Tour OperatorsThe move is seen as a strategic decision for Hotelbeds to focus on its core B2B bedbank business.

Hotelbeds offloads destinations services to TUI for US$135.5 million

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Hotelbeds offloads destinations services to TUI for US$135.5 million
Photo Credit: Delpixart/Getty Images

Alongside tours, Destination Services includes customer transfers and other in-destination products for tour operators.

Hotelbeds has ended its interest in providing incoming services to travel agencies by selling its Destination Management division to TUI for €110 million (US$135.5 million).

The wing of the company forming the deal includes three main brands: Destinations Services, Intercruises and Pacific World.

Alongside tours, Destination Services includes customer transfers and other in-destination products for tour operators.

The move is being touted as a strategic decision to give Hotelbeds the opportunity to focus on its core B2B bedbank service, although it will still act as a distributor of activities through the platform (around 16,000).

Executive chairman of Hotelbeds, Joan Vila, said, "Our Destination Management division has been highly successful over the last 18 months, growing revenues significantly and enhancing its range of services. However, TUI recently approached us and after careful consideration we believe that this is in the best interests of all stakeholders: not least our employees and business partners.

"TUI is well placed to continue the division´s growth trajectory, given its own core tour operator strategy as well as the longstanding and significant relationship between our two groups, with TUI being an important customer and partner."

Strategic realignment
The offloading of the Destination Management unit follows the acquisitions of bedbank brands GTA and Tourico Holidays over the course of the last 12 months.

Those two acquisitions came swiftly after TUI sold Hotelbeds to private equity group Cinven and the Canada Pension Plan Investment Board for €1.2 billion in April 2016.

TUI had previously bought U.K.-based consumer-facing tours and activities startup Isango in February 2013 for an undisclosed fee.

Isango was part of the portfolio of brands that were sold to Cinven and CPPIB and, despite the departure of the remaining tours-related services back to TUI, will remain at Hotelbeds.

Jordi Cerdo is the current managing director of Destination Management, overseeing 150 offices around the world and with four hubs for the Destinations Services wing in Europe, Americas, India and Asia-Pacific.

Intercruises runs port services for cruise lines in over 400 destinations worldwide (around 12,000 "calls" per year), while Pacific World is an event management business operating in 30 countries around the globe.

Earlier this week, Hotelbeds announced it had appointed 350 new managers across the bedbank division, ending a period of restructuring following the acquisitions of GTA and Tourico.

Around 40 staff left the larger, combined business, an official says.

TUI view
For its part, tour operating giant TUI gets 2,600 new employees in 25 countries as part of the acquisition.

The company clearly wants to grab some of the action revolving around tours and activities, a market estimated to be worth in the region of €140 billion and growing at around 7% on annual basis, it says.

Some 4.5 million excursions were arranged through the business in 2017, putting TUI in what it claims is the top five providers of products worldwide.

Consumer-facing players include Expedia, TripAdvisor's Viator, GetYourGuide and a string of others.

TUI CEO Fritz Joussen says the company wants to make "better use" of the average four-month period between a booking of a trip and departure, so that it can up-sell in-destination products to customers.

He added, "The global market for these services is growing. Four factors put TUI in an extremely good starting position: our strong international brand, the trust of 20 million customers, the trust of the destination countries through decades of presence and, most importantly, our world-class IT and CRM systems, in which we have invested in recent years."

Source: Phocuswire

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