An eye to growth
Consolidation in the industry is an interesting area to report on and I was slightly surprised by how upbeat many agencies were when giving their opinions on takeovers and acquisitions. Despite this being a very loyal industry, many agents said they had no qualms at all about continuing a business relationship with a school, even if key staff members left, because they believed staff changes, and ownership overhaul, could result in a better service. Clearly, our readers have faith in a school’s decision to sell, to whom to sell, and they have good expectations of what takeovers can mean for them in the long-run (pages 20-22).
With the news that Navitas (previously IBT) has further expanded its empire, with the purchase of Hawthorn English Language Centre in Melbourne and Muscat, Oman (page 6), this article was timely in its assessment of a trend towards takeovers and acquisitions. With some of the larger groups in our industry keeping their schools branded as separate institutions rather than as part of a chain, knowing the ownership status of a school is also becoming harder to decipher.
On the agency side, less consolidation is apparent, with the business of selling study programmes overseas seeming to be a national rather than an international business in the main. But one company bucking that trend is iAE Group (iAEG), which began in Korea but, aside from Korea-wide offices, now has branches or partner offices in China, Taiwan, India, Nepal, Sri Lanka, Hong Kong, Mexico, Malaysia and Myanmar.
The group has designed its own computer system for use in all of its offices (page 8) and hints at further link-ups soon to be announced in Japan and Brazil.
Aside from linking up with other agency businesses, a further way for agencies to grow their potential, of course, is to expand their portfolio and look at new sectors that tap into demand for experiential travel and learning. And as we report in this issue, many study abroad agencies are looking at work placements overseas as an obvious next step (page 56). Revenue-earning potential is not as good as in the language travel sector, say agents already working in the sector, but they acknowledge that the interest and volume potential is there, as, certainly with paid work programmes, the opportunity to recoup the cost of travel overseas means many more students can consider it.
For agencies to grow and flourish, they might want to consider diversification if not covert consolidation.