TUI AG, Europe’s largest tour operator, is moving ahead with the sale of its online hotel booking business Hotelbeds Group, which could fetch about 1 billion euros ($1.1 billion), people familiar with the matter said.
The Hanover, Germany-based company is working with Deutsche Bank AG and Bank of America Corp. to prepare a disposal, said the people, who asked not to be identified because talks are private. No final decision has been made on the sale, which may kick off early next year, and Hotelbeds is likely to attract bids from private equity firms and travel companies, the people said.
A spokesman for TUI declined to comment. Representatives for Deutsche Bank and Bank of America couldn’t immediately be reached outside of regular business hours.
Chief Executive Officer Friedrich Joussen in May said he will focus the company on hotels and cruise ships while cutting back online activities in an effort to drive annual operating profit growth by an average 10 percent a year through 2018. At the time, the company said it would hold on to Hotelbeds in the near-term and “evaluate options” for the business. TUI runs Hotelbeds as an independent company.
Hotelbeds offers rooms to online and traditional travel agencies and airlines with a database of beds at more than 72,000 hotels worldwide, plus transfers and tours.
First Choice Holidays started Hotelbeds in 2001, and the parent merged with TUI AG’s travel unit to form TUI Travel in 2007. The company plans to increase underlying operating profit by as much as 20 percent a year, making it one of TUI’s strongest growing businesses, the company has said.
TUI last month sold LateRooms.com, one of Hotelbeds’ brands. Analysts have said the move came because TUI couldn’t get the business to reach the size needed to enjoy success similar to online travel agencies, such as Expedia Inc. or Priceline Group Inc.’s Bopoking.com.
This article was written by Aaron Kirchfeld and Richard Weiss from Bloomberg and was legally licensed through the NewsCred publisher network.