Ever since it became known last week that Kuoni, the Zurich-based travel company that is continental Europe’s oldest tour operator (it was established in 1906 by Alfred Kuoni) had announced that it had begun accepting acquisition bids, the global tour and travel industry has been rife with speculation as to who is going to owning the company.While almost all of the coverage treated the matter as if it were somewhat a surprise, perhaps those of us following industry developments should have been tipped off when it was announced just weeks before, on Dec. 15, 2015, that Kuoni had sold its headquarters office building in Zurich to zürcher kantonalbankfor $75 million—a price which, according to published accounts, matched its market value. Earlier in 2015, Kuoni sold off its European travel companies toDER Touristik, and its operations in India and Hong Kong to the financial holding company that owns Thomas Cook India.
In the days since the possible sale of the company became known, the speculation has centered on what will happen to Kuoni’s specific units. There are three principal components to the company:
—Global Travel Services, which deals with Kuoni’s B2B offerings (this includes GTA) including its bedbank operations, ground transfers and sightseeing tours.
—Outbound and Specialists, which is focused on dealing with tour operations and destination management.
—VFS Services, which deals with visa processing and other inbound legislative enquiries.
What seems to have fueled more interest than any other part of the potential transaction is the possibility that whichever bidder takes on Kuoni’s bedbank operations might also acquire TUI’s Hotelbeds, which is headquartered in Palma de Mallorca, Spain and has a large Americas operation in Cancun, Mexico. The latter has been on the block for several months, during which TUI—it is Europe’s largest tour operator—has made a number of announcements highlighting the healthy financial condition of Hotelbeds, as it seeks to secure the highest price for the unit.
The speculation is not merely in back channels or on tour and travel industry blogs. For instance, the widely followed German travel trade publication FVWhas said “an investor could acquire both GTA and Hotelbeds and merge them into a single dominant B2B hotel capacity provider serving tour operators, hotel portals and other travel companies.”
And the respected German business newspaper and online site, Handelsblatt, wrote: “The imminent sell-off of the last major part of the Swiss holiday giant Kuoni has left German competitor TUI rubbing its hands at the prospect of profitably divesting part of its business on the back of the deal.”
Perhaps because it is taking place in the tight-knit tour and travel industry in Germany, in which TUI is a dominant presence, the speculation is a bit overheated. As one industry observer suggested to the Inbound Report: although there might be some economies achieved by the scale of the acquisition of both bedbanks, the overall cost of such a purchase would be expensive and the margins are too low to justify the debt load this would require.
Those firms mentioned as interested in Kuoni include the Swedish private equity company EQT; BC Partners a global private equity company based in London; Permira, another London-based investment firm; Partners Group, an investment company located in Alexandria, Virginia; the Washington, D.C.-based private equity firm, the Carlyle Group; and the Haikou, China-based HNA Aviation Group.
