Fashion and flash sales company Gilt has puts its luxury travel flash sales site Jetsetter up for sale, and is looking for as much as $100 million for it, according to a story in WSJ, though that may be hoping for too much.
Our sources have confirmed the sales process, and among the media companies that have been approached are the usual suspects, including Conde Nast, Hearst and others, amidst worries about the flash sales models and a slew of well-funded luxury hotel sales competitors.
Some numbers on Jetsetter we have been able to find: it is making $25 million a year, with about $2 million in losses in its most recent year, so still a money losing proposition, but the growth numbers seem to be moving in the upward direction. However, WSJ’s sources says the asking price may be high:
From WSJ: One person who looked at Jetsetter’s books said the asking price is too high and the business model too inefficient. Jetsetter commissioned its own photographs of the hotels and resorts it listed, a time-consuming and costly process that left it less efficient than competing travel sites, the person said.
We reported earlier this month that flash sales and retail hotel sales now account for 50% each of Jetsetter’s business. That’s a big change for Jetsetter, which launched in 2009 as a flash sales site and introduced published-price retails sales about 18 months ago. Jetsetter now offers about 1,100 hotels on a retail basis, and expects to increase that number to 1,800 next year.
If the $50 million-$100 million possible sale price as WSJ reported is correct, the multiple on the business will be on the low side considering internet commerce site multiples. Jetsetter’s founder CEO Drew Patterson exited the company in May, amidst management troubles at the company, mirroring some of the turmoil that has played out at parent Gilt as well. Interim GM Rob Deeming is now the permanent GM and running the company.
One source told us that Gilt is looking for a new CEO, as founder and investor Kevin Ryan looks to take a backseat, and prepare the company for an IPO. Jetsetter’s sale fits into this house-cleaning process that Gilt has been going through for the last year or so.
We’ve reached out to Gilt and Jetsetter for comment.