Consolidation will change the bed bank sector dramatically in the next 12 months and lead to the major travel companies shifting their business models to drop traditional packages completely, youtravel.com founder and chief executive John Kent has predicted.
It is only a matter of time before independent bed banks are snapped up by the major travel companies and traditional holiday brochures and packages disappear, said Kent.
Although youtravel.com is not “up for sale”, Kent said the company would be open to future offers. “I don’t think many people are growing their businesses to keep them as family businesses. You create it in order one day to sell it.”
He forecast companies such as Thomas Cook and TUI Travel as well as American travel giants such as Expedia and Cendant will aim to capitalise from the dynamic packaging boom over the next year.
This means major tour operators will ultimately switch all their business from traditional packages to just offering dynamic packaging, dropping conventional holiday brochures completely for online brochures, he added.
“I believe in a few years’ time there will not be any brochures. It will all be dynamic packages and there will be no traditional packages but because of the bureaucracy at the big companies it will take a while,” said Kent. “You will get flights, accommodation and tailormade holidays. It makes sense for them to buy bed banks if they don’t want to do it themselves.”
Youtravel.com, which has its financial year end this week, is targeting a turnover of 150 million euros next year, of which 70% is likely to come from the UK. Passenger numbers are predicted to rise from this year’s 280,000 to 650,000 .
Meanwhile, Kent denied youtravel.com was any more aggressive than other bed banks in the sector. He said margins were averaging 8% for trade sales. “I am not saying in some cases we are not aggressive but everyone is doing it,” he said.
And, Youtravel.com is to launch a site in France next year as its expands its reach overseas.
The company recently launched into Sweden and already has sites in countries such as Italy, Germany, and Greece. In Italy the company signed up 2,500 travel agents in three months.
Kent said the company would continue to expand further into European countries with good flight accessibility to serve their domestic markets.
Youtravel.com is also preparing to launch its cities programme by January, with its biggest programme in Italy.
The company also plans to beef up its Italy and France product generally in areas it believes are currently not well known to the UK market. Within the next month it will have more than 500 hotels in Italy.
“In the south of France and Italy, UK bed banks have minimal product,” he said.
Meanwhile, the company aims to increase the number of five-star hotels from 15% to 25% of its portfolio of 3,000 hotels, particularly in the eastern Mediterranean.
Two further distribution deals with traditional travel agencies should be complete by the end of the year.
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