Welcome to Travel Again Presents, the weekly travel roundup covering the headwinds and tailwinds impacting the business of travel. Please welcome our hosts, Mike McCormick and Ed Silver. Hello, Mike. How you doing? Hey, Ed. Good to see you, man. Good to see you, too. Wow. It is season four, our first episode. We're kicking it back into high gear here, Mike. Absolutely. First episode, new season. New season. It's fall here in Asheville. It's beautiful, cold. The leaves are changed already. It's quite spectacular here. Awesome. Awesome. Well... It's great to be back. And we got a good, another season, terrific lineup.
I'm excited about our first guest. Just kick it off. And yeah, got a lot to talk about as always, right? As always. I mean, this is an amazing guest we have today. We're going to kick off the season with an icon in our space. I'm really excited to hear what he has to say. Mike, since we last spoke, though, so much has happened. I don't even know which news to pick. There's so much to choose from. Well, and as always with our industry, it's always like a mixed bag of things, right?
Premium Cabins Up, US Hotels Under Pressure
As we always say, the headwinds and tailwinds, right? But on one hand, certainly the major US carriers, but in general, airline industry reaping the benefits of premium cabin usage. But interesting dynamics because outbound from the US, certainly globally, generally, airlines are doing well and business is up. We're well past the post-pandemic recovery. This is just real growth that's coming in the system. But then you have pockets like U.S. Hotel industry hitting more of the headwinds as a result of tariffs and policies and political views that now are you know, really and the shutdown of the U.S.
Government that's really affecting inbound traffic that, you know, for tourism and business that, you know, basically that hotels rely upon. So you've got kind of a mixed bag there. Actually, you know, interesting always, right? The different factors that drive growth or, you know, or or you know, challenges within certain segments. It always is changing, right? And then, of course, you know, in general, you know, always there's always business transactions in our industry that are interesting. We're going to talk about one of them today. The impact of AI, and this is up your alley for sure, but so much going on there in terms of just, I think we're at a huge, huge pivotal change in our industry that we're right in the middle of now.
It's exciting. It creates a lot of opportunity, but it also means a lot of change for the businesses that have been in the space. No doubt. No doubt. Yeah. Yeah. Well, Mike, with that, why don't we bust right into it? I've got some interesting news stories for us to go through today. And I like this first one because it's kind of a twofer. Let me throw it up on the screen and we could talk about it. This one's from MSNBC, or it's just MSN these days. The government shutdown has killed IPOs and Navon stock tumbled in its debut.
The Shutdown, IPOs and Navan's Debut
Mike from MSN, I'll read you the opening. The IPO window hasn't been completely nailed shut during the government shutdown, but the number of initial public offerings that have made it to Wall Street since late September has slowed considerably, and most have been quite small. And as noted, Navon has struggled. So what's the combination here between government shutdown, IPOs, and let's talk about Navon. Yeah. So a lot of play. Right. So first off, the government shutdown piece. Yeah. I mean, you've got it. It definitely has an impact in terms of basically the process you have to go through to do an IPO.
Right. And the requirements you have to go through if If those things grind to a halt, they just grind to a halt. I mean, not reflective of market conditions. This is just purely the function of getting through the IPO process. And so there's definitely interesting dynamics around what the market is doing, which continues to do well. But seemingly almost in spite of some of the underlying indicators that are there. So I think it's hard for harder environment to do an IPO right now for those reasons, right? Just, there's a lot of just, you know, kind of not specific to your business or your industry, just this issues about going public at this time.
Now, Navon has been well down that path before the government shut down well down that path in terms of, you know, almost, you know, you know, a long, long, awaiting for them to actually finally go public right but what's interesting is that Their hope was to come out, and I've written about this, our industry's hope was that they would be successful and they would come out and they would have a successful IPO. And over the coming months, their stock will hold value. And the reason for that is because this is about elevating the industry, not just one particular company.
This is about proving out the model that an offering such as theirs and their competitors, is more than just a travel booking, travel distribution play. It's about expense. It's about end-to-end systems. It's about the ability to grow revenues well beyond booking airline tickets into hotel rooms. It's about a much bigger play and getting valued for that. And that's something that the industry has not been able to do to date largely. I mean, I think the only thing we can point at is back to SAP's acquisition of Concur, which was at a very nice valuation that they saw the potential back years ago.
Yeah. And so that, you know, for their specifically for their business. But, you know, that was about, you know, that again, that was about them, you know, their acquisition of Concur and then eventually the efforts to integrate that into the SAP ecosystem. So this is, you know, an interest that this is that next, you know, kind of play in a very public one. And obviously we're all watching it within the industry. Now they came out, they, you know, they went out at twenty five. They initially fell to twenty. They're down to sixteen.
This their trajectory is not really any different than what Amex went, you know, Amex GBT went through when they did their their SPAC IPO. Same thing. I mean, went out publicly, then had the initial dip and have been kind of working to climb their way back. But again, still not seeing, I'd say, the valuation that we as an industry would want and I'm sure ones they're hoping for. They've made progress since that initial dip. But again, it's been a slow, steady climb back, right? So, again, it would be interesting whether Navon follows that same trajectory.
