Lotus, which employs 20 people, will keep its name and remain at its current office near London Bridge, with W founder and global CEO Warren Johnson and the agency’s MD Richard Tompkins joining the Lotus board.
Founded in 2007 by Sarah Johnson, Lotus’ clients include tourism bodies of Greece, Spain and Alaska, as well as hotel groups such as Palladium and airlines including LATAM and Philippine Airlines. It generates fee income of around £1m per year and revenue of twice that amount; the agency handles other aspects such as marketing, representation and consultancy.
Warren Johnson told PRWeek Lotus will have access to expertise from W, and vice versa.
"It sits absolutely as part of our ambition and strategy to acquire majority stakes from best in class vertical sector experts, which are top-three in market and still operated by the founders," he said.
"This is a case study of how we want to do deals – we’ll take 51 per cent and the rest stays with the founders, without an earn-out. It’s effectively an earn-in; we’re effectively buying into the business so we can scale it."
Lotus becomes the fourth business in which W has invested in the past two years, having bought hospitality and entertainment specialist House in 2016, followed by Newcastle-based GluePR (since named W North) in 2017.
Last year, the company also took a minority stake in jewellery PR specialist Facets – W has since increased its investment to a majority stake.
Warren Johnson said: "We’ve got two or three other specialists we’re looking at [investing in] at the moment, all very much fitting this brief, which is best in class, lead sector expertise, and offering more than ‘traditional pr’, that gets closer to the clients’ bottom line… to actually help drive business value and revenue.
"That for me is something only sector specialists can do. The more the industry can get closer to our clients’ commercial objectives, the more robust we’ll be. It’s one of the reasons advertising agencies have been so resilient is that even of no-one watches ads any more, they can have the ears of the CEO and they can actually talk the language of commerce, which I think as an industry we still don’t do very well."
Sarah Johnson said Lotus had looked at acquiring a smaller agency but "it was expensive in terms of cost and timing".
"It really became apparent to us that we knew travel really, really well, but looking at the portfolio of clients [W] has and the awards they pick up for creativity, there’s nothing like that in the travel space. For us to bring the commercialism of travel to the party, and then add in the brand portfolio, it’s really something unique."
She added: "It was important to us that our partner was going to be British. A couple of our competitors have recently been acquired outright by American companies. We had been approached, but that really wasn’t the space we wanted to be in.
"Part of the attraction is the fact these guys [at W] are British and independent and that’s what our clients have bought into with us and that’s what we want to continue to be. That cultural fit was quite important. We keep our clients and we keep our team."
One client they share is Hard Rock. W has a consumer-focused account to publicise the opening of a Hard Rock hotel in London next year, while Lotus handles PR, sales and marketing for the brand’s hotel sites in Tenerife and Ibiza. Warren Johnson said his ultimate goal would be to "try and join those things up".
W opened in Singapore in 2015 and Warren Johnson said there’s a "huge opportunity" for Lotus to either operate from the same building or open a standalone office. He said a large amount of growth in the Asia office is from hospitality clients.
The W chief executive said W and Lotus have already started pitching together, for an unnamed hotel group.
W is ranked 46th in PRWeek's most recent UK Top 150 Consultancies list, with UK revenue of £6.6m in 2017.
Read next:
Luxury is the new black: Boomtown for specialist agencies in London as M&A activity heats up
'Ad agencies will cease to exist' - the new PR world according to W Communications
