Lloyd Dorfmann: never taking no for an answer

The Malta Financial & Business Times talks to Lloyd Dorfmann CEO Travelex Group

The first thing that strikes you about Lloyd Dorfman, chairman, CEO and 63% shareholder of Travelex Group, is his 6’5" height. The second thing is his air of quiet determination and the sense that his mind never stops working. The energy is palpable. He tells how he began his £18 billion turnover worldwide business with a small shop next to the British Museum in London, in 1976 when he was 24 years old. Nine years later, the business having grown, he realised that the next step was the foreign exchange market for outgoing tourism, and where best to get it than the airports, which were at the time dominated by the major banks.

With some amusement, he describes how he secured his entry into Heathrow’s Terminal 4 in 1985. "I had to reverse two refusals. There was a lot of opposition from the banks and the airport administration. We were not considered a serious operation. But I stuck to my maxim of never taking no for an answer, and now there are no more major or national banks at city airports. Foreign exchange is being left in the hands of foreign exchange specialists."

Dorfman was in Malta to mark the rebranding of Thomas Cook Financial Services as Travelex, following a £440 million buyout. The Thomas Cook signs have come down in outlets in Malta’s tourist centres, and the Travelex signs have gone up instead. At a meeting for Maltese businessmen and financial services providers, held at the InterContinental Malta, he described how he made his purchase. "The auction was run by J. P. Morgan, and we were specifically barred from entering the bidding process, because the Thomas Cook management thought we were unsuitable. Then I concluded that if I didn’t kick that door down and get in the ring, nothing would happen, so that’s what I did."

To buy the operation, which employed almost 4000 people the world over, he had to borrow from Barclays, whose foreign exchange outsourcing is done by Travelex. "We paid for it in March, and by the following October, we were able to completely repay the £440 million loan," says Dorfman. "If you had asked me, way back in 1976 when I was standing alone in my shop, that my company would one day buy Thomas Cook, which dominated the world market for foreign exchange and global payments, I would never have believed you. But it’s happened. Our largest acquisition prior to that was a business from Barclays for £18 million."

There were some hitches to integrating Travelex with Thomas Cook Financial Services in the beginning. Dorfman tells how antagonistic Thomas Cook key management was at the beginning. "One woman who is now a top member of the team told me some months afterwards how she drove to work the day the bidding went through, praying at the wheel of her car: ‘Please don’t let it be Travelex, please don’t let it be Travelex.’ When there is such major change, people are bound to feel insecure, and the business we had bought was three times our size. I made it clear that I had no interest in disrupting things, and pointed out that, for the first time in its 160 year history, Thomas Cook Financial Services is owned by a financial services organisation, rather than by an operation whose primary interest was travel. To be fair, we also had to up our game. We went from a business of 800 employees to one with 6000. The casualties were not all on one side; we simply wanted the best people. It was very important to win their hearts and minds. I made it clear that I wasn’t standing before them as CEO, but as a 63% owner of the business, and that I had bet a lifetime’s efforts on this."

Foreign exchange is just a part of the business. Another significant part of the operation is global payments. Dorfman attributes Travelex’s considerable success in this sector to "sticking to what you know and do best" – in other words, specialisation. "The days of the banks as department stores of financial services are gone," he says. "When you’re trying to do everything and anything, you tend to get bogged down in red tape and bureaucracy. You’re also slower to react to your customer’s requirements. Banks expect you to form an orderly queue outside their door; we go to our client’s door. Also, because foreign exchange and global payments are what we do, we are highly specialised and that makes for greater efficiency. We have seen a dramatic increase in our global payments business."

Travelex’s sole public exposure is a £75 million 10-year bond listed on the London Stock Exchange last year. It remains a private company. The other 37% shareholding is held by Travelex management and by 3i, the former Investors in Industry, a venture capital organisation set up in the 1960s by the British national banks, which is now the oldest and largest such in Europe.

Dorfman lists what he sees as the four characteristics of the Travelex story: persistence, sticking to what you know ("and by and large, staying out of trouble"), self-belief, and knowing that conventional thinking produces conventional results. These have been an eventful 18 months for Dorfman and Travelex, but his energy remains undiminished. "However challenging we thought 2001 would be at the beginning, with the British debate on the euro, and the foot and mouth disaster, by the end, with the crisis that followed 11 September, we were very challenged indeed. And through it all, we were integrating with Thomas Cook," he says. "You’ve got to enjoy what you do. Do the earth and heavens move every day? No, they don’t. But if they move 51% of the time, that’s OK by me.”