Lastminute on the acquisition trail

Lastminute.com has bought UK hotel and conference booking agency, First Option Hotel Reservations Ltd (First Option) for £12.1 million. The deal will mark the online agent’s first venture into retail outlets. Lastminute says the acquisition of the late availability specialist will broaden its range of UK hotels and B&Bs. According to Lastminute, 90% of First Option’s bookings are for same-day arrival at stand-by rates. The deal also brings with it 21 retail outlets, mostly in railway stations and airports. Commenting on these Group commercial director, Andrew Windsor told TravelMole: “We will keep all of the outlets open and we are looking to expand in transport hubs. In most cases they are small one or two man desks, but are ideally placed for late availability bookings.” Lastminute says it intends to re-brand these and keep them open 24 hours a day by offering customers the chance to book at terminals when the outlets are not manned. Mr Windsor says the company is looking into different functionality for the terminals including touch-screen controls and a help button that connects to a call centre. The deal sees First Option owner, Sheetal Kapoor, receive £10.5 million in cash and an issue of around 750,000 shares in lastminute.com. He has agreed to stay on in a part-time consultancy role for six months. First Option has a number of corporate and Government customers, to whom Lastminute intends to market the rest of its products, including car hire, flights, and extras. These customers are currently handled by consultants via corporate extranet solutions. Mr Windsor said Lastminute intends to grow the corporate clients and offer them products like Exhileration, a corporate events offering. He told TravelMole: “This deal gives us entry into the corporate market.” First Option made a profit before tax of £700,000 in 2003, and has been making profit for some years according to Mr Windsor, but had a tough year in 2003 because of its dependence on inbound visitor numbers to the UK. The company has a staff of about 200 people, mainly based at the call centre in Stockport and at the retail outlets around the UK. Lastminute chief executive, Brent Hoberman said: “The acquisition of First Option creates an opportunity for further growth in a category where the margins are good and the returns are sustainable.” He added: “This acquisition again accelerates our growth in the UK, our largest market and moves us to a leading position in the online hotels category.” Speaking about the future, Mr Windsor didn’t rule out further acquisitions. He told TravelMole: “We are constantly looking to fill gaps in our product portfolio and gaps in our channel to market, and are always on the lookout for opportunities to do that.”