HotelPlanner is planning to merge with Reservations.com before combining with Astrea Acquisition Corp., a special purpose acquisition company (SPAC) for a listing on Nasdaq, the group hotel-booking site said in a press release Tuesday.
The deal will value the combined company at an enterprise value of US$567.1 million, or 3.3 times estimated 2022 revenue, with the possibility of additional consideration if market-based milestones are hit, HotelPlanner said. The company said it is expecting US$120 million in cash proceeds from the transaction.
Tim Hentschel, co-founder and CEO of HotelPlanner, who will become chairman and CEO of the combined group, told Shenton Wire that the company managed to post only an around 20 percent drop in revenue in 2020, after hitting a record in 2019, while this year has been tracking around 14 percent higher than 2019’s levels. The recovery began in December 2020, he said.
Pivoting call center approach
Hentschel attributed the relative strength in revenue to the need to pivot after the Covid-19 pandemic shuttered its call center in the Philippines. With those workers unable to work from home due to a lack of internet access, the company shifted to using “gig-economy travel agents,” he said.
Using AI technology, calls would be routed to the around 2,000 gig workers based in the regions where bookings were being made so they could use local knowledge to help customers navigate pandemic restrictions, he said.
That AI-to-human routing generally increased conversions, he said, noting those agents usually earn US$10-US$30 an hour on a commission basis.
Hentschel added that while corporate travel remained depressed, there’s been a pickup in group bookings for pro- and youth sports and a lot of pent-up demand for weddings. He noted music festivals appear to be going ahead in the U.S. and Europe, although some are being cancelled when faced with higher insurance costs.
Events the company has won as clients include golfing’s Ladies European Tour and soccer’s 2021 MexTour.
Travel remains depressed
The travel industry has been hard-hit by the Covid-19 pandemic since the virus emerged at the end of 2019, amid border restrictions and quarantine measures, as well as local lockdowns to stem the virus’s spread.
Globally, January-to-May international tourist arrivals are down 85 percent compared with 2019, according to data from the U.N. World Tourism Organisation, or UNWTO. Hotel searches for the January-to-July period were down 44 percent from the same period in 2019, while hotel bookings were down 33 percent, according to Sojern data cited by UNWTO.
There was a lot of variation globally: Within Asia and the Pacific, hotel searches for the January-to-July period were down 75 percent from the same period in 2019, while in the Americas, that figure was a 20 percent decline, the data show. Hotel bookings in Asia and the Pacific were down 60 percent during the period, compared with just 6 percent in the Americas, according to the data.
Globally, actual air reservations were down 88 percent in the January-to-July period this year, compared with 2019, according to ForwardKeys data, cited by UNWTO. Within Asia and the Pacific, that figure is down 95 percent, while in the Americas, it’s down 69 percent, the data show.
However, some online travel agencies have managed to surprise on the upside. In a report last week, Credit Suisse said Booking Holdings, which has brands including Kayak, Agoda and Priceline, reported second quarter gross bookings of US$21.96 billion, beating the investment bank’s forecast of US$15.41 billion on a continued overall travel sector rebound, mainly on a faster recovery in Europe. Booking Holdings reported second quarter room nights were down 26 percent, compared with 2019’s second quarter, the report said.
Company projects revenue growth
HotelPlanner said the combined company is forecasting 2022 revenue at around US$170 million, with an expected three-year compound annual growth rate of around 42 percent over 2020-2023.
The proceeds of the SPAC deal will be used for mergers and acquisitions, online advertising, hiring more gig-economy travel agents and more engineers, Hentschel said.
He cited the relative ease of on-boarding the gig-economy travel agents, using an application, background check and training, with the existing website allocating customers to each worker.
The Philippine call center has been discontinued, while the company will keep its Singapore office open to pursue partnerships with Asian travel companies, Hentschel said.
The combined company will keep the HotelPlanner name, trading under the stock code HOTP. The free float will be around 28 percent.
The SPAC, Astrea Acquisition, is currently trading under the symbol ASAXU.
The HotelPlanner and Reservations.com asset injections into the SPAC are expected to be completed by the end of this year, Hentschel said.
HotelPlanner’s existing brands include Meetings.com, EventConnect.com and Venuexplorer.