AsiaRooms: TUI A&D division generates no profits in Q4 of 2009 but AsiaRooms conversion on the improve

Here at BOOT central we try to collect and collate information on Asia's online travel companies. One of those we are tracking is AsiaRooms, the Pattaya based online hotel company owned by the European travel giant TUI. As reported last year AsiaRooms is incorporated into the LateRooms part of TUI.

In May 2009 I managed to collect some information about the performance and results for the TUI Online Destination Services group - which included AsiaRooms, LateRooms, Hotelopia, Hotelbeds and a dozen offline destination brands. The group was renamed the TUI Accomodation and Destination (A&D) division in the second quarter of 09. With the new name comes with a slight realignment of brands and sub-divisions into the following.

B2C Division: LateRooms and Asiarooms.
B2B Division: Hotelopia, Hotelbeds, Holidays Services and TUI Espania
A&D Specialist Division: Intercruises, Aeolos, Pacific World, TUI China

I read this as a greater separation of the operations of the combined LateRooms/AsiaRooms and the other "online" businesses of Hotelopia and Hotelbeds. While the focus of the BOOT is on the B2C group it is worth noting that the A&D section of TUI is big business generating more than £552mm per year in Revenue and more than 8,000 employees. (one page pdf factsheet on the A&D division here)

Last week TUI published their results for the quarter to 31 Dec 2009 (pdf here). From it we can collect another little piece of information on the online activities of TUI and AsiaRooms turnover. Here's what the announcement says

"The A&D sector reported an underlying operating result of £nil (Q1 09 profit £1m) due to foreign exchange translation losses. Profitability in our Online B2C business improved due to better conversion rates in Asiarooms following its switch from a merchant model to a commissionable model. This was offset, however, by reduced volumes in our Destination Services business in Spain."

In one paragraph it is only AsiaRooms out of some dozen or more brands that gets a mention. Nothing specific enough for us to tell whether or not AsiaRooms is profitable or not but they are celebrating conversion improvements. Any other information you have on AsiaRooms?

AsiaRooms and LateRooms complete merger of operations - my guess from reading between the lines

Here at BOOT central (even while on holidays) we are always on the look out for information about the TUI owned AsiaRooms. After my (relatively) recent interview with AsiaRooms marketing boss John Fearon I started to compile as much info as I could about AsiaRooms as other companies in the TUI Online Destination Services Group including their new push into direct hotel contracing and the commission model. Recent news seems to say that the next piece in the AsiaRooms puzzel is a complete integration with stablemate LateRooms (of Manchester).

I have picked up is more information on executives and team numbers on AsiaRooms care of an update from Siew Hoon at the WebInTravel website called "“Bad boy” no more, AsiaRooms moves to commissionable model". I recommend you read Siew Hoon's interview with LateRooms boss (and therefore AsiaRooms boss) Chris Morris but let me walk you through a highlight from the interview and how it led me to conclude that LateRooms and AsiaRooms are now one.

First to the highlight - we now know the name of person in charge of leading AsiaRooms into the direct to hotel contracting business. According to the interview Kathy Gwinnett will head up contracting as Hotel Relationships Director – B2C Division. She will be backed up by a team of 25 in Asia. Not clear if all contracting staff or have a mixed contracting, database and content role. Also not clear yet where the commission collection group will be run out of. Gwinnett (according to her linkedin profile) is a long term LateRooms employee (8 years) and is Manchester based. Looks like she is heading up a combined AsiaRooms and LateRooms hotel contracting team.

Second to the conclusions - I think this interview makes it very clear that the LateRooms and AsiaRooms business have been fully merged. I draw this conclusion not only from the shared staff members but also from a recent technical glitch at AsiaRooms which resulted in the AsiaRooms website pointing to a LateRooms error message page (c/o the franz). Finally (and conclusively) the sort order results for both LateRooms and AsiaRooms on a search for Singapore are exactly the same. Both have new layouts that but for colours are exactly the same. Means that while we have different brands and site skins, the hotels, ops, tech and execs behind LateRooms and AsiaRooms are likely the same. Means we can expect a very rapid roll out in the new direct to hotel model and further brand integration.

AsiaRooms moves to commission model at 15% for directly contracted hotels

The TUI owned AsiaRooms started life as a 100% operator shop. Accessing net rates from operators such as GTA and Turismo Asia. Many times they were criticised for pricing policies that angered hoteliers but recent comments from marketing head John Fearon indicated they were looking to move away from that pre-TUI reputation. AsiaRooms is part of TUI's Onlien Destination Services Group.

I have heard today of another step in that move UPDATE (and this has been confirmed by John Fearon). Here is a screen shot from an email sent out to hoteliers today. It shows that AsiaRooms is moving to a commissionable model with directly contracted hotels at 15%.

I am sure this will be a challenging shift. While it may make it easier to contract hotels, setting up an effective accounts receivable department across Asia where none existed previously will be a huge challenge for AsiaRooms. While hotels will be happier with the pricing certainty on AsiaRooms, the commission model shifts the credit card fee and payment transfer cost to the hotel. Here a shot from the email. What do you make of this change?

