TUI AG, Europe's largest travel services company, has agreed to sell its Hotelbeds unit to private equity firm Cinven Ltd. and the Canada Pension Investment Board for a sum of USD 1.3 billion. Proceeds from the sale will be used to improve TUI's finances and invest in future opportunities as the company looks to expand in non-tourism based businesses. The sale is subject to regulatory approval and will be completed by the end of September.
TUI's Hotelbeds database contains beds from over 72,000 hotels across the world, which are booked through online and traditional travel agencies and airlines. The Hotelbeds unit also offers transfers and tours, and made a pre-tax profit of EUR 69 million last year. TUI shares rose by 1.7% to 1,023 pence on Wednesday in London due to news of the sale.
The sale may spur growth in the global online travel agencies IT spend market, which is forecast to grow at a CAGR of 24% by 2019, according to a report available from Research and Markets.
The sale may also result in growth in related markets. The global travel technology market is set to grow at a CAGR of 7.9% by 2019, as forecast in an industry report. However, the purchasing of TUI's Hotelbeds unit suggest a strong interest in travel technology, one which could become an evident trend in the coming years leading to additional growth.
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