This was my first time at World Travel Market in London. The show is absolutely massive, as it is primarily a salon for destinations to showcase their various vibes.

The Travel Technology Show dominates a corner of the North hall, bringing together vendors who serve destinations, hotels, and other destination-driven bookings.

One of most prominent stands was the Hotelbeds stand as it continues to highlight its recent growth through its acquisitions of Tourico earlier this year and GTA this past October.

The size of investment in tradeshow square footage is often a signal of how a company feels positioned in the industry.

Hotelbeds is making a play to become more than just a bed bank, and become one of the largest and most comprehensive sources of all types of inventory in travel.

I sat with the Hotelbeds Managing Director Carlos Muñoz to discuss the company’s growth, how they are integrating the multiple tech stacks, and the challenges of running a global organization with a variety of cultural customer service needs.

We recently interviewed Stefano from GTA during Arival in Las Vegas. We spoke about the Hotelbeds acquisition of GTA. I’d like to know how GTA fits into the Hotelbeds strategy.

The first thing is that the market is very fragmented.

There is a need for consolidation. The rationale for this consolidation is to create value in the marketplace.

It’s just so fragmented for customers, especially small-to-medium sized OTAs and travel agencies and operators, that it’s difficult to compete against the big B2C players.

They need a company with size enough to help them compete. That’s our objective here, for the customers.

Also for the suppliers, they have such a reliance on these large B2C players.

So we create an opportunity for diversification for them.

Overall, this is about creating value for both our customers and the suppliers. And to start consolidating the bed bank space.

Why is that? Is it always because of the structure of the business, with smaller regional players? 

The market is fragmented because there are lower barriers to entry. But when you start growing, the importance of scale becomes clear.

The market is maturing. And as it matures, the volumes play a larger role. If you have a bigger or smaller size, in terms of the technological investment, is the same.

You need to develop the technology, the connections with suppliers, the capability, the cloud enablement.

Regardless of the size. If you are bigger, you can afford more investment. If you are smaller, it’s different.

This also applies to contracting, to distribution, to transactional finance, to plenty of areas that are important for our business model.

Size matters in this business. Just like any other internet business. So there’s an opportunity for those who consolidate.

When it comes to HotelBeds and GTA specifically, what kind of integrations are we going to see? What other services will hotels be able to enjoy thanks to those purchases?

For our suppliers, we are already offering all the customer base from Tourico and very shortly all the customer base from GTA, in addition to the existing Hotelbeds customer base.

And the other way around, for example GTA customers will get access to Hotelbeds and Tourico.

We are extending the distribution for our supplier partners. For our customers, it is similar.

We are offering the portfolio from all three companies. At the moment, all the inventory from Tourico is already available and very shortly GTA will be. The same applies to transfers and activities.

How are you handling the integration of these other tech stacks?

We are building a single base for inventory, so we have one system across all of the brands.

We’ve got three different systems, and then we start by developing the connectivity between systems. And then over time, we will close down the other two and manage a primary technology.

We are investing in the technology. The objective of these acquisitions is not to save money but to continue investing in technology, people, and product, as well as to create value for customers and suppliers.

We also have moved from on-premise to cloud.

In our case, we worked with British telecom. But we have transitioned the front of these systems — the connectivity to the customers and suppliers — to the cloud.

This gives us an unlimited capacity to scale up the model and the number of searches we support. Our joint system is poised to handle 1.5 billion searches every day!

So you integrate all that inventory, and hotels have access to transfers and tour inventory? For the hotels, do they then just simply place that inventory in the booking process? How are hotels going to benefit from these new inventory types?

Initially, we are focused on distribution for our customers: the travel agents, the tour operators.

But we also have solutions to offer the same to hotels, so hotels can include activities and transfers. This can be in the form of connectivity, API, white label or widget.

That’s big because the hotel booking process is still fairly basic, as far as up-sells in tours and transfers are concerned.

Especially in the hotels. They are very focused on distributing their room inventory.

And in some cases, the technology is not there. They need to keep investing in that side of distribution.

Did hotels express interest in having these up-sell opportunities, or was it your company’s insight into the market and how to position hotels for the future?

It depends on the segment. There are hotels that show real interest, such as big hotel chains interested in introducing new services. Such as transfers, activities or even flights.

In some other cases, it’s us pushing them in some geographies and categories.

It’s working well. It’s not our core product or revenue stream, but it is working very well. It’s getting traction.

Let’s look ahead to the next 18 months. More acquisitions? 

First, we want to successfully integrate the three companies, GTA, Tourico and HotelBeds.

