Hotel Blogs - When Hotel Marketing gets Social

Premier Inn still on acquisition mode

The leading UK hotel chain Premier Inn is very close to acquire several assets from the Real Hotel Group, the company behind Purple Hotels. Real Hotel Group has called administrators in last month after announcing the very difficult financial state of the group.

Ideally, the collapsed hotel group would like to sell all their assets in one basket but Premier Inn could only be interested by the Purple Hotels and not so much about the Choice franchised hotels. Talking about Choice International, they have decided yesterday to terminate its contract with Real Hotel Group meaning 22 hotels would cease trading under brand names like Comfort Inn or Quality.

Stock Market Listed hotel companies downgraded

It looks like financial analysts have revised their 2009 forecast about how hotel chains will perform this year. It will be a poor year in terms of profits according to some and some listed hotel companies like Marriott or Starwood Hotels have seen their share price down yesterday.

Expedia acquires Venere but what does it mean?

You've probably read the news on Tuesday, Advent International has agreed to sell Venere to Expedia for an undisclosed sum (for now).

Let's look back at the recent history of the hotel booking engine Venere.com.

Venere was founded in Rome in 1995 by 4 friends and entrepreneurs (Gianandrea Strekelj, Matteo Fago, Marco Bellaci and Renata Sarno)

Advent International is an international private equity company that believed and invested in Venere back in November 2006 to gain 60% of the company shares. This was helped by the exit of first investor Kiwi II who use to have 33% of shares back in 2000. The remaining 40% was still in the hands of the 4 founders.

Advent International and Venere decide in February 2008 to acquire for a undisclosed sum a serious competitor in Italy, WorldBy.com. This move was justified to enhance Venere portfolio of hotels by an increase of 6,000 properties with 2.5 million registered users. Worldby is also a model in terms of bringing quality pictures to the end consumer.

Today, Venere has access to 29,000 properties that use the booking engine extranet to load rates and availability. Their model is retail meaning the consumer book on Venere and pay the hotel directly at the end of his stay. Then the hotel has to pay a commission to Venere (which is probably between 10 and 15%).

With this acquisition, Expedia has enlarged their hotel offering by 10,000 properties (after de-duplicating for properties already working with both Expedia and Venere). Content is gold, certainly when you have inventory loaded on your system and where you are maybe weak in certain countries (Italy maybe).

Having said that, the model of Venere is totally different from Expedia model. Expedia is on a merchant model where consumers pay Expedia at the time of the booking and comes to the hotel with a pseudo voucher.

It would be interesting to see in the future how Expedia is going to merge Venere content in Hotels.com and all their Expedia sites. How not to confuse the consumer where 2 models are clearly different? It's probably too soon to say at this stage.

At this stage, I would say Venere team will be alright for 1 year and will keep doing what they do best. Then, I won't be surprised if we start to see some shift in management, reduction of staff and consolidation of contracting and account management team. It is inevitable. Unfortunately. Time will tell...

And oh, I have forgot the most important reason why I think Expedia has bought Venere.com: to re-gain market share against Booking.com and please Expedia Inc shareholders. Hotels is where you make some money (commission, mark up, better yield, ...) not Air anymore. Apparently Expedia Inc. shareholders agree with this move.

The TripAdvisor galaxy is growing but how much did they pay for this traffic?

Ok. So TripAdvisor Media Network is back to "acquisition mode". They've recently acquired Virtual Tourist, a worldwide travel community where you can find travel tips and all sort of user generated content. Virtual Tourist has been founded in 1999 by J.R. Johnson and Tilman Reissfelder. From the same owners, they've also snapped OneTime, another comparison travel search engine.

Now, the press release doesn't say why and how much TripAdvisor has paid for these 2 companies. I assume the main reason is for traffic. In 2008, traffic is king...Profits Money is not anymore.

With all the recent acquisitions, TripAdvisor media network claims to drive around 32 million monthly visitors per month. Can you imagine how much advertising space you would sell with this traffic?

