Uri Argov, founder and CEO of Tourico Holidays, stopped off last week at NAJ’s Active America Summit-China and talked about his company’s initiatives in China (more on that later), but what seemed to captivate the 210 tour operators and U.S. travel suppliers at Argov’s presentation was a new insight into the impending sale of Hotelbeds, whose future has been the subject of intense speculation—primarily on the part of the European travel trade press—ever since its owner, TUI, Europe’s largest tour operator, announced the bedbank component of its business was up for sale.
Not that long afterwards, Kuoni completed the sell-off of its remaining units (its European brands were acquired last summer by DER Touristik and its operations in India and Hong Kong were acquired by Thomas Cook India), which included GTA, its large B2B bedbank and group specialist, AlliedTPro. The speculation has been rampant in the European trade press that EQT, the Swedish private equity firm which acquired Kuoni, had the inside track on Hotelbeds; such an acquisition would give it the largest and most dominant bedbank operation in the world.
But Argov suggested differently, his insight informed by his own experience with Chinese investors who, he told Active America delegates, were contacting him at the rate of four-to-five times a week with expressions of interest in his own Tourico Holidays. According to Argov, the acquisition of Hotelbeds is in the second of three phases of review.
—During the first stage, there were 18 companies whose interest was sounded out by TUI.
—During the current, and soon-to-be completed, second stage, there are eight investors, with five of them Chinese.
—In the upcoming final round, there will probably be four finalists.
Who will prevail? Speculated Argov: “I would not be surprised if it were a combination of a Chinese company and investors from another company.”
He went on to suggest that there will ultimately be just one global bedbank, a playout that he welcomes, as he believes that B2B travel companies are operating at a disadvantage against a “duopoloy” of online travel companies: the Priceline Group and Expedia who, between them, own or have substantial ownership shares in almost all of the world’s online travel companies.
Argov went on to indulge in a favorite rant against the “duopoly” and the way in which their dynamic pricing puts at a disadvantage all tour operators who rely on static rates in the products and packages they develop with travel suppliers.
In its essence, Argov’s case is seen in this analogy: Suppose, he said, one were to go into your favorite grocery store to get a bottle of Coke that was posted at a price of $1.99 only to reach the checkout counter and find that the price had just gone up to $2.49. Or, he added, suppose one went to a movie theatre, only to learn that a ticket that had been advertised that morning at $7.50 had increased to $9.00 that afternoon.
“You would never come back again,” said Argov. And now, he noted, “so many hotels have taken the American way of traveling and tried to impose it on the world”—implying that dynamic pricing in an overseas B2B marketplace alienates the buyer and creates that perception that the hotel is a bait and switch practitioner.
As for his latest on what the company is doing in China: it now has four offices in China—up from three. For 2016, it is now five all-inclusive, two-week packages, each of which will feature a specific U.S. region. And his company, which operates its own education and training facility (the Tourico Academy), has now sent 100 graduates of the program into China.