Aviation Festival: Hotelbeds identifies airline partnerships as driver for growth

Airlines ‘small but fastest-growing sector’ for bed bank

B2B trade supplier Hotelbeds says it is seeing more airlines looking to differentiate their hotel ancillary portfolio as they become more sophisticated retailers.

Speaking to Travolution at the Aviation Festival in London last week, Jon French, Hotelbeds’ director of strategic partnerships, said airlines was a small but its fastest-growing sector.

He said the Majorca-based bed bank, which was sold by Tui Group in 2016 for €1.2 billion, is investing in technology solutions specifically for its airline partners.

Hotelbeds has supplied easyJet’s bed stock for its holidays division for a number of years and also works with BA, through its API, and Singapore Airlines on its packaging proposition.

“We are seeing a real need from airlines for an all-in-one solution,” French said. “Average net profit per seat globally is $6 so clearly there’s a need for them to diversify into selling hotel and non-airline products.

“Airlines are at different levels of maturity; some are saying it all about ancillary revenue from seats and bags. A lot of airlines have been white labelling with very well-respected and well-run providers, but they tend to be a bit vanilla.

“What we are seeing airlines looking for is a bit of differentiation. We contract hotels directly, we are not a reseller, so we can do exclusive deals for airlines based on their portfolio and really personalise some of the offers they are giving to their customers.”

One of the latest airline deals Hotelbeds has struck is with Luxair, the flag carrier of Luxembourg, for which is it providing accommodation for its city break programme in the 20 destinations it serves.

French said airlines tend to be very risk averse and so Hotelbeds’ ex-Tui tour operating background means it can offer them the reassurance that hotels have gone through the necessary health and safety checks.

“They [airlines] needs a bit of due diligence and quality assurance,” he said. “And we offer hotels guarantees and deposits so it’s at our own risk. We have been doing this for 15 years, so this is our bread and butter and we do it well. The risk is on us, but the return is the airlines’.”

Hotelbeds looks to work in partnership with airlines, added French, beginning with understanding what the potential is for then to start offering packaged deals.

And with access to Hotelbeds’ wholesale rates airlines can be competitive in the market while assuring hotel partners those opaque rates will not end up on public-facing websites.

“We are all about partnership,” said French. “We share everything with the airlines. If they want to know which hotels people are booking, or how far out they are booking we can tell them.

“Airlines are looking for more than just a commission cheque. And this sort of partnership is good for our hotel partners.

“You know you are not just selling to OTA X, Y or Z. If you are selling to a customer you know is going to be packaging you can get some good deals and availability.

“It’s the same for airlines. Because we are B2B we are not competing with the airline for that final customer. That makes a difference in terms of trust but also working in partnership.”

Hotelbeds currently works with 40 airlines in multiple ways, including a call centre solution, through a white label, or API, and is also providing activities content and transfers through its Beyond the Bed division, which includes Holiday Taxis.