TUI group has sold its Palma-based B2B bedbank Hotelbeds for €1.165 billion.
European private equity firm Cinven and Canada Pension Plan Investment Board (CPPIB) have confirmed their joint purchase of the bedbank, which also provides transfers, excursions and tours, meetings and events, visa processing outsourcing and cruise handling services.
Established in 2001, it employs 6,150 people worldwide.
The accommodation business, which generates the majority of Hotelbeds’ profit, has achieved double digit volume growth in its hotel portfolio and room nights over the past five years.
TUI said proceeds from the sale will be used to invest in future growth opportunities and strengthen its balance sheet.
"Due to their different business models and strategies, Hotelbeds had been operated independently from the group’s tourism business in order to maximise the division’s growth and value," it said.
TUI began a strategic review of Hotelbeds late last year and Peter Long, chief executive at that time, said a sale was the likely outcome. Reports of discussions with private equity firms had emerged earlier this week.
Announcing the purchase today, Cinven and CPPIB said their decision was based on market growth and potential for more growth, along with Hotelbeds’ ‘highly-experienced’ management team, led by CEO Joan Vila.
They also said they would benefit from market consolidation opportunities in Europe, Middle East, Asia and the Americas ‘given market fragmentation’ and saw potential for further margin improvement through economies of scale.
Jorge Quemada, partner at Cinven, said: "We believe there are considerable growth opportunities through further investment in IT – as we did successfully with another global business based in Spain, Amadeus; growth in Asia and other markets – supported by our Hong Kong-based portfolio team; and market consolidation as the wholesale accommodation market remains highly fragmented."
The deal, subject to approval from relevant regulatory authorities, is expected to be completed by the end of September.