Is this more short term? Can they accelerate through it faster? I mean, obviously, their initial financial results over the next coming quarters will really have a big impact on that outcome. Right. So, again, there's a lot there to say the least. Right. Yeah. But, you know, one we're really watching again is an industry because I think it's a really interesting and really key indicator of, you know, valuations for a lot of businesses over the coming next two or three years. Yeah. And I mean, I'd encourage our listeners to go check out your article from the exit row.
A few weeks ago. Good piece on why we should all be rooting for Navon no matter how you feel about it just as an industry. That is a great piece to check out. Mike, I've got our second article. Kayak CEO, our good friend Steve Hafner is back on the circuit and he says, Kayak CEO on his four hundred and fifty seven million write down Google squeeze travel from our friends at Skiff Booking Holdings announced Tuesday. It took a four hundred fifty seven million accounting write down on its kayak brand because of an unexpected reduction in cash flow and hikes in customer acquisition costs.
Kayak's $457m Write-Down and Google's AI Overviews
Kayak co-founder and CEO Steve Hafner explanation to Skift about what happened has implications throughout the travel industry. Hafner laid much of the blame on the rise of large language models, which includes Google's AI overviews. Kayak, he said, had to spend more money on Google ads to attract traffic that previously came from clicks on free links. So many in the travel industry and across the broader spectrum are still trying to figure out what's the impact of AI overviews on Google traffic. But this one hit kayak pretty hard, Mike. What's the context here?
Well, in the interview, the part you didn't mention is that Steve called it a nothing burger, which, you know, four hundred fifty seven million dollars is more than nothing burger. It's, you know, it's probably maybe to Steve. It's a nothing burger, but I don't know. It sounds like a lot of money. It's probably more of a double quarter pounder, you know, with cheese, I'd say. Or maybe an unhappy meal. I don't know. But it's but his explanation is solid. I mean, I do. I agree with his assessment. You know, he's is that this is a shift in how, you know, Google and others are using AI to shift data.
Know basically shift to their benefit um uh you know traffic going into a more away from organic search and into more of a paid model and so you know they're they like he said i mean it's a write down based on the you know technical book value of the kayak brand yeah you know the other guys who are public you know have the you know that they they um depending on their their structure i mean they just see it in the terms of reduction of the value of their company right and so and it is just an accounting quirk in some ways really it is in some ways but the underlying impact it's having on the business, meaning it's getting more expensive than ever for them to basically attract the traffic that they need to continue to grow their business is real.
And that's a very real issue. Now, I will also say it's hard to have a lot of sympathy because the large players in the space have basically, along with the Google model, have made it virtually impossible for small brands with small budgets to compete. So it's kind of like, yeah, you know, you're, you're shifting maybe some economics between Google and kayak, but it's not, you know, the real, the still, still the rest of the market, you know, It's very difficult to and almost impossible without enormous budgets to play in that space.
Yeah. And there was this weird quirk after this article was updated, was published. They did update that Google chief business officer, you know, actually mentioned kayak in their third quarter earnings as a successful partner of a new tool called AI Max, which is supposed to help businesses recover from the overview of And apparently they did have some conversion increase after testing this tool. But I think this is gonna be an ongoing story for travel providers, Mike. Yeah, it's another area to watch. It's these big underlying underpinnings of the industry that drive the big macro economics for our industry that you almost, it's like you can't lose sight of them.
You have to kind of step back and look at the big picture and what's happening and how this is gonna, in the long term, can really change the whole competitive environment. Okay. Well, I'm excited to hear more from our guest about that article because the media space is changing quite a bit. But this last one, I'm really excited to hear from them about JTB. Completes Norstar Travel Group acquisition from our friends at Travel Weekly. Norstar Travel Group, parent company of the Travel Weekly and other B-to-B media and event titles in the travel space, announced the completion of its acquisition by JTB Corp.
JTB Completes the Northstar Acquisition
From investment fund managed by Eagle Tree Capital and its co-investors. Norstar will operate as a wholly owned independent subsidiary of JTB and continue to be led by its existing management team, including CEO Jason Young. So Mike, we've been following this one for a long time. Try to give us some perspective on this. Well, I think our guests will give us the real perspective. You know, again, really interesting, you know, acquisition. Certainly in travel media, it's, you know, Northstar by far is the biggest player in the space globally. And, you know, in given the whole, you know, list of brands that is under the umbrella, including, you know, my old company, you know, focus, right.
And, you know, and then obviously, you know, BTN, Travel Weekly, the brands we've known and read for years and years and years, right? Yeah. So this is a, it's really interesting, you know, relationship, interesting acquisition for JTB. So love to get, you know, our guests view on, you know, what this all means and what it means for travel media, you know, in the years to come. So. All right, very good. I will defer to the expert that's about ready to join us. Okay. Mike, we will be right back with our guest.