Based on traffic, here's my estimated valuation of the company.

In January 08, * TechCrunch UK spread the rumour that WAYN was valued at $200m for 6 million monthly visitors per month and 11 million registered members. Vator gave their insight after the acquisition of Bebo by AOL.

So VirtualTourist could have been bought for around $17M if you also take registered members (see the average cost per user between VT, WAYN and Bebo).

Interestingly enough, Virtual Tourist drives more unique users per month per registered member than WAYN. It means the website is a useful source of information for travel and that you don't need to be necessarily registered to view information. What does that mean for the valuation?

Maybe the valuation is  too low and that Virtual Tourist owners negotiated the price with TripAdvisor executives based on their 5 millions unique users per month. In that case, it would make  the valuation much higher...

Q1 Results for 2 big OTAs

If you are interested to hear the latest financials results and development with 2 major OTAs, you can listen the calls here for Orbitz (2nd chart) and here for Priceline (1st chart).

Potentially the biggest Hospitality merger this year

You may have read or heard on the news recently that there are some merger talks between Premier Inn (the leading hotel economy brand in the UK) and Travelodge.

The owner of Premier Inn, Whitbread is in serious talks with the owner of Travelodge, Dubai International Capital. According to sources of The Times, this merger is 50 - 60% likely to happen.

If the merger goes ahead, it would means Whitbread will own 830 hotels across Europe with the brands reunited. And it would give a better competitive position in Europe against their competitors like Accor, Louvre Hotels or IHG.

I believe this is probably the story to watch in the hospitality industry at the moment.

WAYN What?

TechCrunch UK has reported yesterday that WAYN was in talks with AOL for a possible sale of the travel social networking for an estimated £200M.

Annika Erskine - PR Manager for WAYN - has made a response here.

My first reaction to the news is I don't believe it. The company expects to bring $4.5M in revenues this year with about 10M subscribers. The valuation of the company would be 44 times the revenue it brings (let alone the profits!).

This is really crazy valuation in my mind. But if this is true, I can't be happier for Jérome and Peter.

I found the story to good to be true and funny enough comes out at the same time of the Eye for Travel conference in London where Jérome Touze (founder or WAYN) was speaking on Wednesday. Coincidence or a nice PR move ? I let you be the judge.

After the TechCrunch story, the blogosphere and traditional media haven't waited too long to report the story. HotelMarketing.com even made the story its headline for yesterday. Shocking...

You can find other comments about the story in:

M-Travel (Eye for Travel)

Travolution "AOL to buy WAYN?"

Alex Bainbridge "WAYN - Will AOL Yes No?"

Microsoft invests in Facebook phenomenon

Microsoft has taken a small equity stake (1.6% of the capital) in the big social networking site Facebook. Microsoft has indeed injected $250M in the next round of financing which values Facebook at $15B !!!!

Another hotel group acquisition - The Eton Collection

The British hotel group The Eton Collection has been acquired by JJW Hotels & Resorts. JJW has consequently increased their portfolio of hotels in the UK to eight properties. JJW Hotels & Resorts belongs to MBI Al Jaber, chairman and founder of MBI International - a group of companies with a net asset value in excess of $ 4.8B which operates across Europe, the Middle East and the United States. The communication doesn't say if those 5 new luxury hotels will be rebranded under JJW Luxury Collection.

Technorati Tags: jjw hotels, eton collection, hotel acquisition, jjw

Priceline and Booking.com still make some happy investors...

Following a recent announcement about their Q2 2007 earnings thanks to their Booking.com operations in Europe, Priceline has seen yesterday its share price reached $80 with 22% increase. The leading online travel company has reported better results than expected thanks to overseas demand. You can follow the webcast here. Some analysts are still puzzled about why Booking is outperforming compared to its European competitors.

Technorati Tags: priceline, booking.com, booking, pcln