Hotelbeds’ €110 million sale of its destination management arm back to former parent Tui will allow it to focus on the tech-driven bedbank side of its business.
The Palma-based global distribution giant, which was sold to private equity owners by Tui in 2016 for €1.6 billion, said the deal came about following an approach by Tui.
Although few details were disclosed of the proposed transaction, which is subject to regulatory approval but is expected to close within a couple of months, it is understood to have come in at around an 11 times multiple.
Total Transaction Value of Hotelbeds with the destination management division included stands at around €7 billion, without it that figure drops to around €6.3 billion, according to sources close to the deal.
The division employs 2,600 people globally and was included in the package that Tui Group, Europe’s largest travel firm, sold to Cinven and Canada Pension Plan Investment Board.
It is headed by managing director Jordi Cerdó, based in Miami, has 150 regional offices and offers tours, transfers and other in-destination services to tour operators in over 70 countries and handles around 2.2 million passengers annually.
The division is made up of three brands: Destination Services, Intercruises Shoreside & Port Services, and Pacific World.
Speaking to Travolution as the deal was announced this morning, Joan Vilà, executive chairman of Hotelbeds Group, said the firm was approached by Tui and hadn’t spoken to anyone else about selling the destination management division.
“For us this is an important milestone,” he said. “It means we will completely focus on our core business, the bed bank, a business that is much more global, more technology-led and growing more than destination management.
“We did not have any intention to sell the business but Tui approached us and it looked like a win win for us and them so we felt maybe it was something we should consider. They can now build a global business with more of a strategic flavour for destination management.
“It was a good valuation for us and we can now focus our attention to the more important part of our business, the bedbank.”
Vilà said it was hard to evaluate the added value Hotelbeds has been able to realise from selling the division, having operated it for two years, as the original sell off by Tui was part of a package and it was not independently valued.
But he said the division was profitable and growth has been good tracking in double digits over the last two years.
“It was well managed and we had a very good team. Tui had checked what was in the market and did not see anything better than what we had,” added Vilà.
After yesterday’s announcement of 350 managerial roles as part of the integration of GTA and Tourico Holidays, which Hotelbeds acquired in 2017, the firm will employ around 5,000 people globally once the Tui deal has gone through.
Vilà said the focus was now on integrating the three bedbank brands on to one technology platform, a project he said he expects to be completed by the final quarter of this year.
As well as its bedbank businesses Hotelbeds has TAB, its Transfer and Activity Bank, and Roiback, a B2C direct sales arm that offers hotels a booking engine (Backhotel) first launched in 2017 and channel management and payment gateway capabilities.