Mike, thanks to our sponsor, Safe Travel Rx, an app that takes the worry off your itinerary, providing travel peace of mind with emergency response components, travel security and risk management, especially for those traveling internationally. It includes twenty four seven global concierge assistance. Landed in the hospital in China, forgot your prescription, wallet stolen. Safe Travel Rx is your prescription for better, safer travel. Mike, how about that Jump the Line service? Tell me more about that. Yeah, so this is a new element that they just added to their product. I think it's really interesting.
It's really targeting just when you think every segment of the industry has been addressed in some way. The realities are there's a segment that's there that really needed a new product and service, and this is it. And when you think about when you're traveling and traveling, you know, you're on a certain airline and, you know, the mechanical happens, the, you know, flight disruption some way that's impacting your airline. Long ago, showing my age a little bit, there used to be a time when, you know, that happened on one airline, you know, they would walk you over to, you know, another airline so that you could get out and get a flight out.
That doesn't happen, obviously, at all anymore. I mean, there is. You know, there's no cooperation between them. It is, you know, you're that. So in those situations when you just absolutely have to get somewhere, your particular flights being disrupted, you know, to have a service that basically can get you, you know, get you real time information, get you the flight you need, because you're not going to go walk from one terminal to another and abandon the flight you're on. You know, unless you're secure in the fact that you got a seat and you're ready to go on an airplane.
So the jump the line is basically another service they're offering. It guaranteed, you basically hit the button on the app, you get a guaranteed callback within like a couple minutes, and they take care of you and get you out of your way. So it's like, it's a, it's a next kind of generation real time. You know, hey, look, if you work for know big corporation and you've got you know a tmc and they're giving you a high level of service like yeah you've got a way to go but for most people out there they don't they don't have that level of support so this is a part of their offering fits in well um the whole jump is about you know basically you know that that's their their overall offering and trying to find these different ways where whether it's medically related disruption related they're trying to solve for those problems in a way for people when they just absolutely need help they get it and it's an easy hit your app press the button and the the response is there so very cool yeah uh download it today to discover the power of safe travel rx if traveler x your prescription for better travel all right mike now on to our guest yep today Joining us is Tom Kemp.
Tom Kemp, Northstar Travel Group
Tom is a seasoned executive and private equity investor with extensive experience in business to business information, events, and media. He has led the growth of Northstar Travel Group into a leading global travel industry company, providing information, marketing solutions, and e-commerce services. Among many high profile roles in his career, Tom was previously chairman and CEO of Penton Media and president and CEO of Miller Friedman. Over his career, He has completed and integrated over one hundred transactions and had extensive experience in public company leadership of financing. Tom currently serves in numerous board positions, including MMGY Global, as well as chairman of PRA Business Events.
By the way, Mike, MMGY is one of the biggest ad agencies in the DMO space, including the agency of record for Explore Asheville. Tom has numerous honors, including induction into the B to B Media Hall of Fame in twenty twenty three. Mike, please welcome to the stage Tom Kemp. Tom, welcome. There he is. Oh, you're on mute. There you go. Welcome, Tom. Great to have you. Good to see you. Can you hear me okay? There we go. I think you're unmuted now, Tom. You can hear us? You're all good. Absolutely.
Absolutely. I enjoyed the segments. And Mike, your comments about Navon, I think are really important. And even... Amex GBT is rooting for to be successful because it's good for the whole industry. Not just the TMC space, but obviously very important for the entire travel industry. And in fact, we have our Focusrite conference. You mentioned Focusrite, Mike, coming up in two weeks in San Diego this year. And certainly the potential for startups to be VC-backed and then to... Eventually do an ipo is important for the for the whole industry uh so it's good it's good to see the industry doing well from that standpoint but now on has gotten off to a bit of a rocky start so we'll see but uh good morning from mill valley california if you can't see it outside my back deck was filled with redwood trees and lovely spot uh we actually moved back here from new canaan connecticut uh during covid uh because we bought bought the home The last time we sold North Star, we bought our home here with the intent of eventually getting back to Northern California, which is where I got my start in business.
Rebuilding Northstar From Print to Events
But certainly the North Star Travel Group acquisition by JTB was monumental. Just give you a little bit of background on that. I had stepped down. I started at North Star in January of two thousand nine. We used to call it the Great Recession, although after going through COVID, that was not like what were we complaining about? Oh, exactly. Like the oh the industry is down twenty percent it's like oh what are we gonna do oh yeah it's like ninety percent all right that's like yeah i mean yeah so i started in january two thousand nine uh was ceo up until january twenty twenty three uh our expectation was to take the company out uh to the market uh depending on our full recovery and by twenty three twenty four we pretty much fully recovered from from COVID and then depending on market timing.
So we knew that we're going to make that transition. So we brought in a new CEO, Jason Young, who's done a fantastic job, deep experience. He was CEO of Zip Davis, the top technology media and information events company for a long time. And also deep experience in ad tech and marketing tech and really a technology and data-driven focus on the company, which is the future of our business. So I stepped down in January, I'd had three different private equity partners at Northstar. And in fact, they're Eagle Tree with whom I'm still working for both MMGY as well as PRA corporate events.
