Travel firm buys online booking business

UK travel and tour operator First Choice was today preparing for life with its new business, internet-based hotel booking site Laterooms.com.

The firm snapped up the website for £108m (€161m) on Saturday, but could end up paying another £12m (€17.9m) over the next three years depending on its performance.

Laterooms.com was bought by private equity firm ECI Partners in 2004 for £25m (€37.2m), netting founders Steve and Paul Walsh an estimated £17m (€25.4m).

Peter Long, chief executive at First Choice, said: “Operating in a high growth sector, we see considerable opportunity to increase Laterooms’ future profitability even further.

“It has a distinct business model serving a niche market segment at low cost. This increased range of accommodation already available in the group will strengthen its position and give international scalability.”

First Choice said Laterooms booked £1.1bn (€1.6bn) worth of hotel accommodation in 2004 – a figure which is expected to increase 21% year on year to £3.4 (€5bn) by 2008. It boasts one million customer visits each month, with 13,000 hotels and guesthouses registered on the database.

Interest in the website, which was set up in 1999, came as First Choice ponders the sale of its mainstream package holiday arm for £500m (€745.8m).

The sale of the business would allow First Choice to concentrate on its operations providing specialist trips and activity breaks, such as Sunsail and Trek America.

The business, which is thought to have attracted interest from MyTravel and Thomas Cook, runs 32 aircraft, has more than 300 high street outlets, and is responsible for taking 2.5 million customers on holiday every year.

The package holiday industry has been hit by rising fuel costs and a fall in demand as people turn to budget airlines and the internet to plan their own trips.

Last year, First Choice generated around £54m (€80.5m) of operating profits from the package holiday arm, which includes the Falcon and Sunstart brands.

First Choice has embarked on a strategy that has seen it cut capacity and switch its focus to long-haul destinations and niche trips.

Mr Long said: “I’m sure that as part of First Choice, Laterooms will continue to lead the way in late-availability online accommodation.”