PS - I am assuming the email is legit. Can't say either way but if you know it to be a fake please let me know.Is confirmed as legit direct from Fearon at AsiaRooms

TUI Online Destination Services Group - digging for details - UPDATED

Update to a post from March 2009. Am trying to collect as much information in one place about the TUI Online Destination Services group. Update drawn from TUI Q1 2009 trading update. Includes a link to a new corporate site (at least one I have not seen before) for the TUI ODS. In turn this points to a one page pdf profile document (called a fact sheet - link will open a pdf). Confirms much of the below but also adds that:

• the ODS headquarters is in Palma Spain; and
  
  
• "employs circa 8,000 people worldwide"

The "Financial Highlights" Section reports the following

	FY07	FY08	Change
Revenue	£455mm	£502mm	+10.3%
Profit/Loss bf tax	£49mm	£57mm	+16.3%

And here is the original post



Yesterday's post of AsiaRooms spurred some BOOT readers to dig around for more information on the TUI Online Destination Services group. I had initially assumed this group to be focused exclusively on online distribution for TUI (as the name implies. Seems there is more to it. This is the group at TUI that is responsible for B2B and B2C. Here is the introductory paragraph from the ODS page on the TUI Travel PLC 2008 Annual Report & Accounts website.

"Online Destination Services combines a portfolio of B2B and B2C businesses providing destination services to tour operators, travel agencies and individual clients worldwide. This includes selling hotel accommodation, organising meetings, incentives, conferences and events (MICE), as well as providing port services, turnarounds and shore excursions to cruise lines."

Shows there is a strong but not exclusive online bent to the business. Goes on to set out three divisions within ODS.



B2B HotelBeds - online accommodation and offline destination services through:

• Hotelbeds (to tour operators)
  
  
• Bedsonline (to travel agents)
  
  
• Pacific World
• Intercruises (ground agent for cruise)

B2B Portfolio Incoming - "network of destination agencies worldwide and includes brand" (not sure what that means). Includes

• TUI China;
  
  
• TUI Turkey
• TUI Espana;
  
  
• TUI Hellas; and
• Holidays Services
  
  

Combined 2008 online results - 18,298,000 bed nights (not room nights) (up 6% y-o-y)



B2C - Online to consumer. Three brands (as we discussed yesterday):

• AsiaRooms (merchant Asian online hotels)
• Hotelopia (Spanish based online merchant hotels)
• LateRooms (UK based retail model last minute site)
  
  

2008 online results - 6,966,000 bed nights (not room nights) (down 6% y-o-y)



Combined ODS - 2008 underlying profit GBP57.4mm up from GBP49.2mm in 2007



SamIAm also sent through another link for a different profile page for the ODS. At the bottom of this page is a drop down box listing the following (as of date fo this post) as brands for the business. Here is the list of TUI ODS brands from that link:

• ~ Acampora Travel
• ~ Aeolos Liban S. A. L.
• ~ Aeolos Malta Ltd.
• ~ Aeolos Travel LLP
• ~ African Travel Concept
• ~ Aitken Spence Travels Ltd.
• ~ all4ships
• ~ AsiaRooms
• ~ Bedsonline
• ~ Danubius Travel Agency S.R.L.
• ~ Expomundo
• ~ First Choice Meeting
• ~ Flexi Conferences
• ~ Gulliver Travel d.o.o.
• ~ Holidays Services S.A.
• ~ Holiday Travel Israel Ltd.
• ~ Hotelbeds
• ~ Hotelopia
• ~ Inter Cruises
• ~ LateRooms.com
• ~ Medetours
• ~ Meridian
• ~ Mex-Atlántica Tours S.A. de C.V.
• ~ Pacific World
• ~ Pollman's Tours and Safaris Ltd.
• ~ Ranger Safaris Ltd.
• ~ SummerTimes Group - Manahe Ltd.
• ~ Tantur Turizm Seyahat Ltd.
• ~ Travco Dubai L.L.C.
• ~ Travco Group Holding S.A.E.
• ~ Travco Oman L.L.C.
• ~ Travel Scotworld
• ~ Triaena
• ~ TUI Bulgaria OOD
• ~ TUI China Travel Co. Ltd
• ~ TUI Dominicana S.A.
• ~ TUI España Turismo S.A.
• ~ TUI Event Management
• ~ TUI Hellas Travel and Tourism S.A.
• ~ TUI Portugal Ágencia de Viagens e Turismo S.A.
• ~ TUI Service AG
• ~ Tunisie Voyages S.A.
• ~ Turismo Asia
• ~ Ultramar Express
• ~ Ultramar Express Event Management
• ~ Ultramar Express Transport

Profit for AsiaRooms, losses at LateRooms???: Reading the TUI Online Destination Service Groups results announcement

Early this week I posted an interview with AsiaRooms Head of Marketing John Fearon. Was AsiaRooms first major press comment post their acquisition by TUI (if ever). It was a deliberate part of Fearon's plans to bring AsiaRooms out from behind the secrecy curtain. Co-incidently, yesterday parent company TUI published their results for Q4 2008 (ie quarter ending 31 Dec 2008). In the announcement (pdf here) there is a small paragraph on the Online Destination Services group at TUI (ODS) which includes AsiaRooms and UK stable mate LateRooms and the Spanish based Hotelopia.