Has been my partner. I like to say that we were past our sell-by date. We were nine years into the deal. Privately, partners are great, but they don't like to have you around that long. Not that long. It's like uh like relatives right you know for your company right okay time to go stay past your welcome but you know the company has certainly transformed tremendously since when i joined it we had three brands travel weekly travel age west and meetings and convention yeah we had some subscription information products and we only had two events the travel weekly leadership forum at pebble beach which is now in its twenty seventh year and the travel weekly readers choice awards uh in in new york city every december uh but that's all we had and uh seventy percent of our revenue came from print advertising it was really kind of a traditional trade magazine publishing business uh at that point in time And so the first thing we set out to do was build an event business, either through acquisition or startups, and then to build out our data and digital media business through our websites.
And then build a custom content studio to do custom work for our clients. And we've really transformed the business. In fact, so we started off with three brands and our revenue was about a little less than thirty million dollars in two thousand nine and four and a half million of EBITDA. And when we exited this year, the pro forma for for Intopia, which was sold earlier early in the year to outside about one hundred and you know, about a hundred and thirty million of revenue, about thirty five, thirty six million dollars of EBITDA this year.
So the company changed dramatically. But but most importantly, our our event business went from two events to about one hundred and twenty five events and in twelve different countries this year. And we built that through. And in fact, you mentioned Focusrite and thinking about changing the company dramatically, not only changing the mix of our business, but also the culture of the business. We came from a print advertising magazine centric perspective, and that was kind of the culture of the business. And we really needed to change it dramatically. And one of the ways in which I envision changing the culture is is through acquisition.
Why Phocuswright Was the Pivotal Acquisition
So not only bringing in new businesses and new brands into the company, but also the talent into the company. And I think strategically, I think the most important acquisition we did in my career was what's the focus right conference, and buying that from Carol and from from Phil Bull. Yeah. Yeah. It's interesting to research. Yeah. It's like, it was like, even though, you know, it's, it's niche in terms of it's important, but it was your, that's true. It was, it was reflecting back. It was kind of a real change. Like it was, it, it, it was the beginnings of your, your whole transition of the whole, the bigger picture.
Right. And, and that, Like you said, really doubling down on events and starting to really focus on data, which has been a long play. But yeah, you're right. I never really thought about it that way. It was kind of the little spark. It's your injection for you. Yeah, yeah. Yeah, because it not only, you know, it did a lot of things. One, it obviously got us into research and content and data and subscription information products. That was the foundation of Focus, right, Mike, as you well know, is how it started with Lorraine and Phillip.
Yeah. It got us into high-quality events and instead of like a trade show, like a GBTA, for instance, Focusrite is really a content-driven event of leaders in the industry. It wasn't so much about the trade show portion of it. That was minor compared to the networking, the content, and the interaction in the industry. And it also got us into a new segment. We were largely in the retail travel, travel advisory segment, which was the biggest segment, which still is to this day. But it got us into what, going up to Philip's office in Connecticut, there's that street sign that had the intersection of travel and technology.
Yeah and so it got us into the cutting edge part of the future instead of travel agents and of course everyone at that point in time thought travel agents were dying and they were all going to be gone and dinosaurs and of course that hasn't happened but the transition from traditional distribution channels to online distribution channels and the OTA market and the whole travel technology space. So I think strategically by far, Focusrite was our most important acquisition and also bringing in a new culture into the business. People like Douglas Quimby and Lorraine Cilio and working with Philip and Bruce Rezard and the whole team.
It really... Product, different calls for entrepreneurial than the traditional business had been. Successful Meetings and SMU International, which was another very important face-to-face event. And then the Berber Hotel Network, which includes the Alice Show, which is the largest hotel investment conference in the world, really put us in a different space in terms of hospitality. And then the Centaur Travel Shows, Business Travel Show and the Meeting Show in London. Those were more traditional trade shows, but we've turned it into a host of buyer events as well for high quality corporate travel advisors.
But, you know, I think the combination of organic growth, I mean, out of our hundred and twenty five shows now, I think about thirty five. To forty of those events were acquisitions and the rest were green shoots, startups. In fact, we're having the anniversary, I think the fifteenth anniversary this week of our Cruise World event, which was our first internal launch that Bob Selve and I launched back in two thousand and ten. And that's become a a bulwark of the company uh and and we've really expanded into singapore with our events uh singapore and aipac has been a real growth area and that's ties in with jtb and wanting to expand into aipac as well yeah so so with with jtb what what was what did you know how i mean i think when it when the deal was announced it was a little like Well, you know, why?
How the JTB Deal Actually Came Together
It was a head scratcher. Come on. It was. Well, just because it was kind of an unexpected... Well, it was a surprise. Yeah. It was. It was. But I think... It was a surprise. I... While our investment bankers, Bright Tower, who did a fantastic job for us throughout this whole process, while they might want to take credit for it, I can tell you that in terms of our list of potential buyers and both financial buyers and strategic buyers, JTB was not high on that list. I'm sure, right? Yeah. And JTB had approached us sometime last year, late last year, that said that they were potentially interested in North Star.
