Lowcosttravelgroup has acquired cruise specialist agency Ideal Cruising.
The deal, for an undisclosed sum, continues lowcost’s “buy and build” strategy, giving it a strong “fourth division” of cruise to add to lowcostholidays, lowcostbeds and Resorthoppa, according to lowcost chief executive, Paul Evans.
“The fifth bit is building into Europe,” he added.
Ideal Cruising will become a wholly owned subsidiary of the lowcosttravelgroup, and will continue to be run by its current management team. All 35 staff will be retained at their Camberley offices and Ideal Cruising chairman Ian Brooks will stay on in an advisory capacity.
Evans said the plan was to grow Ideal “by using all of our online capability and technology”.
“Ideal is a great little company which is profitable. I’ve waited two years to get it so I’m really excited. I like cruise – it’s a growth sector. We’ve had lowcostcruising ticking along for three years, but we need scale and I’m quite impatient. It’s important to do it yourself for a bit so you understand it, but then if you buy something you get there quicker. We did the same with Resorthoppa.
“There’s going to be consolidation in cruise retailing and we want to be one of the big players,” he explained. “Smaller companies eventually need to finds a niche or need a big brother behind them.”
“The good cruise retailers are still only doing 12% of their business online which is tiny. We want to take that to 25% in the next three years – we’re in all the channels now. We’ll also drive people to our call centres – we are great at telephony too,” Evans added.
He said lowcostcruising would be integrated into Ideal, but that both brands would be retained.
“Ideal is an established brand on a global basis, whereas lowcostcruising will be focused on the Med, sub the £1,000 mark. The combined total cruise transaction value is approximately £25m.”
Evans said Ideal’s growth would come by increasing the number of flexible, independent dynamically packaged cruise holidays sold, by taking advantage of lowcost’s existing technology, marketing funds, access to good value, high quality beds, transfers and flying.”
When asked if Ideal would be lowcost’s last cruise retailing acquisition, Evans declined to comment.
“The key to success in this market is to differentiate and our access to good hotel stock and transfers, plus having better technology than anyone else by miles, will achieve that,” Evans said.
Ideal’s Brooks added: “We are really pleased to be joining a stronger group that can add product, great technology and marketing strength to our existing team’s strong cruise knowledge and relationships. We see the opportunity to grow Ideal Cruising and the brand quickly as very exciting.”
Evans said European expansion was the next goal, with lowcostbeds launching in Germany this week, and lowcostholidays, lowcostbeds and Resorthoppa all launching in Austria, Switzerland and Ireland pre-Christmas, and in Spain, Norway and Italy in the first quarter of 2011. They will be followed closely by France and Holland.
Evans added: “We will be live in all ten major European markets by the end of 2011, in both the b2b and b2c and hoppa, all on common technology, with some strong experienced local management in place in each country, driving the business, ahead of some major new contract wins.”
“That’s the beauty of the name lowcost – it’s totally pan-European as it’s understood in every country, but also in a long period of economic downturn, it’s so relevant for consumers – it’s perfectly positioned for further growth, without now having to rely on any single country, market, channel, sector or customer.”
Lowcosttravel’s latest trading figures for the financial year ended October 31, 2010 show 80% plus growth across the group’s three core businesses (lowcostholidays.com, lowcostbeds.com and Resorthoppa.com) in spite of the difficulties the travel industry has faced over the last year.
The company claims total transaction value is up 88% for the year to £205m and passengers are up 41% to 2 million.
“Despite this having been a very difficult year, with margins and profits under pressure due to the competitiveness in the market, as well as the unprecedented disruption caused by the ash cloud and the failure of suppliers including Globespan, Goldtrail and Kiss flights, the group expects when it reports, a solid EBITDA performance for the year on the back of this year’s growth,” said Evans.