After months of speculation, TUI Group has finally sold its Hotelbeds business, netting Euro 1.165 billion ($1.3 billion) in the process.
The buyers are named as Cinven and Canada Pension Plan Investment Board.
Mallorca, Spain-based Hotelbeds has been on the market officially since December last year, but TUI has been trying to offload the business for at least 12-18 months.
Recent months have seen major players such as Expedia Inc and the Priceline Group linked with a purchase of the global accommodation platform.
The eventual buyers, both private equity investment houses, have identified why they see Hotelbeds as an attractive investment opportunity (“considerable growth opportunities”), starting with its having recorded double-digit growth in its total transaction value for the past five years.
The latest Hotelbeds’ financials for the year-ending-in-September show a total transaction value of Euro 3,657 million, turnover of Euro 1,059 million and underlying EBITA of Euro 69 million. Its gross assets at signing are worth Euro 1,338 million.
Both have also noted CEO Joan Vila and the existing management team’s ability to drive organic growth, both in terms of hotel supply and customer base.
The new owners are looking to invest in its contracting team and IT to expand the business into new markets as well. Asia-Pacific and other emerging markets are a potential goldmine for the bedbank operator, with support from Cinven’s Hong Kong-based portfolio team mentioned in the announcement.
There is also the potential of consolidation in the highly fragmented wholesale accommodation market and growth in the hotel market generally, with a shift to online bookings taking place at the same time.
Hotelbeds’ bedbank business is by far the biggest profit-maker within the portfolio, but it does have some interesting smaller units – a B2B car rentals business and a tours and activities bank, as well as a destination management business and a visa-processing unit.
Vila and the existing management team will continue to run the business. He says:
“We are excited about Cinven and CPPIB’s investment in Hotelbeds which will enable us to continue improving the quality and range of services we provide to customers as a financially solid, independent and scalable bedbank operator.”
“The Bedbank segment continues to grow fast and with the backing of Cinven and CPPIB we will be well placed to invest more strongly than ever in technology, innovation and distribution.”
Cinven has previous experience in the B2B travel tech arena and mentions its investment in Amadeus in its statement. In 2005 it linked up with BC Partners to buy Amadeus for Euro 4.34 billion, in one of Europe’s largest-ever public-to-private transactions.
It re-listed Amadeus back onto the Madrid stock exchange in 2010 and completed its exit the following year, having “generated 7 times its original investment, realising gross proceeds of more than €1.6 billion.”
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