish invasion due to the need of creating a proper tourism strategy the government of Cyprus promoted the resort as a tourist destination. Gradually hotels of all types were build, restaurants, bars and clubs were all over the place. The resort now receives approximately 33% of all Cyprus tourist arrivals. The reasons are a lot but the main ones are the following

Firstly, is the networking build by the local tourist authorities such as the Agia Napa municipality and the local hotel association. The second is the continues improvement of the Ayianapa hotels. Hoteliers realized that the will be more profitable if they invest and upgrade their product. This is what happened the past five years. Five star hotels are true five star hotels, in terms of both service and product. the majority of the hotels now are upgraded and successfully target tour operators specialized products such as families and couples

A walk in the resort will persuade you about this fact. Three plus, four and five star hotels are everywhere and increasing in number, while the low quality accommodation, that of hotel apartments is decreasing.

Ayia Napa has a future as an upscale destination. Discover it.