Actually, they approached Eagletree, and the Eagletree also owns PRA corporate events, of which I'm chairman and was interim CEO for a period of time this year. But they have the largest DMC. JTB owns the largest DMC in Hawaii. And so originally, Eagletree thought they were interested in PRA. Instead, they said, no, no, we're interested in Northstar. And so we signed an NDA and gave them all the information they wanted. We didn't hear anything from for a while. And we were preparing. We sold off Intopia earlier this year to Outside, which fits into their outside position because Intopia is a SaaS e-commerce company's white label software, mainly in the ski resort and mountain destination.
Right. And so that was a good fit with outside. But, you know, we were getting ready to, you know, a lot dependent on market conditions and interest rates and financing and all those kinds of things that go into M&A, which is still kind of, you know, fraught a bit in spite of the stock market being strong. And so we were preparing to go out. And then all of a sudden last summer, we got an LOI from JTB. And it was a serious, well thought out LOI from the chairman at a good valuation, not the top valuation, but it was a very good double digit valuation of the business.
And we started engaging with them and getting them. And they said to us, if we can get some more information, we might be able to increase our purchase price. And so we worked with them for the next several weeks and months. And they were just, you know, they did what they say. You know, it wasn't like negotiating with a financial buyer of your business and looking to retrade or looking for the gotcha or having, you know, a swarm of young MBAs who are, you know, asking for stupid things from five years ago.
And try to pick apart every aspect of your business and look for... We've been there, done that. Exactly. Yeah. And so their approach was very different they were very diligent uh very much when they laid out a timeline they kept and we laid out a time and worked through that timeline we kept to it to the day uh every step of the way and they were really good partners to work with now there were some cultural issues and some legal issues because of a japanese company and as you as you probably know i'm jtb is a multi-billion dollar Travel, a hundred percent travel related company.
Started off as kind of a tour operator and travel advisory company. Has been looking to expand more and more globally, which fits in with us. And what they really want to do is expand the particularly inbound tourism into Japan and to really drive that business. And they feel, in fact, the CEO was at our web and travel conference shortly after the transaction was announced in early October. And he talked about looking at the demographics or looking at the inbound tourism in Japan compared to other major destinations and how they had a long way to go to really open it up and to open up the whole country and to deal with both not only technology and booking, but also destinations.
And language barriers and things that made it more difficult. But Japan's a great company. It's a great destination. And it's not just Kyoto and Tokyo. And they feel that they have a lot of upside to bring collectively into the business. Want to do is move upscale in terms of the food chain and the travel industry. And that's why you saw North Star, because of what they describe as the intelligence, the intelligence part of the travel community. And with everything from our data, our first party data, our research, we love focus, right?
For instance, Mike, our research capabilities, our deep relationships with fifteen hundred of the major travel suppliers in the world. And we have a strong we've been expanding our position in Southeast Asia, particularly in Singapore. And we'd like we have we do a little bit in Japan, but we'd like to do a lot more in Japan. And so I think from our perspective, with Northstar's perspective, opening up more in Southeast Asia. What they really want to do is move upscale, become more globalized, build their brand. And they just came to, as a seller, having a strategic buyer who's not a financial buyer.
A Strategic Buyer, Not a Financial One
What kind of return of multiples of invested capital? Over the next three to five, four years and measuring the value of the business and their purchase price based on that. For JTB, they were fair and equitable, but it was their strategic buyer. They had strategic reasons to buy the business as opposed to, and instead of thinking in three to five year terms, they think in a hundred year terms. Well, I was just saying that's a general idea. Yeah. Yeah. That's their model, right? I mean, generally that's the model, right? It's for a Japanese ownership.
It's like more of like, you think you're thinking long-term you're thinking, you know, you know, big strategic play buy and hold, you know, not, not, not, not, you know, three, four year, like you said, three to four year flip, you know, model, right. It's like, Yeah, I mean, it is. In the opening LOI, they informed us that they were sitting on two billion US of cash and that they would just write us a check. They didn't have to worry about the financing markets or interest rates. And you always like to hear that as a seller.
Yeah, you don't hear that every day. Yeah, what kind of leverage can you put on this business? Yeah, right. Exactly. Yeah, we were saying, like, from the outside looking in, it was like the first reaction right away was like, oh, this was, you know, this was one of those deals. Like you said, it had to be strategic. It had to be a very good, you know, a good, a very good solid off. Like, it was clear, like, because... There would be no other way to, you know, otherwise, you know, it'd be a more of a bidding, you know, kind of situation.
But clearly it wasn't. So, yeah, when we were thinking about strategic buyers, we were thinking about companies like Informa or Clarion. Yeah, for the data. Yeah. Yeah, companies like that and the events, of course, particularly our event business, which is, you know, it was two events and was one percent of our revenue back in two thousand nine. Now, the majority of our revenue, fifty five percent, fifty six percent comes from events and our event business. Has rebounded tremendously coming back from COVID. We're way past where we were. Think about in terms of the future of the media and information space and the technology.
