The pair agreed to contribute at least five hotels with a value of £150 million, with Thomas Cook’s CEO describing developing own-brand sites as “absolutely key to our success.”
The seed assets will be used to develop the platform into a fund focused on acquiring a pipeline of further hotel and resort assets across Thomas Cook’s destination markets.
As part of the agreement with LMEY, Thomas Cook has acquired a 42-percent stake in Germany-based holiday company Aldiana, which has eight clubs across Europe and Tunisia and has plans to open another four resorts in the next two years.
Thomas Cook and LMEY said the move would provide customers with an even greater choice of high-quality holidays that are unique to Thomas Cook and achieve both higher levels of customer satisfaction and better margins than the portfolio average.
“The development of a strong portfolio of own-brand hotels is absolutely key to our success, allowing us to provide customers with a consistent and high quality holiday, whatever their needs,” Thomas Cook CEO Peter Fankhauser, said. “Our new strategic partnership with LMEY, with its proven track record of identifying and redeveloping highly successful properties in sun and beach locations, gives us the perfect launch pad to accelerate this critical part of our strategy.
“The acquisition of a stake in Aldiana expands our reach with a premium club-based activity holiday brand that both complements and enhances our existing own-brand portfolio, enriching our holiday offering for customers and giving us an established pipeline of new properties for the future. This is yet another example of the way that we are transforming our business through partnerships.”
“I believe that the combination of the entrepreneurial approach that LMEY has to buying, developing and upgrading hotels and Thomas Cook’s unrivalled expertise and professionalism in European tourism, has the potential to build a really exciting pipeline of new properties in sun and beach destinations,” LMEY founder, Hans Kortlevers, said in a statement. “We are looking forward to working with Thomas Cook in this alliance and helping to fast-forward the development of its own-brand hotels and resorts business.”
The announcement was made as part of the company’s results, at which it warned that it expected prices in Spain to rise by another 5 percent to 10 percent, as a result of a rise in demand as the country maintains its safe haven status, despite the terrorist attacks in Barcelona—having previously anticipated a smaller increase.
“We don’t have enough beds for all the demand,” Fankhauser said.
Last month saw TUI acquired Stella Polaris Creta, a subsidiary of the Greek Karatzis firm and owner of land on the southern coast of Ierapetra in Crete, to open a new Robinson Club. In a comment which could have come from Thomas Cook, Sebastian Ebel, TUI Group executive board member in charge of Hotels & Resorts, said: “We are aiming to deliver substantial growth in our own hotel brands TUI Blue, RIU, Robinson and Magic Life in the next few years. The expansion of our portfolio in the trending destination Greece marks a further step towards that goal.”
As competition builds in key markets such as Spain, the tour operators have found that, in order to maintain supply, they must commit their own money. How long until the asset-light hotel operators feel they have to do the same?
Katherine Doggrell is an editor at Hotel Analyst, the U.K.-based news analysis service for hotel investors.