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Čedok under new management

U.S. owners promise to pump crowns into storied company

By Michael Heitmann
Staff Writer, The Prague Post
December 26th, 2007 issue

VLADIMÍR WEISS/THE PRAGUE POST
Čedok's 45 locations in the Czech Republic served more than 400,000 customers last year.
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Čedok the Czech Republic’s largest travel company has a new owner.

The Odien Group an American-backed investment company that bought a 98 percent stake in the travel agency and tour operator earlier this month has promised to expand Čedok’s operations internationally with new investments totalling hundreds of millions of crowns.
“Travel services will continue to be a growth sector in Central and Eastern Europe and we believe that Čedok as a leading travel corporation in the region is in an excellent position to meet the increasing demand” said Michael Saran Odien’s managing partner.
“The consistent sales growth in the past years reflects this trend and reinforces the Čedok brand for quality and reliability” he added.
Odien purchased Čedok from the Unimex Group for an undisclosed amount. It is the first time the travel agency — which was founded in 1920 and established as a state-owned tourist monopoly under communist Czechoslovakia — has been sold since its privatization last decade.
With more than 450 employees at 45 locations across the Czech Republic Čedok reported revenues in excess of $170 million (3 billion Kč) in 2006. This year’s profits are expected to reach 50 million Kč on sales of 3.12 billion Kč. The travel agency served more than 400000 customers last year half of whom travelled abroad.
Despite these somewhat modest profits Odien is ready to pump more money into the travel agency to facilitate its international expansion. Odien is considering other acquisitions in Central and Eastern Europe in light of ongoing regional consolidation of the tourism industry it said in addition to its investments into Čedok which claims to be Europe’s oldest travel agency.
“We expect [Odien] to continue the current and proven strategy of investing in quality customer service” added Čedok spokesman Tomáš Brejcha.
Čedok has several areas it needs to tackle such as a planned expansion of travel services on the Internet improvements in its marketing and brand recognition and a possible extension of the branch network for those customers who still prefer dealing with travel agency staff face-to-face Brejcha added.
While tourists from all over the world flock to Prague to admire its beauty it is beaches and snow-capped mountains that lure the Czech Republic’s natives.
“Of all the countries in the region the Czech Republic has the highest number of package-tour travelers” said Udo Wichert of the travel agency Neckermann Reisen. The German travel giant Thomas Cook acquired Wichert’s travel agency in September.
Domestic competition in the travel market should intensify as Čedok tries to increase its market presence by adopting more aggressive marketing and pricing Wichert added. He expects Odien will eye further expansion under the Čedok brand into eastern countries such as Romania where international operators are still underrepresented.
Focus change
The Čedok sale marks a change in focus from travel services to the consumer and wholesale retail sector for the Unimex Group owned by Jiří Šimáně who is also its chairman.
Šimáně recently sold a major share in Travel Service the Czech Republic’s largest privately-owned airline and operator of the country’s first low-cost carrier Smart Wings to Icelandair a deal approved by the Anti-Monopoly Office in November.
Following speculation in the media as to why Unimex would sell Čedok which was a strong asset Šimáně had this to say: “In the selection of our potential investor the main criterion we focused on was the guarantee of further development and growth of the business.”
Šimáně said he was convinced that Odien was an international investor that would continue to strengthen Čedok as a reliable travel corporation offering a strong price-quality ratio.
Global Spirits and Global Wine — the largest domestic importers of wine and liquor — the Eso travel agency and the home improvement retailer OBI make up the remainder of Unimex’s portfolio. The group’s combined revenues reached 18.5 billion Kč in 2006.
Čedok is not the first major acquisition for Odien which has regional offices in Prague and Istanbul Turkey. In August the company purchased a share in the Turkish social networking site Yonja.com.
In the past Odien has been successful at buying troubled companies restructuring their operations and balance sheets and eventually selling these companies at a profit though it has given no indication that it would pursue a similar strategy with Čedok.
Odien bought the Prague-based truckmaker Daewoo-Avia three years ago split it into separate manufacturing sales and property management divisions and later sold it to Ashok Leyland an Indian auto company.

Michael Heitmann can be reached at mheitmann@praguepost.com


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