European tourism giant TUI to sell Hotelbeds unit for $1.35 bn

European tourism giant TUI AG today struck a deal to sell its Hotelbeds unit to private equity firm Cinven and Canada Pension Plan Investment Board (CPPIB) for €1.191 billion ($1.35 billion) in cash.

The London-listed Anglo-German tour operator said that it would use the proceeds from the sale to invest in further growth and strengthen the company's balance sheet.

TUI had last year decided to offload its Hotelbeds unit since it did not fit with its other tour operating, cruise and hotel businesses.

Fritz Joussen, TUI's CEO, said ''there were numerous bidders for Hotelbeds'' and ''following intensive negotiations'' it opted to sell the unit to Cinven and CPPIB.

Hotelbeds reported a turnover of €1.06 billion and underlying EBITA of €69 million in the year to end September 2015.

Hannover, Germany-based TUI is the world's largest leisure, travel and tourism business with travel agencies, hotels, airlines, cruise ships and retail stores in its portfolio.

Hotelbeds is the largest distributor of hotel rooms worldwide, offering hotel capacity to travel agencies and tour operators in more than 120 countries.

It has 75,000 hotels on its books, and its fastest growing destinations include Japan, the Philippines, South Korea and Indonesia.

Since Hotelbeds is based on a different business model and strategy, it has been managed as a separate company outside TUI Group's core tourism business.