First Choice Holidays has bought online price comparison company LateRooms for an initial sum of £108 million.
The company, which operates the website www.laterooms.com, specialises in late availability hotel rooms and has a 12% share of the UK intermediary online booking market.
Under the agreement, First Choice will pay up to a further £12 million for the company depending on its performance over the next three years. LateRooms’ management team will remain in place.
LateRooms was founded in 1999 and it is estimated it will have sold 1.3 million room nights in 2006. Net revenue was £6.9 million in 2005 and is forecast to grow 57% to £10.8 million for 2006. Operating profit is forecast to grow 68% to £6.2 million for the year ending December 31, 2006.
The site features more than 13,000 independent and major chain properties, with the majojrity in the UK. On average rooms are sold at a discount of 40% on the rack rate.
First Choice chief executive Peter Long said: “We see considerable opportunity to increase LateRooms’ future profitability even further. It has a distinct business model servicing a niche market segment at low cost.”
He added the company’s European and international growth prospects will be improved by having access to First Choice’s accommodation.
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