Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
I helped a little (very little) in the purchase of Titan in 2010 for £14 million at the time. Purchase because it wasn't going to get its ATOL licence without new funding, so Saga got it cheap. The passenger numbers of Titan are around 35,000
It was always a brand that had a very strong following from travel agents and was an excellent fit with Saga (unlike Destinology which made absolutely zero sense). The client base is very similar to Saga's, without the age limitations. Regularly we would put new products into the Saga programme that helped to make us stand out (Salt flats of Bolivia, Safari tents in Botswana, jungle trek of Borneo), and this was to move the brand along into being a slightly more adventurous brand, and not just for long-stay mid-winter holidays in Malta. Much of the time, these didn't cut the grade with the passenger numbers required for Saga passengers - they needed more customer service skills, more tour managers and escorts, and so the holiday was moved to Titan, charged slightly higher as it was a smaller group, and became a success.
Since the beginning of Covid, both Titan and Saga acted really well. They cancelled all their holidays and cruises initially I think until January, meaning that the customer wasn't constantly having their holiday changed time and time again. For both businesses, with well-deserved loyalty, many of the customers just moved their holiday/cruise to next year, and for Titan particularly which heavily travel agent sold, it has been lauded and appreciated by agents who didn't have the hassle as they have had with many other travel businesses. Titan is a strong brand in the travel industry, others with a similar customer base have fared much worse, and this can only bode well for them as the acceleration of travel sets off again.
VC/PE was lining up to consider bids earlier in the year. I see no reason why they wouldn't do it again, but perhaps at a discounted price, although in my view it should technically be worth more - with less competition.
As for deposits...It was always a challenge doing some things at Saga that other travel companies could do. Not because we didn't want to, but Saga is FCA regulated, and by default, the travel business had to adhere to the strict rules of financial regularity, and so no; Saga or Titan never used customers deposits to pay for operational costs.
Saga's DNA hasn't changed, but then nor has older people's. They/we like to have confidence and like to know about their finances. The new 3-year fixed price products started off slowly in the eyes of the market, but has gathered pace and will do very well for the business. Yes, I have shares in them, but I think that with a new team steered through some choppy waters with the support of RDH, the man who understands and cares about the business more than anyone, I can only see positive movements in the longer run.
Sorry, that's a long explanation, but hopefully, you can pick out some useful b
I worked for Saga for many years up until it went to the stock market (although I now own more shares than ever before).
One of the reasons the cruise-ships were named Ruby, Pearl, and Sapphire was that they were the jewel in the crown. They are what everyone knew and talked about in the portfolio, but it was the insurance side that was the crown.
The feeling was and will be again now that RDH is back, that if a customer has a disappointment in any of the products, particularly on the holiday side, there is a good chance they will cancel not only their next holiday but their insurance and magazine subscription too, hence Saga had some of the best customer services you could ever imagine. I saw from the inside the lengths they would go to to make a customer happy knowing retention was the most important thing. That was lost over recent years, and it was about getting everything you possibly could out of a customer.
And so the question is a really interesting question because, in value, the travel division doesn't bring in masses of profit but take it away, and you also lose some of the insurance profit, and the easiest, best customers to keep.
My own guess is that the split should be 20-25% for travel 0-5% for the mag and 70-80% for insurance.
If you are adding Titan Travel to the mix (and it's done very well in Covid), then it was on the block to be sold earlier in the year with a value of £140 million. You could say that valuations of travel businesses would have decreased massively recently but in my view, there will be a lot of consolidation going on over the next year. Saga will have no interest in buying more brands, but if a VC wants to add Titan to a new or existing portfolio, it wouldn't surprise me that it's let go of for around £70-£80 million.
On a slightly different note, I am now on the Astra Zeneca/Oxford uni covid19 trial. Results will be coming out shortly, and they've apparently gone "very well". Interestingly, and this is great for Saga, the results of efficacy in the over 65 appear to be as strong as it is for any other age group. It wouldn't surprise me if cruising gets going in April and they operate at higher levels of occupancy than currently expected.
Just one thing to be careful of, the Pfizer results are so far preliminary results and the 90% is going to decrease. That's not being reported on by the media, but well known in the medical world, and so when they do report on it...don't let it worry you!
I've fluctuated my holdings in Saga for a couple of years with a supplementary number of buys ranging from 12p to 17p over the last three months.
Today I've bought more at the most ridiculous price of 11.4p
This is a very sound business. The three year contracts are selling well, and the two travel businesses (saga and titan travel) have very loyal followings.
RDH in my view knows the business inside out, he understands the errors the business made over the years and will help steady the ship. He's not investing £100 million or more because he has a loyalty. He's doing it because he knows what's wrong and how to fix it.
Titan alone was valued at £140 million just a year ago. Put on hold because of covid 19, but its a very small part of the business and when travel returns, I have little doubt it'll be put back up for sale, in a stronger position with peers bankrupt or cash strapped.
I've requested my full additional allocation of just under 70,000 shares and will then try to forget about them all, waiting for a good return over the medium term.
The cruise division of Saga is probably the jewel in the crown, but also not a massive earner.
Absolutely convinced this is a great buy, and have recently bought 65,000 shares ranging from 14.5p to 16.5p - if I had more spare cash, I'd be buying mroe.
Having originally started with Saga Rose and Ruby, the business has built up a very strong following, with almost 70-80% of the cruise customers being repeat passengers.
Cruise lovers are a loyal bunch, and particularly Saga cruise customers who know they will get looked after like nowhere else. They will be itching to get back onto the ships as soon as possible, and those walking sticks will be used to gain an advantage of being on the ships first.
They've successfully removed people from the holidays business that took it on the wrong path, and returned to the old chief executive who has Saga running through his veins. Cancelling holidays for 2020 will probably be almost a relief while they re-engineer their program.
It wasn't long ago, that they put Titan up for sale - at a value of £100 million, Having bought it for peanuts, they would have made a pretty penny out of this and far from being worth less money - I think it could well end up being valued more when the fallout of its competitors happens later this year, leaving Titan in a very strong position.
Sage has also launched the three year fixed products - older people like certainty, and these fixed prices ensure the business has a regular stream of business and this will be very welcome for their customers.
And finally, the insurance side of Saga is their most profitable - pet, house, car, travel - Saga customers will find travel insurance difficult to get, and so while they may not travel this year, many will want to keep their policy.
But car, pet, house insurance....I can only see that there will be less payouts - no one is driving, but still need to insure the car, staying indoors means that unless there's accident in the home, there will be less claims on other forms of insurance too.
Lance Batchelor took a lot of stick, but I think he's put Saga into a great position and the travel business will come out of this much stronger than it went into it; and the insurance division, with the new format can only be strengthened.