29 May 2018

LoveHolidays gets some cash for customer acquisition

WeLoveHolidays Ltd has sold an undisclosed stake in UK-based OTA loveholidays.com to a private equity firm for an undisclosed sum.

A £180 million investment by investor Livingbridge into loveholidays was widely tipped a fortnight ago. The statement today from Livingbridge declines to mention the amount paid, or indeed what share of the business it now owns.

The release highlights that LoveHolidays is “the 6th largest ATOL holder in the UK” and is licensed to carry more than 800,000 passengers for the year to end-March 2019. The ATOL is actually held by the parent company, WeLoveHolidays Ltd.

For non-UK readers – the ATOL is a governmental regulatory requirement for tour operators who, at the risk of oversimplifying, sell flight  + accommodation package holidays. The UK’s biggest ATOL holder is TUI which is licensed to carry 5.4 million in the same period; Expedia’s UK business is the fourth largest at 1.4 million.

However, the page offering more details reveals that the WeLoveHolidays Ltd ATOL covers not only loveholidays.com but also holidaypirates.com.

When asked about the relationship between the two, a spokesperson for Holiday Pirates explained: ” Unfortunately we can’t give you more detailed information in regards to the ownership of LoveHolidays but we can tell you that we absolutely do not share the same parent company in the UK. Our relationship with LoveHolidays is solely that we have a binding white label partnership and nothing else…We are one of their biggest distribution partners.”

The white label partnership between loveholidays and holidaypirates was announced in April 2017.

The last set of financials for WeLoveHolidays Ltd, filed at Companies House, are for the year to end-Oct 2016 and therefore do not factor in the commercials of the Holiday Pirates relationship. For that period, loveholidays’ turnover was £23.2 million resulting in an EBITDA before exceptionals of £2.5 million.

Livingbridge’s investment in loveholidays will, the statement says, be used “to fuel further growth through customer acquisition and driving repeat booking rates, while Livingbridge will “look to work with the business to support further product innovation as well as category expansion”.

The release also makes the bold claim that loveholidays is “the fastest growing online travel agent in the UK.” In lieu of any specific metrics, its ATOL is as good a reference point as any. For the year to end-March 18 it was licensed to carry c400,000 passengers, so in volume terms it expects to double its passenger numbers in a year.

Livingbridge  has offices in the UK, Australia (Melbourne) and the US (Boston). Other travel interest listed in on its current investment page include Direct Ferries, Sykes Holiday Cottages and travel management company Key Travel.

The Direct Ferries deal took place in 2016, and also involved Beaumont Partners run by Greg Willis. Willis is well known in the UK for selling his car hire business – TravelJigsaw – to Priceline Group for £200 million in 2010, which rebranded it as rentalcars.com. Livingbridge was an investor in TravelJigsaw at the time.

Other than Travel Jigsaw, its realised travel investments include OnTheBeach, the UK-listed short-haul beach specialist which is now listed in London. Livingbridge, or ISIS Equity Partners as it was called at the time, invested in OnTheBeach in 2007 and sold its stake to Inflexion for £73 million in 2013.

OnTheBeach is the obvious reference point for Livingbridge’s loveholidays play, and there are similarities between the two, notably the focus on short-haul ex-UK dynamically packaged holidays. But one big difference is the market dynamics – it’s a lot more crowded and consolidated today than when it made a play for OnTheBeach. Keeping repeat bookings front-of-mind as part of a customer acquisition strategy makes sense in theory – in practice however loveholidays is not the only OTA in the UK trying the same approach and there are only so many bookings and customers to go around.