Why AI Makes Face-to-Face Worth More
We're thinking about Steve Hafner's interview with Rafat about the impact on kayak. Steve is, as we all know, is quite the character, inspirational guy, fun guy, great to have him in the room. The Nothing Burger, I agree with you, Mike. It's only a Nothing Burger from, I mean, I think his point is it's a non-cash impact on the business and is an accounting write down, but really doesn't. But you were absolutely right, Mike, in that what it means is that there's been a significant impact. Yeah. And anticipated not a short-term impact, a longer-term impact on the cash flow of the business, the EBITDA of the business because of the rising cost for customer acquisition and impact of AI.
And I think that OTAs have done a pretty good job so far with integrating AI, but I think the larger term and they've been dealing with Google for years and years and never thought Google was going to steal their business and that hasn't happened. But open AI and the resources and the amount of cash going into AI are tremendous. Even though Booking is the largest travel company in the world, compared to the big tech giants who are pouring billions and billions of dollars into ai uh they're relatively small we'll see what happens but i think one of the things that you know one of the things that attracted jtb to northstar and one of the things that gives me a great sense of of of optimism about the the future of certainly of northstar is that uh from an ai perspective uh what we're seeing in the event space uh generally i'm on the board of directors of a an event association called CISOs, Society of Independent Show Operators, is that the drive for face-to-face events, if anything, is going to be a positive from AI because when people get together face-to-face in person, they don't have to worry about, is this AI generated?
Is this real? Is this really the person talking? Particularly as technology generally is impacted, our world and AI is going to accelerate that and hopefully a very positive. The value of having face-to-face interactions and bringing buyers and sellers in a community together becomes that much more valuable. We're certainly seeing it. We're up close to twenty percent this year on our face-to-face events at Northstar. We're having a very good year at PRA corporate events and PRA is a DMC serving corporate incentive events, working with major suppliers. And our business is up double digits this year.
So that value of bringing people together and particularly as, you know, i assume we're all like in our home office you know with with the remote work environment uh not only bringing getting together and seeing your customers face to face which has become more difficult in a uh distributed environment you can't just call on someone in their office anymore uh but also our our own people and building the culture of your business and that's why we see in the corporate event space uh a lot of A lot of major companies are using like industry events, for instance, to have their own in conjunction with events for their suppliers, their partners, their clients, as well as their own teams.
To have that, because as a CEO, one thing I worry about with remote environment is losing that culture. And to me, there's nothing more important in the success of a business than the culture of a business. And someone once said that culture each strategy every day for breakfast. And because you can have the greatest strategic plans in the world, but really execution, it comes down to people. And building that culture. And I'm very proud of the culture that we built at Northstar. And the team that we've been interacting with, I'm no longer part of it.
For the first time in sixteen years, you go to the leadership page, I'm no longer chairman. But Cameo paid a very nice price to become chairman of the company. But one thing we like about it is they're keeping the whole team together. They want to invest in it. I was going to say that, like, one, a testament to, you know, the North Star, the big umbrella, and certainly the people within it, is that you look at the longevity of the people that, you know, have stayed and stayed in, you know, all through.
Yeah, they've been there a long time. And after, even, you know, through all the pieces you put together, you know, you know you kept the teams intact and you know they you know as a result like again that culture and that and your comments on the event industry i'm i'm totally bullish on that that whole sector for the long foreseeable future because it's your point of people crave the interaction i mean you you you know the the the things you took for granted about Being in an office, being together, the teamwork that gets done, the ideas that get generated, the focus about it.
You're right. The serendipity of that. There is. As good as this technology is, It's not the same as us sitting down and having lunch together and all the different ways in which we communicate, including the emotions that come across. And so I think AI, so I think the face-to-face event business, but I think the media and going back even to Hafner's comments about customer acquisition, marketing costs are changing dramatically. And certainly... It's not just digital broadly speaking, but what we're trying to do, and I think Jason has done a great job, brought in Nino Tasca from Google, who's working in Google AI as our Chief Digital Officer.
Data, Measurement and Trusted Brands
And really focusing on the data-driven marketing spend and trying to move down the funnel. Like in the old days, you buy a page of advertising and travel weekly for Royal Caribbean. It was nice branding and whatever, but what did it do to drive businesses? It was always hard to measure that. Right now, it's people looking for not only where to spend their money, but what are the analytics associated with that spend? And the more we can move down the funnel to draw a direct comparison, this is what Jason and Nino are really working on, and using AI partially to do this, is the connection between the amount you're spending with us on branding and advertising online and the direct impact on your business.
And being able to measure that and put that in place because the more you can go back to your clients, there's unlimited spend. If you can say that for every dollar you spend with us, you're going to generate ten dollars of incremental revenue for your business. And we have that. And for us with And the other thing that's an advantage to us as opposed to the broader digital media industry is that we have very valuable first party data. We have almost one point five million dollars of travel professionals across leisure, travel, retail segment, the my segment, travel technology, the corporate TMC, corporate travel industry, the hotel investment community.
And these are major buyers. It's not consumers. Two vacations in years. These are volume buyers and drive a disproportionate amount of spend in travel by being travel professionals. And that's all we do, B-to-B travel professionals. And then that data associated with it. And the other thing is that trust of brands. You know, we've seen the proliferation of brands. And I think the brands that we have that we've built up within Northstar create that sense of community and that they can believe us and have that sense of trust. Well, you're hitting on kind of a, you know, a little bit of topic to wrap up on, but you're right in terms of the trust element.
