Tour Insights: The History Behind ALG's Staggering Growth
The growth of the Apple Leisure Group is almost frightening. I’m not talking about fear as in predicting some bad outcome, rather I’m referring the feeling of awe that comes over one when watching a gigantic natural phenomenon, like a volcano or a hurricane. The growth of Apple is staggering.
In 2015 ALG’s resort subsidiary AMResorts secured 17 new resort management contracts and expanded to the extent that it plans to have nearly 60 resorts in 26 destinations and more than 20,000 rooms altogether in Mexico, the Caribbean and Central America by the end of 2018.
Even before Bain Capital bought the Apple Leisure Group in 2013, the company was already a huge force, wielding a tremendous amount of clout in the marketplace and serving a giant volume of customers in America’s top vacation destinations: Mexico, the Caribbean and Hawaii.
Apple was unique in structure in the American market. It was and is practically the only large, vertically integrated travel company in North America.
The vertically integrated model is the standard structure of the travel industry in Europe, where giant companies like Tui, Thomas Cook and Kuoni dominate the market, owning companies along the supply chain, including their own travel agencies, tour operators, hotels and airlines.
The U.S. travel industry has remained fragmented. Most tour operators don’t own the hotels or the airlines they use. They contract with those companies. That is true of most tour operators, but not Apple. Apple breaks the mold. Even before its acquisition by Bain Capital, Apple was huge and vertically integrated. The company had a hotel division, a vacation package division and even had its own airline.
Apple struggled with its airline, USA 3000, and finally closed it in 2012. Meanwhile the Bain deal was in the works and in 2013 Bain Capital purchased the Apple Leisure Group. Shortage of capital would never again be an issue when it came to investment opportunities that could spur growth.
Early in 2013, the newly Bain-backed Apple Leisure Group purchased Travel Impressions from American Express, which had built it for a dozen years. ALG merged Travel Impressions into the Apple Group, but also kept it operating as an independent entity with its own brand, its own practices and traditions, most employees and most importantly its customer base of loyal travel agents.
The Apple Leisure Group also purchased CheapCaribbean.com and the Unlimited Vacation Club. There is no denying that Apple has really hit the big time.
It has come a long way from its modest origins.
Apple Way Back
Apple is a classic American success story. It was founded by one man, John Mullen, and was run as a family business for decades. Even after the Bain capital acquisition, members of the Mullen family still dominate its management structure.
In the 1950s John Mullen was a young army veteran from Philadelphia planning for a career in broadcasting. He worked his way through seven years of night school classes at Temple University working at the airport, loading bags, conducting passenger services functions or writing tickets.
His first job in the travel industry was with Capital Airlines in 1958. When Capital merged with United Airlines, Mullen became a United employee. In 1964 he joined Lufthansa, but he still wanted a career in broadcasting.
In 1963, Mullen married Joan Atkinson and opportunities in broadcasting were not opening up to him, so he switched to business school and looked to the airline industry for his future.
In 1969, after 10 years of experience working with affinity groups in the airline business, Mullen was ready to go out on his own working with groups. He started a travel agency called Atkinson & Mullen Travel, named for himself and his brother in law, who soon left the business to play pro football.
By 1978, the travel agency was selling to other travel agencies, establishing itself as a wholesaler. When deregulation opened the airline industry, he was perfectly positioned to take advantage of the new opportunities in chartering flights.
The Mullen family continued to grow ALG for decades, and in 2012 signed a deal with Bain Capital to secure the backing for further growth, which has led to the dramatic expansion we are now seeing
Back around the turn of the new millennium there were a few people who predicted that the American wholesale tour market would consolidate.
It was a historical inevitability, they said. Other industries had consolidated. The cost of technology required to be competitive would be too much for a small company in the future. Marketing costs would also be overwhelming for small operators, they said.
Wall Street investment companies were hungry to buy up tour operators and fulfill the predictions of consolidation of the tour industry. Some of them found travel industry people to act as their agents to buy up companies and roll them together into large conglomerated tour operators. The rollups were led by charismatic figures, flashy, swashbuckling leaders who had enormous financial backing and were able to go around the industry buying up many tour operators, leading the industry into its wave of consolidation.
Whether their predictions were sound or not, they did not prove successful at leading that movement. Their giant, flashy conglomerates came crashing down in huge, dramatic financial collapses that spread disaster far and wide.
Meanwhile, working more quietly behind the scenes, some other travel companies continued to grow and expand from within, making a few discreet purchases along the way, but growing carefully while they kept the individual styles of their operations intact, preserved their brand integrity in the marketplace and kept growing incrementally.
They were the companies that had grown up in the industry, evolved as the industry itself had evolved. They knew the business, they embodied the culture that created the business that exists. And they have endured.
One of them is Apple. The Apple Vacations that was a modest startup back in the 1970s is now the mighty Apple Leisure Group, one of the strongest forces in the travel industry. And to the extent that there will be consolidation in the American tour industry, this is how it will happen. From within.
More by David Cogswell
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