HotelPlanner merged with Reservations.com and a special purpose acquisition company at a $567 million valuation in a deal that highlights its growing roster of gig-economy “travel agents.” What’s more, it underscores a business model that shields it to a degree from head-on competition with other hotel-booking businesses.
The two hotel-booking sites merged with public blank-check company Astrea Acquisition Corp. this week, and would trade under the HotelPlanner brand once the Securities & Exchange Commission approves the listing in several months under the symbol HOTP on Nasdaq. The blank check company, including the three merged companies, is currently trading as ASAXU.
HotelPlanner CEO Tim Hentschel, who co-founded the company with John Prince in 2004 and was mulling an Australian listing pre-pandemic, told Skift Tuesday that during the pandemic the company shed its third-party call center contract, and hired 2,000 gig-economy travel agents. They earn $10 to $30 per hour when working, and HotelPlanner thereby avoids paying its former call center contractor $10-$14 per hour per agent even during down times.
Hentschel said he’s adding 200 call center agents per month, and plans on using the net proceeds from the blank check merger to bring the roster to 10,000 agents, as well as invest in its artificial intelligence technology. These “travel agents” don’t have to have any background in travel, but get trained by HotelPlanner, which uses artificial intelligence to direct calls to the appropriate agent, he added.
HotelPlanner’s business is oriented toward group bookings and events. About 30 percent of its revenue comes from business-to-business deals with the likes of The Knot, Wedding Wire, Priceline, Expedia, Agoda, Hotels.com, Kayak and Trivago, where HotelPlanner powers group bookings involving nine or more rooms.
Direct-to-consumer is the other 70 percent of HotelPlanner’s revenue but it is generated in a nontraditional way. If someone is attending a leisure-oriented event, such as a concert, in a group, the group coordinator will offer some of HotelPlanner’s 50,000 hotels in a closed user group or as part of a package.
“We are in a nice little niche,” Hentschel said.
This direct-to-consumer business still has to compete with some of HotelPlanner’s business partners, such as Expedia Group and Booking Holdings’ brands, as well as wholesalers, but it doesn’t have to do so head-on such as in Google Hotels or Kayak, for example.
The combined companies, which also includes HotelPlanner’s Meetings.com, expect 2021 net revenue of $128 million. The business projected a 40 percent compound annual growth rate from 2020 to 2023.
Both HotelPlanner and Reservations.com, co-founded by Mahesh Chaddah and Yatin Patel in 2014, were bootstrapped, Hentschel said, adding the company’s headquarters will be in West Palm Beach, Florida and that the combined companies’ 140 employees would be retained.