The new owners of trade supplier Hotelbeds are “ready to spend more money” to grow the business and spur innovation.
The sale of the Spanish bed bank by Tui for €1.17 billion to private-equity firm Cinven and Canada Pension Plan Investment was completed in September.
Hotelbeds managing director Carlos Muñoz said the deal promised new funding to expand its core business and drive innovation.
“The new owners are financially very strong and fully committed to investing in our business,” he told Travel Weekly at the recent World Travel Market. “They are ready to spend more money.
“That’s very good news. Being part of Tui had been positive for us, but its core business was not the bed bank, so it was not so ready to invest in us.
“The acquisition was a good deal for Tui, Hotelbeds and Cinven.”
Muñoz said continued investment in technology was vital in the highly competitive bed bank sector, as was expanding product range.
“Acquiring more product requires more sales people on the ground,” he added.
“Smaller players are realising if you do not have the scale, the sector is tough.
“Many play the role of consolidator, taking inventory from Hotelbeds and others. So the added value they offer is limited.
“Because our contracting is direct with hoteliers, we are not a consolidator, and we provide significant value to our customers and suppliers.
“It’s all about adding value. If you do not provide value to the market, then the market will filter that. Ultimately those firms will not continue [in business].”
Muñoz described many consolidators as “opportunistic”. “They have duplicated inventory, so the way they have to get volumes is by reducing prices, which reduces profits,” he said.
Hotelbeds was one of several firms approached by Lowcost Holiday Group, the parent of failed rival bed bank Lowcost Beds, about a potential rescue prior to its collapse in June, Muñoz confirmed.
Lowcost blamed the vote to leave the EU on June 23 for scuppering attempts to attract investment to keep it in business.
Muñoz said Hotelbeds had not seen any impact from Brexit and although Lowcost was a customer, there was no financial hit as a result of the failure.
“We were well covered in this case,” said Muñoz. “We had been following the Lowcost situation for two years and we were ready for that.”
He added that consumers and suppliers “are looking for valuable partners, and we have a very good position, offering a solid partnership”.
In terms of innovation, Hotelbeds recently unveiled a tie-up with What Now to promote an app to hoteliers offering ancillary products to guests.
It has also been ramping up its Transfer and Activity Bank and plans to treble sales in a sector that offers lower volumes but higher margins.
However, Muñoz said he expected the bed bank to remain the biggest part of the business.
“Accommodation is still a more friendly product for the consumer to book online. In transfers and activities, we are where we were with the bed bank seven or eight years ago,” he added.
“It’s important we continue innovating in technology, launching products and new customer segments.
“It’s in our DNA. We are continually launching these types of things into the market.”