Flight Centre share price higher on acquisition news

The travel agent is betting big on cruises. Here's what you need to know.

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The Flight Centre Travel Group Ltd (ASX: FLT) share price is pushing higher on Wednesday.

At the time of writing, the travel agent's shares are up 1.5% to $15.91.

Why is the Flight Centre share price rising?

Investors have been bidding the company's shares higher today after it announced a new acquisition.

According to the release, only months after reintroducing specialist cruise brand Cruiseabout and launching the CruiseHQ wholesale business in Australia, Flight Centre has acquired Cruise Club UK. It is a privately-owned business based in Manchester.

The company believes the acquisition will fast-track the Ignite business's expansion into the large UK market. It notes that Cruise Club's growth blueprint will be based on the model used by Ignite's highly successful MyCruises business in Australia and its established infrastructure provides a platform for deployment of other Ignite offerings.

This could be a good move given that Ignite is one of Flight Centre's fastest growing brands. It generated more than $500million in total transaction value (TTV) during FY 2024 from a diverse stable of businesses that deliver exclusive, value-added holiday packages to customers through hybrid off and online offerings.

Flight Centre's leisure CEO, James Kavanagh, was pleased with the deal. He said:

As we look to increase cruise sales and expand Ignite's offering internationally, we are excited by the potential in the UK and the parallels with Australia, where the Ignite model and MyCruises have proven so successful. We aim to replicate that success in the UK, which is a top-three source market for cruise passengers globally and estimated to be double the size of the Australian market.

Given Ignite's procurement, packaging and advertising expertise, which allows the business to secure additional bonuses and create extra value for customers, we're confident we can deliver an innovative and disruptive offering that will quickly prove popular.

This sentiment was echoed by Flight Centre's big boss, Graham Turner.

He believes it is small but important step as the company rebuilds its Northern Hemisphere leisure sector presence. Turner said:

We see solid future growth prospects in both the UK and America and we are keen to pursue these opportunities, both organically and, in some instances, through acquisitions like Cruise Club where there is a strong strategic and operational rationale.

This acquisition gives us the ability to quickly and cost effectively launch our offering, plus immediate access to expertise, systems and infrastructure that we don't currently have locally.

The acquisition is to be cash funded and is not material in cost to Flight Centre.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel Group. 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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