Loss-making bed bank Youtravel should become profitable by the end of this year, said its new owner, German operator FTi Touristik, as its founder and chief executive John Kent apologised to its trade partners for problems caused by its financial difficulties.
Following the takeover, Youtravel will offer 50% more accommodation and expand into new destinations including Italy, North America and the Caribbean, South East Asia, Lebanon and the Azores.
FTi's destination management company Meeting Point International, which has offices in 20 countries worldwide, will source accommodation for Youtravel in destinations it never previously featured. Using FTi's state-of-the-art IT system, Youtravel will be able to get the product to agents faster, it said.
Youtravel has already started selling hotels in Thailand for the first time and it plans to grow its portfolio from 4,000 hotels to 6,000. From this winter, it will also sell ski accommodation and it plans to offer a lakes and mountains programme and feature hotels in key cities.
FTi's managing director of finance Karlheinz Jungbeck said Youtravel founder John Kent, who remains as CEO, had made "a smart strategic move" letting FTi take 85% of the business, guaranteeing its supply of beds.
"I think we can in a very short time make Youtravel very profitable," he said. "This year it will be profitable and next year it will do very well."
For its part, FTi, the fourth largest tour operator in German-speaking countries, gets a business with a €95m turnover and a brand that it can use worldwide, said CEO Dietmar Gunz. "This gives us a nice platform to build on," he added.
Speaking at lunch for its trade partners and bankers on Thursday, Kent apologised for problems caused by the company. Recently, Youtravel enraged hoteliers when it told them it would pay only 70% of what it owed.
Some UK agents had stopped selling Youtravel after clients turned up in resorts and found their accommodation had not been paid for.
"We faced some problems and we tried very hard to find solutions," said Kent. "I would like to apologise for any problems caused, but now I hope we have found a great partner."
Youtravel had been looking for a suitable partner for a year he said, adding that FTi was "a great fit".
He said that as a result, agents would have access to some exclusive accommodation that would not be available to other UK bed banks. "Some of it will be the same but now we are negotiating as part of FTi we are much stronger," said Kent.
Neither Kent nor FTi would reveal the financial arrangements behind the deal, which has led to Youtravel winding down its direct-sell operation and closing its calls centre, with the loss of up to seven jobs. Gunz said the company had no plans in the future to sell to consumers. "We have never done it, we have no experience in this area and John didn't know how to do this either."
However, FTi said it was not planning to make any more redundancies, either in the UK or in Youtravel's office in Athens.
The German operator is not new to the UK market as Gunz started the business selling language courses in Devon in 1980 and in 1998 he took a 27% stake in Airtours. He later sold FTi to MyTravel and bought it back in 2003.
By Linsey McNeill
Friday, July 6, 2012