And I think in the advent of AI and everything we're seeing, you know, you, joked about it before about, you know, being in person with people. But I think there's, we're also just having a whole, there's gonna be a whole like kind of reinvention around trusted sources and back to your point, like the brands and the people behind them. Because, you know, when I, you know, back to like somebody like Lorraine that, you know, known and worked with back from the early days of Focusrite, but like when Focusrite research comes out, And, you know, her and her team, those people are behind it.
I trust that it's trusted source, you know, not just some, some cobbled together random, you know, thing that I've, that I've, that's been generated. I have to be really, you know, much more. Aware about where information is coming from and what I'm using to base the decisions on. We're seeing it every day and we're still not even at the depths of it. It's very early. It really is. Tom, I'd say we covered a lot of ground. But uh the the question the wrap-up question i have for you is more of one of um you know an interesting one i i i think like for all you know you've got tremendous perspective both about you know the travel industry of course but also and and and media and kind of the intersection of all that you know you're sitting at a really interesting uh you know vantage point um But if you look ahead, what areas do you find compelling still for reinvention or opportunity?
Pick anything, travel or media or events or anything. If you had to pick out an area that you would focus on reinvention, what would it be? Yeah well i think you know two things one of the things that we've really built uh almost from scratch in our industry certainly in the travel industry uh was not just events but hosted by our events where you we qualify our attendees our buyer attendees based on how much money they spend uh recommendations from their uh from their clients uh and to bring in a well-qualified buyers in one-on-one situation with travel suppliers and i think continuing to build the face-to-face i think the face-to-face industry generally uh has real long-term upside particularly in an ai generated world for trusted resources and trusted data so i think the marrying of of data uh data with well-qualified buyers and being able to measure your, as a travel supplier, being able to have a direct measurement of the impact that your dollars are having on your business.
So I think that that And I think marrying the data and measurement tools and being able to go down and funnel and be able to demonstrate to our supplier partners, if you spend this amount of money and being able to measure the incremental impact on your business and how much you can increase it. In terms of me personally, The reason I stepped down in twenty twenty three, my private equity firm didn't want me to step down. This was my decision. But we had originally gone out in the market in January of twenty twenty.
And at that point, I'd had three private equity partners. I was not. And, you know, I. I wasn't looking forward to rolling over with a fourth private equity partner being tied up. No one expected nine years, but even another five years. And the investment banker said, well, you can't tell people that you're just there for a transition and you're leaving. You've built this business. And he said the strategics may not may not care as much, but any financial buyer, that's a big red flag. And so with Mike Struble and Anup Bagaria, our leaders at EagleTree, we came to the conclusion that before we went out next time, I did not want to find myself in that position.
And so that's why we had to install it. You can't just bring in a new CEO six months before you go. Go out they need to be there at least a year two years to have an impact and to execute and and the way i saw it we brought we brought in jason from outside from the tech space because it's like when i first joined the company i came with a strong background in events and really transformed the company from that standpoint and the next transformation is going to be technology driven and bringing in jason And bringing in his background and experience for the future and data-driven and ad tech.
So we stepped down at that point. But it's been great for me because I'm, you know, up until last month, you know, still hard. And I was chairman of North Star. Weekly calls, attending a lot of our events, not as many as I did as CEO, but being active in the community and keeping those connections. Because I love the travel industry. We all do, man. We sure do. In technology, I've been in healthcare and med tech and a lot of different industries. But the thing I love about travel is that it's a very collegial.
Your comment, Mike, about the community. And the congeniality of the industry. And even our suppliers and we get together and we bring people together because we're kind of Switzerland and everyone can come together on our stage. But to see what are otherwise highly competitive companies like the ocean cruise industry, And you get those people together, and all of a sudden, they're friends with each other. They have a sense of community because their goal is not to steal market share from NCL to Royal Caribbean to Carnival, but is to grow the industry because there's still a relatively small number of consistent cruisers, although their business has recovered.
Biggest impact on COVID was on the cruise industry, but they're having the most sustainable long-term positive effect. And their bookings, forward bookings are really, really strong. But the sense of, it's a fun industry. Yeah as vicki green likes to say is that our job is to make people's dreams come true now what you know how can you be in a better industry than traveling fair enough and everyone that is yeah and and even on the corporate side well you know we all love to complain about how much we're on the road and how much we're traveling whatever as soon as it was taken away oh my god you know i gotta stay home every day We all miss that.
The Short-Term Bumps, and the Long-Term Case
It's a great industry. The people are great. Smart people, fun people. It's just a wonderful industry. I think we've got some short-term You were talking earlier about how, you know, some of the things that we've done, you know, we were expecting to have full recovery because we never really fully recovered for inbound travel into the U.S. We're expecting to hit it this year. And then all of a sudden we've got tariffs. We've got... Messaging and in fact my wife and i just got back from three weeks in spain and portugal and talked to a lot of locals about traveling to the united states or uh people generally and they say well we're kind of worried about traveling uh now we hear these stories about uh you know getting getting through the border and and the cost of it and the cost of a visa and you know and i'm not sure where we are in the ten thousand dollar uh uh uh liability insurance that people have to buy.
