Hotelbeds – TTV Recovery and Inventory Growth Strategies

Hotelbeds to hit 90% of 2019’s TTV as pandemic recovery continues

In an Interview with Third Bridge Forum, the specialist said that markets in the Americas and Europe are already above 2019 levels but that Asia, particularly China, continue to lag behind. China represented approximately 5% of Hotelbeds’ source market, the specialist told us, and three or four years ago had a 50%-plus CAGR, which has since dropped to 20%. The specialist claimed there are a number of “complexities” within the Chinese market that make accessing them difficult but called it “the largest outbound opportunity” from a source perspective for Hotelbeds. 

The specialist explained the differences between bookings made by wholesale channels and fully independent travellers (FIT), which they said are currently split 50/50. They said wholesale channels represent 8-9% of TTV, with Hotelbeds representing approximately 15% of that channel. As a rule of thumb, we were told that hotels should give wholesale channels 25% of the consumer price as commission to access these channels. That 25% is then divided further with the travel seller receiving two-thirds and the wholesaler one-third, according to the specialist. 

Meanwhile, we heard Hotelbeds will likely continue to grow guarantee and deposit volumes, also known as G&Ds. The specialist told us guarantees are used more often than deposits and secure lower static rates, which results in higher net margins for the wholesaler. 

The specialist said Expedia Partner was Hotelbeds’ “biggest threat” pre-pandemic but that it is now “holding, if not taking” market share from the company. Meanwhile, Agoda’s new bed network could challenge Hotelbeds in the B2B space it currently occupies, we were told. 

Although the specialist played down the threat of Booking.com, they said Hotelbeds has the “scale” that could make it an attractive M&A target for the company. The specialist mentioned the possibility of Hotelbeds acquiring an ancillary company, which they described as a “growing” industry. Spanish companies Roibos and Halltels could also become potential M&A targets, and the specialist said consolidation in the bed bank sector is “critical” given its current fragmented state. 

The specialist also told us hoteliers are “fed up” with the lack of transparency in the bed bank model. According to the specialist, whichever company can solve this problem will be successful in the market, but they left who that might be open for discussion. 

To access all the human insights in Third Bridge Forum’s Implications of No Surprises Act for Payers & Providers – Arbitration Dynamics & Regulatory Outlook Interview, click here to view the full transcript.