The Motley Fool

The Flight Centre share price is climbing on a Silicon Valley deal

The Flight Centre Travel Group Ltd (ASX: FLT) share price is up 1.2% to $42.94 today after the corporate and retail travel agency last week announced the acquisition of a U.S. corporate travel agency in the heart of Silicon Valley’s tech sector.

According to a December 21 announcement Flight Centre is to acquire Casto Travel in a deal that enhances its footprint in the US$300 billion per year U.S. corporate travel market. Last year Flight Centre reported that it posted US$1.3 billion in total transaction value across the U.S. corporate travel sector, which translated into about 10% of a corporate sales.

It makes sense for the entrepreneurial business to push into the Silicon Valley corporate travel sector as this is where cashed-up high growth companies operate with huge amounts of staff travelling every year. The tech sector’s success also means it’s travel demands are likely to be less cyclical than energy companies for example that will send staff away more or less depending on macro conditions.

A large part of Flight Centre’s growth strategy has always been around acquisitions with it also announcing deals for a 10-year lease on a 4-star leisure hotel in Bali recently, and a deal to buy a Toronto-based travel and tech company.

The stock is down around 39% from recent highs which may present a good opportunity to buy for investors given a rock solid balance sheet and impressive long-term track record.

Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia owns shares of and has recommended Flight Centre Travel Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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