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This spring Tourico Holidays, an Altamonte Springs, Florida, wholesale travel brokerage company, was acquired by the bedbank business unit of Hotelbeds Group, a Majorca-based travel trade services business.
Tourico and Hotelbeds are best known for their work in the wholesale business, in which middlemen essentially buy large hotel room blocks at volume discounts and then pass along the discounted prices for resale by agencies and other sellers of travel, such as Monarch Airlines’s vacation package business.
On Tuesday, Tourico Holidays revealed a tech upgrade that hints at the ambitions of the combined operation.
The platform aims to boost inventory accuracy and highlight hotel deals with the highest profit margins. The tool also introduces an interactive dashboard with detailed monthly reports, where clients can see at a glance total room nights sold, cancellation ratios, and average daily rates.
No other travel wholesale services company provides technology that has a business intelligence tool built in to help clients make decisions and to automate reporting, the company says. It’s also the first time that Tourico sales managers can gain access to key data in their clients’ systems regarding Tourico product to help the clients sell smarter and identify which products are growing in sales.
The platform was developed by Tourico’s Florida tech team and its Tel Aviv-based subsidiary, T.G.S. Israel Development. But Hotelbeds has supported the move and plans to scale up the effort across its portfolio of bedbank channels.
Sector levers up
Officially consolidation in the hotel wholesaling sector is being driven by business logic and the efficiency gains of scaled operations.
Hotelbeds Group connects hotel room inventory to agencies and airlines (primarily in Europe) via its online marketplace, and Tourico Holidays does much the same to agencies and airlines (primarily in the United States).
The match in geographic markets is supposed to be mutually beneficial. Hotelbeds hopes to combine its operation with Tourico Holidays to eliminate redundancies in administration and technical systems.
All of the Hotelbeds brands are likely to adopt a platform similar to Tourico’s new OlympusX platform, which uniquely enables Tourico sales managers to monitor trends in a client’s region and gives them talking points on how clients can sell more high-margin products, such as Tourico’s selection of pre-purchased hotel room blocks, which a client may be missing from its inventory.
But while business strategy is the claimed main reason behind the deals, a less-discussed additional reason is a frothy leveraged loan market.
Hotelbeds Group owners — buyout firm Cinven Capital Management and the Canada Pension Plan Investment Board — were able to go back to markets this spring and sell an extension of its leveraged buyout loans to finance the Tourico and GTA deals.
In other words, the owners were able to take advantage of a current market dynamic where investors are demanding to get in on this type of deal because of an absence of good comparative investment opportunities. This situation enabled Hotelbeds to get favorable financial terms.
Hotelbeds is a market leader but does not have a majority share of the world’s online wholesale business.
Among its rivals are TravelPass Group, a Utah-based travel technology company in the travel industry that offers a marketplace for independent and brand name hotels, wholesalers, and the world’s largest travel agencies. The company claims to book about 3 million room nights a year through its five travel-related websites, such as Reservation Counter.
In comparison, Tourico says it sells 1 million room nights a year to airlines alone.
Hotelbeds is hoping that tech like Tourico’s new platform will give it an edge to win over market share and boost margins despite possibly declining overall wholesale volumes industry-wide.