KEEP YOUR FRIENDS CLOSE AND YOUR ENEMIES EVEN CLOSER, goes the saying. That could go some way to describing the recent wave of mergers, acquisitions and alliances that have taken place in the travel technology sector over the past year.
But it goes further than that. On the surface, the deals may appear to be typical cases of larger firms swallowing up the competition, but dig deeper and you’ll find collaboration, innovation and even a united approach to solving the industry’s problems. Recent headline-grabbing takeovers in the leisure sector have included China’s Ctrip snapping up Scotland’s Skyscanner for £1.4 billon, back in November 2016. In May this year, Expedia acquired a majority stake in SilverRail. Also this spring, Accor acquired French channel manager Availpro. In the bed bank sector (wholesale accommodation agents), Hotelbeds Group has just completed its takeover of Tourico Holidays. While in aviation, Ryanair has been ramping up its online partnerships in a bid to become the ‘Amazon of travel’, adding long-haul airlines, such as Air Europa, and hotel platforms including Eviio, to its offering.
BUSINESS TRAVEL M&A
The business travel sector, too, has been showing signs of increased activity. In particular, HRG’s acquisition of booking platform eWings.com. Nigel Mayer is HRG’s director of group technology and chief operating officer of its SME product Fraedom. He says eWings was a perfect fit. “Like all companies, we keep an eye out and our ears to the ground.
And acquisitions offer an alternative pathway to growing organically,” he says. “EWings stood out. It’s a digital business, built from the ground up. They have a very creative and innovative approach to the market. There was a strong synergy with our own platform, as we develop our next generation of solution tools. Architecturally, we’re aligned.” Alignment is a common theme. Buying newer firms can give the new parent company access to both new technology and new staff with an entrepreneurial spirit. As Mayer adds: “There’s an increase in the understanding of the need, from a tech viewpoint, to tie the vertical stack together to offer the consumer the full portfolio, without depending on multiple third-party platforms.” As well as technical know-how, they also offer a pathway into new sectors. With eWings, Mayer notes: “SMEs don’t want full overheads. We can extend the reach of [our] platforms beyond sector and market.
The omni-channel approach is where we want to be; eWings got there very quickly.” Meanwhile, CWT Meetings & Events, a division of Carlson Wagonlit Travel, last year set up a dedicated “innovation think-tank” and at the end of May announced a new partnership with Meetingsbooker.com.
CWT Meetings & Events vice president Ian Cummings says: “There is so much technology coming at you, from every angle, so we put together an EMEA think tank around meetings and events. Last summer we looked at 40-plus start-ups that were of interest, went through them all then ended up with a shortlist of five or six that had a great proposition. “Acquisitions give us a great, ready-made product into the SME channel, which can be tough for large TMCs… Could we have built it ourselves? No, technology is developing so quickly, so I focus on specialist areas; it’s right to partner with companies. Part of our innovation think-tank was about identifying partners, to help them grow. Our strategy allows us to be close to start-ups.”
SHARING ECONOMY DISRUPTION
Another reason behind the rise in M&A activity is the wave of disruption taking place, with the likes of Airbnb and Uber edging ever closer into the corporate space. Yet, rather than buying travel tech start-ups as a survival mechanism, HRG sees itself at the forefront of this change. “Airlines and hoteliers want to manage their distribution – and they’re now disrupting the model. TMCs have to disrupt the model or get left behind. We see ourselves as agitators in that space, not fending them off.
We know the industry needs to change and we want to be at the forefront of that,” says Mayer. “But we want to be part of the solution. TMCs continue to add value, rather than following the process, we’ve always been trying to drive that disruption. We all feel that things are starting to move quickly – so bringing in new people and technology into the company is a smart move.”
CWT’s Cummings adds: “A lot of major corporates are keeping an eye on start-ups, due to the onset of Airbnb and Uber – to ignore those kinds of start-ups would be at your peril. Look at what’s emerging and coming through.” The pace of mergers and investments is also accelerating in order to help solve problems across the industry. Amadeus Ventures, part of Amadeus IT Group, was formed three years ago in part as a response to this, and was one of the first divisions of its type in this space, according to its head Suzanna Chiu.
“It’s about crossgeography fertilisation,” she says. “Amadeus Ventures is part of our corporate strategy; it’s a unit umbrella and looks at all our business channels – we have visibility across all sectors.”
The division has made eight investments so far, but there are “three or four” further investments due to be announced later this year. “As a trend, we’re definitely seeing things moving a lot faster. It’s constantly accelerating.
Technology is easier to access. It’s easier for technology to take off in a niche area. There’s good opportunity for two partners to grow together, to leverage the ability of the start-up and grow quickly – to test a wider variety of areas.”
Helping customers improve conversion – ie sell more – is a key driver behind this activity, says Chiu, adding: “It’s less talking, more doing. We test them with our customers, to see if an idea gets traction. So if it fails, it fails.” This attitude reflects a dynamic environment that combines collaboration with competition.