Jac of all trades

9 Nov 2015

In a few months, China’s tour operators will have a world of resources at their fingertips once JacTravel enters the market. China’s burgeoning tourism industry is the latest in the sights of the company, which specialises in city hotel rooms and is an inbound tour wholesaler boasting 85 million searches every 24 hours. JacTravel is based in London, but its market is distinctly global and distinctly leisure.

“We buy and sell in 85 countries – we have people in Iceland buying hotels in Berlin that never touch London. The UK just happens to be where the head office is – that’s the beauty of the XML world,” explains Terry Williamson, chief executive of JacTravel, which has a major presence at WTM London this year.

China is the latest market under development, with an office due to open in early 2016. “We are working out how and in which way – it might be an acquisition or a start-up,” says Williamson. His brief is to expand into more new markets and take JacTravel into the Premier League. It has languished in the Championship, with a turnover last year of about £160 million – impressive enough, but nowhere near the Chelseas and Manchester Uniteds of the sector, namely GTA (£1.3 billion) and Tui’s Hotelbeds (£1.2 billion).

JacTravel can buy its way into markets or grow organically. A 2010 sortie into Brazil is an example of how its existing inventory gives it a way in. “We went in focussed on the US and Canada product range and we secured customers. Then we asked what else do we sell and who to?” says Williamson. The result was a big expansion in Jactravel’s product range in Florida – Brazil’s most popular overseas destination – and in August this year, the opening of an Orlando office.
Williamson says China will be “huge”. “We have some product range in the major cities, but our aspiration is to offer our full range.” Likewise India. “We have a sales presence in India but no office, and we have no group business in India, only free independent travellers.”

The already extensive product range took a quantum leap in March, when JacTravel brought TotalStay, another London-based B2B accommodation specialist. The deal added an inventory of 2,500 directly contracted hotels, plus an aggregated supply of more than of 100,000 properties, which doubled the size of the business. The combined firm will turn over close to £400 million this year and TotalStay will become the combined brand’s retail web portal. To simplify things, TotalStay’s Exclusively Hotels travel agents’ website will be rebranded with the TotalStay name, JacTravel will concentrate on the XML side.

Backdrop to JacTravel:

JacTravel is named after its founder, Jack Anthony Coronna, who set up in 1975 and built the business on handling inbound group travel, only venturing into the hotel business 10 years ago, just as this sector moved to the internet. The company has since passed into the hands of venture capitalists – first Bowmark Capital, which exited in July 2014 after seven years, having seen its original investment grow almost fivefold to £80 million.
Coronna got out at this point and JacTravel is now 55% owned by another venture capital firm, Vitruvian Partners, with the rest in the hands of management.

Williamson tells how his investors have deep pockets and are keen to spend. “Vitruvian invested on the basis that we would expand internationally and make acquisitions. That’s what we’re doing. My aspiration is to create another meaningful player. We’ve grown at 20% since 2012 (when JacTravel launched in Hong Kong and Dubai) and this year the combined business will grow at 20% again. The aim is to become a globally recognised wholesaler.”

It’s all there for the taking, Williamson believes. He points out the need for brands like JacTravel as a distributor in the hotel sector: “In the US, 70% are chains, but in Europe and Asia it’s only 30% – it’s still hugely fragmented.”
Having a distributor like JacTravel has advantages for hoteliers, he believes. “Can you distribute all your rooms yourself? That’s fine in a boom, but look what happens when you have things like the Paris bombing – you need help.”

Towards Global Growth

JacTravel bookings are 80% three and four star and the company’s presence is well established in cities where tourists like China’s are heading. “If you look at the stats, the top 20 cities are the same as 20 years ago.” JacTravel’s key supply market is still the UK – it has 1,250 properties on its books, including 450 in London, and it distributes for the budget brand Travelodge.
The budget sector will be even more important in future once Asian and Chinese travellers really get on the move. “At the moment, the Chinese mainly buy cheaper hotels and spend the vast majority on shopping and visiting,” he says.
For Williamson, there are few barriers to growth globally. He names only technology as a possible handicap, but there remains the question of visas in countries like the UK, which only this year made it easier for Chinese tourists to obtain. “The UK government has come a long way, but there’s still a long way to go because it’s so much simpler to go to the Schengen countries. We won’t capture the full value of [tourism] until we lift the visa and runway restrictions,” he adds.

But where there is a barrier to one market, there is an open door to another. “Tourism is a scale market – I’d like to think we can double organically again in three years. Generally speaking, the market is big enough – $35 billion. We’re only scratching the surface.”

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