For the first time since TUI sold off its Hotelbeds unit three years ago to the London-based private equity firm Cinven and the Canada Pension Plan Investment Board followed by Hotelbeds’ subsequent acquisition of Tourico and GTA the following year, one got the sense last week at the company’s annual MarketHub Americas conference (this year in Cancún) that something really big is finally, really happening with a company that is, by far, the largest bedbank in the world and that its other components (including the tours, attractions and entertainment sector) are ready to grow. This was, in effect, the first MarketHub since the nearly complete integration of Tourico and GTA into the company.
One detected, as did INBOUND’s editor, that the pain felt by the reorganization, realignment and head-rolling that took place across and within the Palma de Mallorca-headquartered company throughout much of 2018 has ended—one delegate told us during a golf-car shuttle to our rooms, “The first nine months were really hard; then it got better.”— and that a new, more muscular organization was and is poised to maximize yield through its market dominance.
The MarketHub event also showed that the realigned company has a lot of companions facing forward: there were some 80 partners and sponsors in Cancún for the event, including a number of major hotel brands and some key destinations and attractions (Disney and Universal), as well as some other marquee names, such as Amazon and Google (Sorry, every slide from the Google presentation was marked “proprietary” and “confidential,” so we don’t have much to report on what its representative said), with about 300 or so official delegates on hand at the small convention center of the new Grand Palladium Costa Mujeres Resort & Spa. Its boutique ballroom feel helped foster an intimate rock-concert-type vibe which had people hooting and whooping whenever a favorite supplier or destination was mentioned.
“The last 12 months have been a bit of a challenge” declared Sam Turner, wholesale sales and sourcing director, his voice shifting to reflect relief, adding, “Thank you for your patience.” He then announced that, “after market acquisitions, we have become the clear market leader in the bedbank arena.” Cheers.
An oft-quoted veteran of the tour and travel industry whose career goes back more than 20 years, beginning with a tenure at Brittania Airways before it became a part of TUI AG, Turner then went on to discuss the near-term future for both Hotelbeds and the tour and travel industry in the context of the global economy and current industry trends, posting and commenting on information slides and key numbers as he did.
INBOUND also had the opportunity to speak with Turner one-on-one. That’s where he told us that the realignment is 95 percent complete. It has taken a while, he said, because the structure of Hotelbeds after its acquisitions of Tourico and GTA left it with unnecessary duplication. “There was no need to making three of everything—tour operators, loyalty players and so on,” he said.
Asked what’s left to do, he explained that, among other things, there are some contracts outstanding in several areas. Also, the company has to bring order to those who are engaged in the re-selling of Hotelbeds’ product.
Trends in a Nutshell:
—The macro trend suggests that (1) travel and tourism growth is likely to continue beyond that of the economy as a whole; (2) an overall economic slowdown is likely; and (3) a strong U.S. dollar is weakening demand.
— Travel distribution trends highlight: (1) there will be increased dominance on the part of leading OTAs; (2) there will be an increased focus on parity; and (3) maturity.
The first of the following three tables shows one basis for the company’s projection for its projected hotel industry trend:
And now, there is an increased focus by hotels on protecting rate parity, as 52 percent of people review hotel websites as a part of the search process, and 72 percent always, or mostly always, consider price comparison in booking. In the meantime, well prior to the MarketHub, Hotelbeds was creating a balanced mix of markets that it serves.
Some Key Talking Points Numbers for Hotelbeds:
—It now has 180,000 hotels and plans to add 10,000 a year—4,000 annually in the Americas.
—110,000 hotels own contracts.
—There are 3,500 hotels in its Guarantee program.
—It now has 18,000 activities (attractions, tours, entertainment, etc.).
—It has more than 1,000 contractors, over 600 engineers, 400-plus account managers, more than 800 call center staff, and more than 100 data and analytics specialists.
— Hotelbeds is now 7 times bigger than all of its competitors.
What’s Hot and Going to Get Hotter?
—Turner said that China will be the largest driver of change in the next 10 years. Already, right now, the China-to-USA corridor accounts for 3 percent of total volume.
—Hotelbeds now has 400 people in China.
—China has moved up to number 4 source market (the cluster of the UK, Germany and the USA comprising the Top 3) up from the number 5 spot a year ago. It was number 20 five years ago
Instant Poll Results: One feature of the morning presentations on the first day of the event was a pair of instant polls. Attendees were shown a flash poll on the big screen behind the conference room stage and asked to make their choice at that moment. Following are the poll result numbers as INBOUND was able to tally them. There were approximately 250 votes cast in a matter of seconds.