At the same time, we continue to deliver organic growth. Once that’s settled and digested, we will be ready for more M&A.

The first priority is the integration and the organic growth, and then depending on the availability in the market, we may continue with M&A.

We are taking a mixed approach between organic and M&A.

We just announced in June the acquisition of Tourico and GTA in October. At the same time, we are developing our organic growth. There’s so much inventory available out there to capture.

So there’s still room out there to grow?

There is a lot of room to continue growing. Our portfolio is 170,000 properties, and in the world there are more than half a million. So there’s lots of room to continue delivering growth.

When you look to future acquisitions, are there any categories that come to mind, like booking restaurants? Or is it more of the same, buying companies similar to GTA?

At the moment, we offer every type of activities in the destination, from tickets to attractions.

We also offer transfers and even include cruises, like selling cabins to our customers.

Restaurants, and things like that, are not in our pipeline at the moment.

We also offer car rental, but not these type of local things like restaurants more tailored to the local market — for example, people from London booking restaurants in London.

What’s the pitch that you make to hotels when they are considering where they want to place their room inventory? What are some questions they usually ask?

There are a couple of things that are really important to hotels.

Number one is diversification, and not putting all the eggs in the same basket.

Second, is access to distribution channels they wouldn’t otherwise have access to.

I’m talking about travel agencies around the world.

If a hotel in London wants to access a travel agency in Korea, we can do that. if they want to access loyalty program customers or opaque channels like tour operators, we are a distributor for this segment.

What about direct booking on hotel websites? There has been some talk about wholesalers undercutting hotel direct pricing. How do you feel about pricing issues hotels might face?

For us, this is very clear. We partner with hotels, and we respect the rules that they set. Always.

The hotels are especially considered for distribution in the B2C environment. In the opaque environment, it’s less of an issue.

For the B2C, we are very cautious not to distribute where we shouldn’t.

Distribution is very complex, so perhaps temporarily there are routes that are not under control. For those routes, when we identify this, we cut distribution in order to support our hotel partners.

It seems like there are many channels where this can happen, as its hard to control them all.

Yes, it is. But we have developed the technology to keep this under control. We are best in class on this.

How does that work? So when a hotel comes to you with a rogue pricing issue, it’s pretty quick to find and fix?

We have the ability to cut certain hotels for certain distribution channels for certain customers for certain periods of time, depending on the supplier’s demand.

We also have a distribution map, so we control who are customers are distributing to.

In this way, we can cut all these elements hoteliers are not happy about.

Will there always be smaller OTAs? Will the Momondos of the world always get bought and then the cycle starts anew with a new regional player?

I think the market is changing. And the OTAs are facing some difficulties due to the B2C space.

Having said that, [the OTAs] are becoming creative with niche opportunities.

By specializing in certain customer segments, certain product segments, or certain regions to market to. Thanks to those specializations, they are growing back again.

Does the average traveler care where they book their travel? Will the larger OTAs always have that advantage?

My impression is that we will always have the 2-3 mainstream players, the generalist. But there will always be customers that prefer a niche experience.

More tailored made to their needs. Because the biggest don’t focus on the specialized needs.

Google recently pulled access to its API for certain partners. There was some renewed buzz that Google has an interest in becoming an OTA. Do any of these moves by a major player concern you, are they encroaching on your space?

My impression is that Google is in the business of organizing information and transferring information.

But not in the transactional business, or dealing with the operations such as the call centers.

If Google decides to develop some solutions for selling travel directly, we would be an active player in this solution. So we see Google as a partner not as a competitor.

There’s the element of call centers that are expensive. And you cannot be best at everything.

You have to develop the customer service for travel. My perception is that this is not the focus of Google today. We see Google as an opportunity, less as a threat.

Hotelbeds has many call centers, localizing to many countries. How many languages do you have in the call centers?

Now we have 20 different languages and more than 20 call centers around the world  And then we also offer services to our customers in different languages and time zones.

This is a service for our B2B customers, directly to the travel agents and tour operators. We also operate call centers to serve our suppliers.

How do you decide which languages to localize? There was an interesting perspective from Priceline’s Glenn Vogel at this year’s TravelDaily, and I’ve been more fascinated by call centers recently. I’m curious to hear your approach.

It always depends on your partner demands. For example, if you go to the Americas, you cover everything with three languages.

In Europe, with the suppliers, you can deal mostly with English as its widely spoken.

But when you talk about customers in the travel agent segment, you need a local language.

So the travel agency in France needs French, and the agency in Germany needs German.

But often, for suppliers in Germany or France, you can work in English.

It really depends. You go to China, you need Chinese for both suppliers and travel agency customers.