Michelin, the France-based tire company that publishes Michelin guides for restaurants and tours, quietly acquired the booking site Tablet Hotels in October.
The goal of the deal, which was announced Monday, is to have the Tablet Hotels team lead the digital transformation of the print-oriented Michelin Red Guides for restaurants and Green Guides for tourism, and to build a travel larger travel vertical, Tablet Hotels co-founder and CEO Laurent Vernhes told Skift.
The deal for Tablet Hotels
Under the deal, Vernhes, who co-founded Tablet Hotels with chief creative officer Michael Davis, will remain CEO of Tablet Hotels, reporting to Couasnon. Michelin will keep the Tablet Hotels brand, Vernhes said, and its team will remain in New York City.
Michelin and Vernhes aren’t sharing details about the purchase price. Vernhes said Tablet Hotels was expected to notch $100 million in gross bookings, meaning the full value for hotel bookings and not the revenue that goes to Tablet Hotels, in 2018. He said revenue grew 20% this year, and the booking site has long been profitable. The company’s Tablet Plus membership club has 12,000 members who pay annual fees of around $100 to get perks such as room upgrades or free parking at participating hotels.
Informed of the deal and without knowing any profit numbers, several travel industry dealmakers and analysts speculated that Michelin may have bought Tablet Hotels for $20 million to $50 million. Given that Michelin is a strategic buyer, it isn’t out of the question that the price tag would even be a bit higher.
Bootstrapping all the way
An important part of that calculation is that Tablet Hotels had some angel investors, but never took any venture capital money, according to Vernhes.
Vernhes said the co-founders bootstrapped the site, growing from cash flow and profits in its 18-year history. Acknowledging that perhaps management could have been more ambitious over the years if the company had accepted venture capital funding, he said he has long been frustrated that the company’s marketing efforts never exceeded 20% of revenue.
Tablet Hotels plans to devote $10 million to marketing next year, much of it in brand marketing, a first for Tablet Hotels, he said. Vernhes characterized that amount “as a big jump for us” as the company traditionally emphasized product and content over marketing.
While Tablet Hotels may be able to build scale in places such as Europe and Asia, including China, where Michelin is strong, Michelin will be able to add hotel bookings to its dining, tourism and maps portfolio.
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