But we're sending messages. And it's not just through specific things like make it more difficult to come into our country, but also kind of putting up a bit of a cross the world through tariffs. Our reputation is really gone in spite of what you hear from Washington. Our global reputation in terms of us not being welcoming to the world is really deteriorating. And it breaks my heart because we have such a great country we have such a wonderful our destination and just seeing what's happened to brand usa eighty percent of their funding getting cut which is crazy we should be doing the opposite we should because we have such a wonderful destination uh you know talk about act from asheville to colorado to you know all over the country And to be able to demonstrate and to be able to showcase that for people around the world.
And people love our country. But right now we're going through some hits. The uncertainty of the economy is not good. Unemployment, the macro view on unemployment is not moving in the right direction. From our standpoint at Northstar, our business has grown very well this year. We've done, because a lot of our focus is on, in the leisure side, is on luxury travel, because that's who utilize high-value travel advisors. So luxury travel has held up well. Domestic travel, corporate travel, generally, the second quarter was a little bumpy, but that seems to be- It's still solid.
Yeah, still solid and although not a hundred percent recovered either, but certainly you read the earnings reports from Delta and from the airlines, they're seeing a recovery there. The hotel community, they racked up, you know, the rates got so high post COVID that it was just, you know, it got a little too pricey and we're seeing the impact this year and RevPar will be flat or slightly down. Slightly down. Yeah. Yeah. Yeah. Yeah. Year and year. But it's still a tremendous industry, one that we all love, one that I think If nothing else, COVID demonstrated to the world, not just those of us in the industry, how important travel is to us as human beings and those experiences.
And we went more towards the thing community as opposed to the experience community. And we were forced to by COVID because we couldn't have those. So coming out of COVID is that people cherish that. That you can spend with your family and friends in destinations going to different places. Also, I think from a global standpoint, I think our impact on the world and building those connections, when you have more familiarity with different cultures and different languages and different parts of the world, we break down those barriers. Things that we don't know are things that we fear.
And when we go out and travel the world, we realize how much more we have in common than opposed to each other. So I'm bullish on the long term. I think we'll be fine in the short term. We've got some bumps here and there, but overall, people love to travel. It's now they consider it a right and it's not negotiable. You know, they'll put off, you know, remodeling a kitchen or a bathroom or something to be able to spend time, you know, particularly with your teenage kids. Get them off their handsets and off their iPhones.
But it's a it's a great business. Well, I love it. Well, Tom, again, thanks for coming today. You know, we covered covered a lot of ground. Sure did. Insight. And we'll certainly be staying in touch as we continue to maneuver through the industry. But, again, love your insight. And congratulations on the North Star transaction. I think it's great. By the way, it was the biggest – And not just the travel industry, but also the information, B to B information and event industries. It's the largest transaction in the last two years that's been done in that part of the industry.
And what I love about being at, I'm still connected, even though I've had to step down from Northstar by being chairman of PRA corporate events and and on the board of MMGY, a great company. And Katie Briscoe, who's the CEO, is just a delight. She's great. She's just wonderful. Anyway, so keeping connected that way. But I did want to roll over for another five years with another private equity part. Well, thank you so much, Tom, for your time. You've been very generous. Tom Kemp is former chairman and CEO of Northstar Travel Group and chairman of PRA Business Events.
Tom, thanks for joining us on the podcast. Thanks, Ed. Thanks, Mike. Great seeing you. Cheers. Well, Mike, what do you think? Well, it's great. I mean, Tom, of course, you know, just what a terrific leader in the industry, you know, and continues to be, you know, right on the forefront, you know, the issues. And, yeah, I love the perspective when we can step back and look at the, you know, the bigger, broader picture, you know, of what's happening. And like you said, you know, where we started, some of the big kind of macro pieces, you know, levers that are driving the industry.
You know, it's always really important. It's hard. It's easy to get myopic and kind of get focused in on a particular area. And as opposed to kind of stepping back and saying, you know, here's here's what's really happening. And here are the key drivers. Yeah. Yeah. But but again, and also, you know, really interesting to get his, you know, his insight on the. The insider view of that deal is cool. Yeah, I think that was some of the best. Clearly, he was the one to give us that insight. But I thought, again, I think he was really generous and open about giving some real insight into that transaction.
In a way, I much better understand now. When you position that way, it makes a lot of sense. The other thing, too, is that it comes back to makes me feel good about... You know, that that that all of those brands and that media is is going to be in good hands for the industry. Right. That's really important because, you know, we need the coverage and the integrity of the you know, the the the information and the news and the research to be. And the event is how we all grow our businesses, all of us.
So it's yeah, it's critical to our infrastructure. So really cool to hear. It is. It is. And I hope they really invest in growing the brands, which would be fantastic. All right, Mike. Thanks very much. That is our show today. If you have a challenge in your business, reach out to Travel Again Advisory to see how we can help bring clarity to your business strategy and outcomes. Mike, that's it. I will see you back here again for our next episode. Great. Cheers. Cheers.
