WebBeds cemented its position as the second largest B2B bedbank with the acquisition of Destinations of the World (DOTW). Stephen Penn speaks to chief executive John Guscic.
Webbeds, the bed bank arm of WebJets acquired Dubai-based rival Destinations of the World for $173 million, and in doing so increased the number of directly-contracted hotels available to agents by 24%, from 23,000 to 28,500.
The business joins WebBeds’ bed bank portfolio which includes JacTravel, TotalStay, Sunhotels, Lots of Hotels and FIT Ruums.
The additional 5,600 direct hotel contracts have a majority spread within the Asia-Pacific region (56%) with 14% in the Americas. Increasing coverage in the two regions was one of the “key factors” in the acquisition in order to “enhance WebBeds’ existing APAC and Americas businesses”, said Webjet chief executive John Guscic.
The acquisition increases WebBeds’ Total Transaction Value by $529 million (£410 million) to a combined $1,505 million (£1,166 million).
DOTW will also bring its existing 5,000-strong base of travel agents into the business, which will be added to WebBeds current 20,000 customers, though bosses explained there may be some overlap as a number of the agents will already work with both brands.
The depth of inventory was also described to be a “key competitive driver”, as the overlapping directly contracted hotels will increase hotel availability with more competitive rates.
Guscic told Travel Weekly: “Accommodation wholesaling is a business that that naturally suits consolidation because when wholesalers with complementary footprints come together, they add value for their clients by providing greater choice and they add value for their suppliers by increasing distribution.”
He added: “Our existing travel partners will have the full inventory of DOTW on the WebBeds platform, and existing DOTW partners will therefore have access to the WebBeds inventory. All of these will be readily available, offering agents more choice at much more competitive prices.”
The acquisition will also allow the company to bolster their back-end systems, which Gruscic put down to significant investment from the former owners of DOTW, Gulf Capital.
“Private equity organisation Gulf Capital invested £12 million in creating a first-rate tech platform for Destinations of the World,” he added. “This is a solid platform can be utilised by WebBeds, and in doing so will enable us to continue to grow in the B2B division.”
The acquisition will come into force on November, after which the company has said it will focus on “organic growth” with no further acquisitions planned for the next three years. Data from the bed bank shows a 28% organic year-on-year growth over the past four years.
Guscic added: “As a late-entrant into the B2B marketplace, it was clear we would have to make acquisitions. Following the acquisition of SunHotels in 2014, which has doubled its rate of business in the past three years, we decided to add one or two more.
“With the success of the JacTravel acquisition and the DOTW acquisition we now have coverage of the globe and can allow the Webbeds to grow organically. It’s unlikely we will acquire any new business within the next three years or more, unless the right deal came along.”