US giants ‘overspent’ on UK companies
ABTA Convention special report: US travel giants have been accused of overpaying to help establish themselves in the UK travel secor.
Travelzest chief executive Chris Mottershead used the examples of the £209 million paid by Cendant for ebookers and the £584 million spent on lastminute.com by Sabre-owned Travelocity.
He also highlighted the £70 million purchase of TV Travel Shop by InterActive Corp in 2002, claiming that latest figures to the end of December last year showed a loss of $46 million, resulting in the closure of the business this year.
Mottershead, in a wide-ranging speech, said: “Although they have grown dramatically over the last few years, ultimately these US companies will struggle in the UK if they aren’t already.
“They may have deep pockets but at some point somebody will question whether they are getting a decent return on the investments.
“They can’t continue to spend the way they have done and sooner or later the chickens will come home to roost. They are buying businesses on turnover, not profit.”
He claimed the reason why a UK company did not acquire ebookers was “it cost too much money and just doesn’t make enough profit”.
Mottershead added: “It looks cheap though when you realise that lastminute was sold to Travelocity for £584 million – I am intrigued to know what the expected payback on that deal is and if the management who proposed it will live long enough to see it pay for itself.”
He also challenged the “tens of millions” being spent by Expedia on advertising.
But David Roche, managing director of Expedia arm Hotels.com, disputed the accusations, saying: “I can’t accept that we’re dumping money into the market.”
Report by Phil Davies
Phil Davies
Vegas’s Billion-Dollar Secrets – What They Don’t Want Tourists to Know
Visit Florida’s New CEO Bryan Griffin Shares His Vision for State Tourism with Graham
Chicago’s Tourism Renaissance: Graham Interviews Kristin Reynolds of Choose Chicago
Graham Talks with Cassandra McCauley of MMGY NextFactor About the Latest Industry Research
Destination International’s Andreas Weissenborn: Research, Advocacy, and Destination Impact
Graham and Don Welsh Discuss the Success of Destinations International’s Annual Conference
Graham and CEO Andre Kiwitz on Ventura Travel’s UK Move and Recruitment for the Role
Brett Laiken and Graham Discuss Florida’s Tourism Momentum and Global Appeal
Graham and Elliot Ferguson on Positioning DC as a Cultural and Inclusive Global Destination
Graham Talks to Fraser Last About His England-to-Ireland Trek for Mental Health Awareness
Kathy Nelson Tells Graham About the Honour of Hosting the World Cup and Kansas City’s Future
Graham McKenzie on Sir Richie Richardson’s Dual Passion for Golf and His Homeland, Antigua
ADS PRO 
Qatar Airways offers flexible payment options for European travellers
Airlines suspend Madagascar services following unrest and army revolt
Digital Travel Reporter of the Mirror totally seduced by HotelPlanner AI Travel Agent
Strike action set to cause travel chaos at Brussels airports
All eyes on Qatar as Qatar Airways leads a season of global events