TUI Group becomes the world’s leading provider of services and leisure activities at holiday destinations following the acquisition of Destination Management from Hotelbeds Group.
The group is planning to continue to grow with customised services and offers of leisure activities at the holiday destinations. This will also include services for cruise ships in the ports.
With the acquisition of the "Destination Management" business from Hotelbeds, under the umbrella of the TUI Group the leading provider of destination services worldwide is being created. As a result of the acquisition TUI is thus extending its global presence and the product portfolio of its Spanish subsidiary TUI Destination Services.
TUI itself is active at more than 100 destinations all over the world. Following the acquisition, the Spanish subsidiary TUI Destination Services will be present with branches and staff in 48 countries, will employ over 9,000 people and generate sales of 700 milllion euros. The Enterprise Value will be 110 million euros against cash. TUI also expects to achieve operational synergies.
The global market for services at holiday destinations, as already offered by TUI Destination Services today, is estimated at around 140 billion euros and it offers considerable further potential for TUI. It is currently growing at around seven percent year on year. At the same time, with up to 350,000 micro-suppliers, this market segment is extremely fragmented on the supplier side and only to a small extent digitised. Already today, TUI Destination Services develops and arranges around 4.5 million excursions per year. This puts the TUI subsidiary among the top 5 providers in this business field worldwide. TUI Destination Services is already today far more than an intermediary. The Spanish company develops excursion programmes and services at the resort, organizes and accompanies them with its own staff. Thus, the company has a considerable influence on the diversity, exclusivity and quality of its offers.
TUI CEO Fritz Joussen explains: "The global market for these services is growing. Four factors put TUI in an extremely good starting position: our strong international brand, the trust of 20 million customers, the trust of the destination countries through decades of presence and, most importantly, our world-class IT and CRM systems, in which we have invested in recent years". TUI particularly wants to make better use of the average of four months between travel booking and travel start, in order to offer customers individually relevant offers for their stay at the holiday destination. "The TUI brand guarantees the usual premium service, TUI quality and TUI comfort despite the multitude and complexity of leisure offers and providers at the holiday destination. Our IT and CRM systems guarantee that our guests will only receive offers that are relevant to them. And they get them directly from us, not from third parties. Advice, booking, flight, hotel and leisure activities at the resort come from a single source. The customer has one contact person, that is TUI", said Joussen.
The "Destination Management" Division of the Hotelbeds Group is currently active with 2,600 employees in 25 countries, including Italy, Croatia, Mauritius, South Africa, Australia, Canada and many Asian countries. In addition to excursions and transfers, tours and activities such as Segway tours, the division also offers the handling for cruise companies in the ports. This is also interesting for TUI. Because in many countries activities while in port for the three cruise companies - TUI Cruises, Hapag Lloyd Cruises and Marella Cruises - services can be handled by our own company. TUI thus becomes a supplier rather than a customer. "The acquisition will thus bring commercial synergies to the Group's cruise line business", said Joussen.
In addition to the hotel and cruise business, TUI Destination Services is one of the Group's three growth areas and has been reported separately in financial reporting under the Holiday Experiences segment since the first quarter of financial year 2018. The subsidiary company is managed by a management team led by David Schelp (Managing Director) and currently employs 6,500 people in 23 countries. It is headquartered in an innovation park in the Balearic capital of Palma de Mallorca and has two regional offices in Athens / Greece and Miami / USA.