After New Investment, Frosch and TCG Seek Opportunities in a Changed Market

Leibman and Taras

Frosch’s Bryan Leibman (left) and TCG’s Albert Taras discuss:

  • Frosch’s plans for its new investment
  • Outsourcing trends in corporate travel management
  • Finding the right commercial model for TMC clients

New York- and Houston-based Frosch International Travel this week announced that EagleTree Capital had taken an undisclosed minority stake in the agency. Frosch has been bullish on acquisitions during the pandemic, purchasing CorpTrav and Luxe Travel last year and taking a majority stake in Plaza Travel. Frosch CEO Bryan Leibman spoke to BTN editorial director Elizabeth West about the investment and the company’s plans amid the industry downturn and recovery. They were joined by Albert Taras, founder and CEO of TCG Consulting, which Frosch acquired in 2019. The following is an edited excerpt of that conversation. 

BTN: Let’s talk about what led to the EagleTree deal. Why did you take the money? 

Bryan Leibman: Frosch has been growing for the last 20 or 21 years. We’ve always been committed to that, and we have always been well-capitalized and had a strong balance sheet. We wanted a financial partner, and we looked for a partner that would align with our core values: respect, integrity, commitment, excellence and delivering the unexpected. Those were important in EagleTree choosing us; they invest in leaders in the industry. They [were] super to work with through this process, and I expect that to continue as we work together—there is so much opportunity in these times for companies with the right capital. [Editor’s note: EagleTree owns Northstar Travel Media, parent company of The BTN Group and Business Travel News.]

BTN: Does that mean we can expect Frosch to continue to be active in mergers and acquisitions?

Liebman: We are and we always have been. We’ve had several acquisitions in the past 12 months. We took a majority stake in Plaza Travel. We bought CorpTrav in the middle of the pandemic. We are always looking for companies that align with our core values. The market has been decimated by this pandemic. There will be more consolidation, and we want to partner with the best independent remaining companies. We have an outstanding team to integrate with them and bring them onto our platform. 

BTN: Tell me about that platform and what makes it different.

Leibman: Aside from the platform, actually, we’ve been unique. We have historically played in the small-to-midmarket segment and [have been] a flexible, creative partner that comes up with solutions tailored to our customers’ requirements. We really believe in a long-term relationship and … we aren’t focused on short-term financial goals. 

In terms of the platform, we are ticketing in over 60 countries but all with a single team. Some clients are really cost-sensitive, and we can staff people in very low-cost locations, but other customers need that local team and we do that as well. We have people in Sydney or London or wherever they need them, and we have full control over all the operations on a single global distribution system contract. If we don’t have our own offices in a location, for example, we will have an agent sitting in Colombia [who] can issue a ticket from anywhere in Latin America. We may actually [fulfill] the ticket through a partner in Bolivia or Peru, but it’s our agent doing [the booking] and everything shows up as Frosch interactions, Frosch invoice—everything consistent but meeting all local requirements to taxes, etc. That single platform [gives clients] real-time data, and it gives them the ability to manage policy easily in one place. It also allows them to cross-border purchase very effectively to meet agreements or achieve savings.

BTN: Albert, I believe it was the single platform that attracted TCG Consulting to the acquisition in 2019. What is TCG bringing to the table for Frosch, and why does the platform matter?

Albert Taras: When we decided to go out to partner, it was around the total cost of ownership for travel, enabling an [end-to-end] solution and tying it together to a delivery platform that would be fundamentally unique. When you funnel down to the TCG value proposition of enabling travel, meetings, payment and expense and how they come together and then operationally enabling that, we don’t think anyone comes close to Frosch in providing that.

BTN: Bryan has said that, historically, Frosch served the small to midmarket, but TCG really has focused on large-market companies. What is the strategy of bringing two disparate client bases together in one company?

Leibman: [TCG’s] total cost of ownership concept is unique. [Taras] brings his experience in the large market and enables us to apply that from a high level down to our traditional [SMB] clients and to enable those capabilities on our global platform. TCG’s insights from the large market have been very important. We are equipped to and do support large-market clients on our platform, and we think we offer more customized and creative alternatives for that market compared to the megas. 

Taras: Frosch customers have become one of our largest customer bases. Working with Frosch allows TCG to customize solutions. We can be creative and tie together operational to strategic promises. We put a proposal on the table last week that the industry has never seen, but you have to have excellent operations and the tech tools to do it. Frosch has that. And in the post-Covid world, compliance can’t be a question. You have to build a user-accepted model so people want to play within it. 

BTN: Since the pandemic, are you seeing more activity at TCG from companies looking to outsource travel? 

Taras: Yes, and very much so. Outsourcing is a legacy core part of our business. Plus, more companies are looking at what protocols will be in the new world. If someone is bringing back 40 percent of their travel, maybe it’s time to bring back a furloughed travel manager. But that person may have moved on. We give a flexibility of scaling up and down. No one is going to go back to March 12 and picking up where they left off. [We estimate] 30 percent of trips will be eliminated, but even to put those 70 percent of trips back on the road is going to cost more than 100 percent. Covid tests on both sides, agency services to manage that traveler security and tracking and, of course, managing suppliers. We are dismissing the notion that companies will take this as a bottom-line T&E savings directly. That’s why [total cost of ownership] is critical now. Companies won’t be coming back with the same workflows and systems; they’ll have to look at how people will be working in the new world. 

BTN: There’s been a lot of discussion of travel management company commercial models since the pandemic. What are your thoughts on that, Bryan? 

Leibman: We all know what happened to the TMC model heavily dependent on transaction fees. We are still in an evolving time with the commercial model. Frosch has always been on cost-plus, [where] you really are looking at time and materials. In the end, TMCs and customers have to look at real partnerships; we thrive by putting together the right service configuration for the client. But we’ll work on cost-plus, transaction or subscription—and we can move from one to the other when the need is right. I think you’ll see a mix of all of this in the market; but in every client relationship Frosch has, the goal is to come up with something that is fair. 

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