TUI buys Hotelbeds business to sell extra activities to holidaymakers

Frankfurt/Berlin (Reuters): Europe’s largest tourism group TUI has expanded its business offering excursions and activities to holidaymakers by buying part of Spanish hotel room specialist Hotelbeds Group, aiming to take advantage of a growing market.

TUI, which is buying the business for 110 million euros ($136.27 million) in cash, had sold Hotelbeds in 2016 for 1.2 billion euros, but CEO Fritz Joussen said on 4 April it was impossible at that time to separate out the destination services business and that TUI had bought it back for a better price.

The deal will allow TUI to expand in the destination services market, which is estimated at around 140 billion euros and which is growing at a rate of around 7% a year, TUI said.

The destination services acquisition comes as TUI tries to provide more personalised products to customers throughout their holiday, such as such as airline seat upgrades, specific hotel rooms and then a choice of activities, once they reach their destination.

Joussen said TUI wanted to take advantage of the time between when a customer books a trip and when they actually go on holiday, typically around four months, in order to sell them additional activities, such as guided tours or Segway tours, at their holiday destination.

“That’s a period where we can virtually exclusively offer these customers such services,” Joussen told journalists. Joussen said that with up to 350,000 “micro-suppliers”, the market was highly fragmented, and TUI hoped to work more closely with them.

“They won’t find better access to the market than us,” he said.