European private equity firm Cinven and Canada Pension Plan Investment Board (‘CPPIB’) have announced an agreement to acquire Hotelbeds Group (‘Hotelbeds’ or the ‘Company’), the global provider of travel services based in Spain, from Tui Group for a total enterprise value of €1.165 billion.
Hotelbeds offers hotel rooms to the travel industry from its inventory of 75,000 hotels in over 180 countries to its customer base across more than 120 source markets. In addition to hotel accommodation, the Company provides transfers, excursions and tours, meetings and events, visa processing outsourcing and cruise handling services. Hotelbeds’ main clients are tour operators, travel agencies, corporate clients and consumers.
The Bedbank business, which generates the majority of the Company’s profitability, has demonstrated double digit volume growth in both its hotel portfolio and room nights over the past five years. Headquartered in Palma de Mallorca, the Group was established in 2001 and employs 6,150 people worldwide.
Cinven and CPPIB believe Hotelbeds is an attractive investment opportunity on the basis of:
- Strong financial performance with double digit total transaction value (“TTV”) growth in the Bedbank business over the last five years;
- Strong underlying market growth supported by an expected increase in global hotel bookings;
- Hotelbeds’ highly experienced, proven management team, led by Joan Vilà, CEO, with an outstanding track record of driving organic growth in both its hotel supply and customer base;
- Market consolidation opportunities in Europe, Middle East, Asia and the Americas given market fragmentation and potential for further margin improvement through economies of scale;
- Opportunity to improve bedbank distribution via travel agents and tour operators – particularly in emerging economies – via investment in its sales and contracting team, as well as investment in R&D and IT systems to improve customer efficiencies and services.
Cinven has a strong track record in the travel technology business, following its successful investment in Amadeus, the leading provider of advanced technology solutions for the global travel industry, which invested more than €1 billion in R&D and doubled EBITDA during Cinven’s ownership, generating a return of 7 times.
Fritz Joussen, CEO TUI Group said, “This is a very successful transaction – a good deal for the future of Hotelbeds and for TUI Group shareholders as well as our continued growth in our core Tourism business. With the disposal of Hotelbeds, we consistently implement our strategy and strengthen our alignment as the world’s number one tourism group. There were numerous bidders for Hotelbeds Group. Following intensive negotiations, we decided to sell Hotelbeds to Cinven Capital Management and Canada Pension Plan Investment Board.”
