The acquisition by Kaplan International of agency giant ESL Education has made an impact across the study travel sector, with many agencies taking stock of the news that one of the largest student placement businesses in Europe is now owned by a major school chain.
Greater focus on productive working relationships between supply-side and educators will be a likely outcome say some stakeholders, while further acquisitions of agency businesses could be a new hallmark of the study travel sector.
As Mauricio Pucci, network director of the Information Planet agency group observed, it is not the first such example of vertical integration within the study travel business. But, according to Pucci, “Kaplan + ESL is a new reality for our industry”.
He clarified his thoughts for The PIE: “Our industry needs change, these days, schools and agents are using an old business model which is not working anymore,” he said.
Beyond more examples of vertical integration, Pucci – whose own agency network includes 50 offices around the world – said he predicted: “collaboration will be the new currency”.
“Both sides are wasting valuable resources, and as a result making very little profit from it. At the end our client – the student – is getting less value from their investment,” he claimed.
“We are all reaching maturity. It is time for schools and agents to work closer together,” he said. “I believe we are ready for it and we should expect more alliances to be formed in the near future.”
At a smaller agency, Aventure Linguistique in Switzerland – the same country where agency giant ESL is headquartered – founder, Denis Baker, suggested that the biggest impact in the medium-term could be on similarly-sized education companies.
They will be aware that one of the big European distribution channels may be disrupted or impacted to some extent – Kaplan has stated that ESL will continue to operate as an independent agency, but nonetheless, ESL agencies will now represent all of the Kaplan language schools across their network.
“This [news] reinforces that more than ever, small agencies and independent schools should be looking to find better, more formalised ways of working together to help secure the viability of both,” Baker told The PIE.
The acquisition “is definitely an eye-opener”, he continued. “Whether it’s the game-changer some people fear remains to be seen.”
In Brazil, at one of the biggest agency businesses in the country, Victor Hugo Baseggio, co-founder of CI, saw the move as an endorsement of the agency business channel from major educator operators.
He told The PIE, “We really appreciate watching such a strategic move from a solid player like Kaplan. It is an indisputable bet on a brighter future for premium education agents.”
“It should shake the ELT industry in a positive way,” he added. “It is challenging to see both ESL and Kaplan running these two businesses independently. We will learn from these new times.”
Pucci of Information Planet, who is based in Australia, pointed to other examples of education companies operating vertically-integrated education counselling businesses.
“Many years ago it was a shock for the industry, today many schools are happy as they benefit from students coming from that agency. Agents are mature enough to understand the relationship and they work well with Greenwich.”
He continued, “In my opinion, agents and schools can work under the same company group, but should keep independent management as they are different businesses.”
Kaplan previously entered into the agency business, acquiring Swiss company ProLinguis in 2008 before it was then acquired by StudyLingua in 2016. It also has an ownership stake in BEO in Asia.
The company has also invested in direct business via student counselling services offered directly by Kaplan teams. At the time of the ESL acquisition, a spokesperson commented, “In certain countries, we have invested in selling direct and this will remain part of our channel mix.”