EasyJet says its ambition to become the UK’s third-biggest operator remains on track although it may be working with a new hotel provider next year.
The budget carrier this week invited companies to tender for the contract to supply beds and run the easyJet Holidays website.
The carrier’s current deal with Lowcost Travel Group expires in February 2014.
Lowcost stopped short of confirming it would bid, but chief executive Lawrence Hunt said it was interested in renewing the deal and easyJet said it would be invited to tender.
EasyJet said it expected a ‘plethora of firms’ to express interest, but sources close to the negotiations suggested only a small number would put in a bid.
When the contract was awarded to Lowcost in November 2010 the only other firm in the running was On Holiday Group.
Hunt said Lowcost’s latest results, for the year to October 31, showed strong growth through international expansion and partnerships such as that with easyJet, lastminute.com and latterly Kuoni Apollo in Scandinavia.
“EasyJet Holidays has grown massively since we took it over and continues to grow,” said Hunt.
“We are happy with that and have a great relationship with easyJet. We would be very interested in renewing our contract.
“EasyJet Holidays is already a major player in the UK market and is on track to become the third-biggest operator. Being the largest UK airline and one of the largest in Europe means there is massive growth potential.”
Steve Endacott, chief executive of On Holiday Group, believes easyJet’s stringent demands may have limited growth.
“EasyJet Holidays has the potential to be the third-biggest tour operator in the UK,” he said.
“However, it does not appear to have delivered that over the last two years.
“Before anyone rushes in to take on the contract it’s very important to understand the reasons it has not grown as fast as you would have expected.”
Endacott refused to comment on whether he would tender for the contract.
A similar move into dynamically packaged holidays by Jet2.com through its in-house Jet2holidays.com website has been a much-heralded success, enabling it to grow the carrier’s leisure network.
Much of Jet2.com’s success was down to trade distribution, according to Mandy Round, general manager of easyJet Holidays. She said easyJet Holidays’ approach was working well. While trade distribution was mooted by Lowcost Travel, it has not materialised.
Round said easyJet had considered bringing the holidays operation in-house but discounted it, adding it was company policy to put big contracts out to tender.
“We have outlined the way it’s set up, but if there are any changes that would improve the performance we would be prepared to listen,” she said. “We know there’s room for growth and we’d like to know if there is anything we are missing.
“It will be a fairly tight contract to manage, but no different to one anyone else would have selling holidays in the marketplace.”
“It’s a big business, it’s a lot to deliver and not everybody will have the capabilities to deliver it. People have got to take it very seriously.
“The ambition for the venture is to continue to grow. We are delighted with growth so far over the last two years, the model is working really well for us but we feel there is still room for growth.
“We are absolutely delighted with the way it’s going, the growth has been significant. If people do not want to believe that that’s entirely up to them but we are more than happy with the business that’s coming our way. ”
Hunt would not comment on commercial details of the easyJet deal. However, he indicated distribution through the trade could still happen, but it had not been a priority for easyJet.
“As [the operation] grows, inevitably both sides will want to invest more into it, in which case the commercial terms may need to be reviewed,” he said.
From February 2014, easyJet will combine bed supply for its UK and European websites into a single contract. Hotelopia is the current partner for Europe.
Round said the unified deal means the partner easyJet chooses will have to be able to deliver websites in multiple languages and be able to understand the complexities of working in multiple markets. EasyJet currently operates six European websites on top of its UK one.