Digital

Travel IPO Market of 2014 Has Shifted Toward Europe and Asia

@denschaal

Aug 01, 2014 7:30 am

Skift Take

To some extent, the shift in geographic focus of the travel IPO market from the U.S. in 2013 toward Europe and Asia Pacific so far in 2014 reflects where the burgeoning investment and market opportunities are opening up, although it is somewhat surprising that Latin America has yet to be heard from in a very meaningful way.

— Dennis Schaal

Free Report: The Changing Business of Extended-Stay Hotels

Saga

UK-based Saga, which sells vacation packages as well as insurance, legal, health and lifestyle products, is the largest travel-related IPO of 2014 to date, with net proceeds of $928 million. Saga


Editor’s note: Skift is two years old this week, and we’re rolling out five days of special travel industry coverage. This is just one of a series you can find in full here.

The initial public offering market in travel has tilted in 2014 toward companies based outside the U.S., such as UK-headquartered Saga, Japan’s Seibu Holdings and Barcelona-headquartered eDreams Odigeo, but these IPOs lack the blockbuster dimensions of some of 2013s IPOs as none so far this year have breached the $1 billion threshold in terms of net proceeds.

In contrast, in 2013 private equity firm Blackstone spearheaded the high-profile IPOs of Hilton Worldwide ($2.35 billion), SeaWorld ($702 million) and Extended Stay America ($565  million), all U.S.-based, as well as theme park operator Merlin Entertainments ($1.57 billion) in London.

Of the twelve travel-related IPOs we tracked for full-year 2013, seven were U.S. companies (Hilton Worldwide, Empire State Realty Trust, SeaWorld, Extended Stay America, Norwegian Cruise Line, Gogo Inc. and Cvent) while the UK (Merlin Entertainments), China (Qunar), Macau (Macau Legend Development), Malaysia (AirAsia X) and Brazil (CVC Brasil Operadora & Agencia de Viagens) each sent one company out into the public markets.

But, through the first seven months of 2014, only three of the nine IPOs we tracked [see chart below] were U.S.-based companies (La Quinta, GoPro and Sabre) while the U.K. fostered two (EasyHotel and Saga), and China (Tuniu), Japan (Seiibu Holdings), Switzerland (Bravofly) and Spain (eDreams Odigeo) each saw one of their own traded on public markets.

Blackstone choreographed the La Quinta IPO, the largest U.S. IPO of the year so far as the limited service chain raised $650 million.

While Europe dominates IPOs so far in 2014, in addition to Tuniu of China there is much anticipation for the IPO of Chinese commerce platform Alibaba, which could come to fruition in August and might tip the scales as one of the largest IPOs in history.

Alibaba’s Taobao Local Service platform includes Tabao Travel, which offers flights, hotels, and visa services, and enables travel agents and airlines to list their deals.

In addition, Taobao Diandian, which also is part of the Alibaba’s local platform, is a mobile app that enables diners to pre-order meals for takeout.

Also in the wings as a possibility, although not highly anticipated, is car rental company Shenzhou Zuche, which would debut in Hong Kong if the company can execute on an IPO.

And, then there’s global distribution system Travelport, which competes against public companies Sabre and Amadeus and has its global headquarters in the U.K. It is on deck for an IPO, its second try in the past few years, and it would trade on Nasdaq, although it still hasn’t conducted a roadshow for prospective investors.

Virgin America filed papers for an IPO, but as with most IPOs, the timing is unclear and dependent on market conditions.

Only one major travel IPO so far in 2014 saw a travel company take the IPO route on an exchange outside its headquarters country, and that was Nanjing, China’s Tuniu, which sells leisure travel, with a heavy dose of tours and activities, and raised a mere $72 million on the U.S. Nasdaq stock exchange.

In 2013, China’s Qunar began trading on Nasdaq, and Macau Legend Development opened trading in Hong Kong. Macau and Hong Kong are both special administrative regions of the People’s Republic of China.

The largest travel-related IPO in the first seven months of 2014 was for the UK’s Saga, which raised $928 million, but the caveat is that although Saga sells vacation packages, it also offers insurance of all kinds (not just travel-related), as well as legal, health and lifestyle products, so it is not a pure-play travel company.

The second largest travel IPO of 2014 was that of Sabre Corp. ($627 million) which, like several companies that debuted this year, priced below what the company anticipated.

That was also true for Saga and Seibu Holdings while the shares of Switzerland’s Bravofly, an online travel agency, and eDreams Odigeo, a flight-oriented online travel agency, plummeted on opening day.

To some extent, the shift in geographic focus of the travel IPO market toward Europe and Asia Pacific reflects where the burgeoning investment and market opportunities are opening up, although it is somewhat surprising that Latin America has yet to be heard from in a very meaningful way.

That day, too, will come.

Company Trading Start Exchange Raise Background
GoPro June NASDAQ $427 M Story
Sabre April NASDAQ $627 M Story
easyHotel June AIM $54 M Story
Alibaba August n/a n/a Story
Tuniu May NASDAQ $72 M Story
Saga May London Sock Exchange $928 M Story
Seibu Holdings April Tokyo Stock Exchange $434 M Story
Bravofly April SIX Swiss Exchange $291 M Story
edreams Odigeo April Madrid Stock Exchange $589 M Story
Shenzhou Zuche n/a Hong Kong Stock Exchange n/a Story
Travelport n/a NASDAQ n/a Story
Prestige Cruises n/a NASDAQ n/a Story
La Quinta April NYSE $650 M Story

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