Kuoni has announced an agreement to acquire Gullivers Travel Associates (GTA) from Travelport for US$705 million. The Swiss tour operator said the deal was part of its long-term strategic objective to become a leading global provider of online destination management services.
GTA is one of the world’s leaders in the online travel services market and operates in 26 cities. It booked almost 12 million hotel nights booked in 2010, reporting total transaction value of US$1.89 billion, with net revenues of US$294 million. The purchase price represents 8.4 times GTA adjusted EBITDA for 2010. Kuoni stated that GTA would fit well with Kuoni Destination Management business (KDM), and increase its footprint in the Asian market.
“In acquiring GTA, Kuoni is investing in one of the fastest-growing business segments within the tourism industry,” said Peter Rothwell, CEO of the Kuoni Group. “This acquisition, together with our own proven, growing and successful online destination management activities of Kuoni Connect, will transform us into one of the leading global providers of online destination management services.
“In line with our asset-light strategy, the combination of GTA and Kuoni will create a better balanced Group, providing additional strength in the growing area of business-to-business online services and enlarging Kuoni’s Destination Management leisure group business. GTA has a skilled and valuable workforce that will be invaluable as the business continues to develop.”
GTA was established in London in 1975 and is 100% controlled by Travelport. It operates worldwide under various brands, maintaining online travel booking portals for tour operators, travel agents, third-party online travel agencies (OTAs) and other travel wholesalers. GTA also serves consumers directly through its Octopus travel site. Overall, it offers some 35’000 hotels in over 130 countries and in 29 different languages.
“In Kuoni Connect, we already operate a successful online hotel booking platform” added Rolf Schafroth, Executive Senior Vice President Destinations. “With the acquisition of Gullivers Travel Associates, we will achieve one of the leading positions in the global internet-based business-to-business travel services and leisure group travel markets that will help us and our service providers to generate growth. At the same time, the successful GTA brands will benefit from all the existing expertise and the services offered by the other destination management units within the Kuoni Group.”
Kuoni stated that ut expects the acquisition to generate substantial synergies over time, primarily from purchasing benefits and the removal of duplicate IT and other infrastructure. GTA has a number of brands which will continue to be developed following the transaction. Upon completion of the transaction in May 2011 GTA’s President & CEO Ken Esterow will move out of his role with GTA. Rolf Schafroth, Executive Vice-President Destinations, at Kuoni will then take over responsibility for GTA.
To finance the transaction, Kuoni has secured committed credit facilities of CHF600 million (US$647 million) in total. The remainder will be funded from the group’s own liquid assets.
Commenting on sale of GTA, Jeff Clarke, Chief Executive Officer & President of Travelport, said; “Our strategy is to focus our energies on maximising the potential of our core proposition and, while GTA is a leader in its field with a strong proposition, this is a positive opportunity for us to accelerate our plans. Additionally, Kuoni is a well known and long-term customer of Travelport and our aim will be to work in partnership with them to improve further the distribution and sale of the combined Kuoni/GTA inventory across the Travelport subscriber network. Subject to receiving approval from both our lenders and the shareholders of Kuoni, we will apply the net proceeds from this transaction to pay down our bank borrowings.”