Calgary online travel company Tripeze.com has been acquired by retail giant Sears Canada in what the company president calls a last-chance deal.
“At the end of the day, the alternative was oblivion or bankruptcy,” says Doug Walker, the former president of Tripeze.com and now Sears’ national manager of online travel.
“The ultimate would have been that we would have been successful in continuing to raise money, and we wouldn’t have had to go this route. But it’s far better than the alternative.”
The startup travel company, the brainchild of 46-year-old Calgary entrepreneur Paul Verhoeff, was formed in 1999 after Verhoeff sold his Uniglobe travel franchise.
But like many other online companies, it began to run into trouble earlier this year with the collapse of the tech market. The last major financing round was in March of last year, “and we made that last as long as we could. We were one financing round away from profitability,” says Walker.
The company was forced to lay off about a third of its staff, gutting its marketing department almost entirely.
Discussions with Sears began in the spring, well before the Sept. 11 terrorist attacks and the subsequent slump in business and recreational travel.
A letter of intent was signed in June, and Sears closed the deal Wednesday, acquiring all outstanding Tripeze shares for an undisclosed amount.
“There are so many others that have just gone over the cliff altogether, so we were thrilled to be able to find this as an alternative way out,” Walker said last week, as he and Tripeze staff celebrated their acquisition with a glass of bubbly in their 11th Avenue S.W. offices.
“Despite the recent downturn in the travel industry, the timing of the purchase of this leading Canadian online travel company is right for us due to the current value of dot-com companies,” said Larry Moore, vice-president, Service Sales for Sears Canada.
The competition in the online travel sector is led by a couple of U.S.-based companies, including Expedia.com and Travel.com, “leaving the Canadian arena wide open,” Moore said.
Sears Travel Service has already started to operate the Tripeze.com site, which will retain its brand name and website for the time being.
Sears operates 100 travel offices across Canada, along with 188 department stores, seven urban Eatons stores and 37 furniture and appliance stores.
Walker said the company’s remaining staff of 25 will remain in Calgary for the foreseeable future, but “down the road, it’s a judgment call we’ll make if it can run as a standalone or just how badly the integration needs to be with the rest of the organization.”
Verhoeff was unavailable for comment, as he was attending a family matter in Holland. But Walker said the CEO has decided to move on to other ventures, including some work with his former partners at Uniglobe.
Sears realizes the depressed state of the travel market isn’t going to last forever, Walker added. “The movement online is still very real” in the travel industry, he said. “Sears felt they needed to be there, and this was an opportunity for them to get there. Not to minimize it, but the events of Sept. 11 don’t change the big picture. They decided to press forward.”
