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The Australian Financial Review can reveal that Sydney buyout firm Quadrant Private Equity has sold Journey Beyond, which also operates the Rottnest Express ferry service to the idyllic car-free holiday island of Rottnest 19 kilometres off Perth, to American cruise operator Hornblower Group.
The deal comes as forward bookings for Journey Beyond’s attractions, which are popular with holidaying families and “grey nomads”, have doubled as states stick with their reopening plans, notwithstanding the rapidly growing numbers of the omicron variant of COVID-19.
Hornblower Group, the parent company of the American Queen Steamboat Company, Victory Cruise Lines and a number of day-cruise companies, has been owned by New York-based private equity firm Crestview Partners since 2018 when it assumed control after a leveraged buyout.
Journey Beyond, run by group chief executive Chris Tallent, also operates Outback Spirit Tours and Horizontal Falls Seaplane Adventures. Its main appeal for Crestview and Hornblower is that its interconnected rail services and luxury coaches provides an end-to-end network across the country on which passengers can enjoy – and pay for – multiple trips and “experiences”, such as meals under the stars in the Nullarbor, throughout their journey.
Hornblower is based in San Francisco, California, and has a foothold in 125 cities across the United States. It is expected to use its expertise in the mature US market to increase the cross-selling and marketing opportunities across the Journey Beyond portfolio of attractions and facilitate further growth.
Journey Beyond’s 1200-odd staff were told of the change of control on Wednesday afternoon, sources said. It is believed the business will remain headquartered in Adelaide.
Mr Tallent, a former boss of GPT Group-owned Voyager, declined to comment when contacted by the Financial Review.
Demand for experiential travel
Quadrant first invested in Great Southern Rail, the owner and operator of the Australia transcontinental Ghan and Indian Pacific rail businesses, in October 2016.
At the time, Quadrant managing partner Marcus Darville said the private equity firm had pinpointed a growing demand for experiential travel, and started looking for companies with a “strong position in an iconic Australian destination and like-minded vendors who want to be part of a larger group”.
The Great Southern deal provided the platform for a premium travel business which has expanded to include Cruise Whitsundays, the biggest ferry and cruise operator in North Queensland, and Outback Spirit, which runs luxury coach tours in hard-to-reach locations such as the Kimberley Ranges in north-west Western Australia.
Outback Spirit, together with The Ghan, now comprises roughly 75 per cent of overall group earnings.
Travel and tourism businesses have been crunched hard by the COVID-19 pandemic, with theme park and cinema operator Village Roadshow the latest to report a flood of red ink with a $35.8 million loss for the year to June 30, 2021, under the VRG Holdco vehicle established by private equity buyer BGH Capital.
Even so, notwithstanding the toll of the omicron strain on people’s movement and social activities, confidence persists that people will steadily return to their holidaying habits as milder cases of COVID-19 illness proliferate.
Mr Darville and Quadrant partner Chris Coates spearheaded the sale to Hornblower. Jefferies Australia country head Michael Stock advised Quadrant on the transaction, alongside King & Wood Mallesons and PwC.
Investment bank Baird tended to Hornblower/Crestview while Jones Day provided legal counsel.
The deal is expected to complete by late February.
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