The paragraph is a mixed story. It says that the ODS group is profitable - generating £1.1m for the quarter - but this is down from £4.2m from last year. And the business delivered £1.2m in synergies. If I read this right I see two things. Firstly that without the synergy cuts, the combined ODS business would have made a loss. Secondly Fearon stressed that AsiaRooms is profitable. Assuming he was referring to the business of AsiaRooms rather than the whole of the ODS group (John correct me if I am wrong), then it likely means that either or both of LateRooms and Hotelopia have slipped into the red and are losing money. If all true, then this provides further evidence of the pain in Europe right now.

Here is an extract of the entire paragraph (again full pdf here).

Online Destination Services Sector
"ODS reported an underlying operating profit of £1.1m, down £3.1m on the prior year (Q1 08: £4.2m). The sector delivered £1.2m of synergies in the quarter (Q1 08: nil) from the integration of the former TUI and First Choice businesses in our incoming agency division, primarily in Spain. The offline businesses, however, suffered from a decrease in volumes in the quarter due to the capacity reductions implemented by tour operators. Additionally, the agencies in Euro destinations experienced a reduction in excursion revenue due to the strengthening of the Euro against Sterling and as a result margins tracked behind last year. The online businesses continue to perform well."

Not to be outdone by TUI - Thomas Cook drops too much do buy hotels4U

Seemingly in permanent catch up with TUI, Thomas Cook has shouted "look at me, I now get it online" in announcing that it has bought bed bank hotels4u.com for GBP21.8mm (Telegraph story here) - and there are more to come they insist (according to e-tid).

Very limited stats and info behind the deal:

• management to be retained. Haim Perry will stay on as MD (retaining 25% of the company as part of an earn out); and
  
• Hotels4U has 500,000 customers a year and "access to" 30,000 hotels.

Thomas Cook's website was the biggest travel site in the UK (in terms of traffic) from 1998-2002 (or thereabouts). This was despite a dismal site, lack of inventory and a general disregard from the management. At this time, Thomas Cook had the opportunity to look at Amex's missed chance in ruling the US online market and solidify its online lead in the UK. Instead it followed the well trodden offline dinosaurs strategy of being trapped in the headlights of the incoming online meteor shower. Another great BOOT mixed metaphor meaning that Thomas Cook stuffed up at the turn of the century in ignoring all of the advice and opportunity to establish UK online dominance. Now they have to play catch up by overpaying for a small provider.

TUI restructures online division - no hints at integration plans, but lots of names invovled.

News out late last week (eyefortravel via Hotelmarketing.com) outlining a new consolidated structure for TUI's various online travel assets. Joan Vilà and Wolfgang Bremer will be joint MDs with Joan being solo MD from 2009 of the new division to be called the Online Destination Services (ODS) group.

On the B2C side this is a consolidation of Hotelbeds, Laterooms, Hotelopia and the infamous Asiarooms into one operating group. The article names eleven people involved with managing, running or board observing the business (not including the separate boards for each of the businesses) but gives not a hint of the plans for how to bring these four businesses together (or how they will all be run out of idyllic location of Palma). It seems to me that there are still four platforms, four inventory connections, four marketing plans etc. I suppose you could call one organisation a start but I see a lot of cooks on the list of this online broth and not much a guide as to how the menu will be put together (how's that for a tortured analogy).

Its true - TUI acquires Asiarooms

Once again search engine traffic proves an indicator of M&A activity and finally a rumour from the BOOT proves true. The confirmation is in that TUI has indeed bought Asiarooms (newswire article here). Can't believe they did it. Thanks to Nathan from Bangkok for sending through the news link. Press release claims that Asiarooms is doing 4 million bed nights a year (about 2.5million room nights) but that sounds inflated to me.

UPDATE: with help from a loyal reader have found a filing from TUI that indicates the purchase price of Asiarooms of $67.5mm ($49mm in cash and $18.5 in assumed debt). Here is the quote

With effect from 28 September 2007, Pacific World Singapore Pte. Ltd. (Singapore) acquired a 100% share in Asiarooms Pte. Ltd. (Singapore), a company operating in the hotel accommodation agency business. The goodwill (33.1 million GBP or € 47.4 million), capitalised on a preliminary basis as at the acquisition date, was determined on the basis of the purchase price including incidental acquisition costs of 49.0 million USD and negative net assets of 18.5 million USD.

We assume Pacific World is a TUI vehicle. Anyone out there read this differently?