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CNG to exit consumer sector
CNG Travel Group is to dispose of its loss-making business to consumer leisure division to concentrate on its core businesses.
The decision to exit from the B2C arena came as part of a strategic review by the Dublin-based travel technology company.
But CNG said results for 2005 will be below expectations due to continued losses in the leisure division
CNG said the business to consumer leisure sector “no longer matches the group’s strategic objectives”.
It is to dispose of its Places to Stay consumer brand along with all other parts of its B2C leisure division.
This will allow the company to concentrate on its Travel Lodging Connector (TLC) hotel booking software and its US-based corporate travel agency Tzell Travel.
A statement said: “Tzell continues to trade profitably and broadly in line with market expectations and the board is also confident that TLC will achieve a break-even run rate by the year-end. These positive factors, when coupled with continuing losses in the leisure division, will mean that results for the year to 31 December 2005 will be below expectations.”
CNG said it had “undertaken a strategic review of the business to ensure that both management time and group resources are focused on core operations where we hold a competitive advantage”.
The group, which raised £22 million by floating on the AIM in May last year, admitted that TLC’s performance was “disappointing” in the short term but said it was an innovative technology which was already delivering real benefit to travel agents.
Bookings through TLC are running at about $1 million a day but the company said that “conversion to our hotel inventory is being adversely affected by strong increases in US hotel occupancy rates”.
CNG added: “This has lead to a reduction in the number of room rates available to intermediaries. Notwithstanding this, usage of TLC continues to grow”.
The company said it was “cautiously confident” of an improved financial performance from TLC in the second half of the year.
Report by Phil Davies
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