Europe’s tour operating behemoth TUI Travel will run its online and specialist businesses separately to give a clearer idea of what to keep and what to get rid of.

Friedrich Joussen, currently CEO of TUI AG, was talking to investors and analysts this morning, ostensibly about the latest stage in the plans to merge (UK-listed) TUI Travel with (German-listed) TUI AG to create  “the world’s number one integrated leisure tourism business.”

Currently TUI Travel has two units “accommodations and destinations” and “specialist and activity” which sit outside its mainstream tourism business. Under plans for the merger, the “destinations” part of the pie will be transferred into the mainstream, leaving the other parts to “be run separately to maximise growth and value”

Joussen notes that “some of the OTAs are leading businesses, like Laterooms in the UK which is number two, a very healthy business”.

He adds:

“Then you have other businesses like Asiarooms, like Malapronta, which are very small, so the question is what do we do with them?

“It’s very clear that the benefit for the mainstream business is very limited, so they will have separate PnLs, separate accountability.

“But we are not forced sellers. We will look very carefully at each segment and decide what do we want to grow, what do we want to sell, what do we want to IPO, what we have to restructure…”

Peter Long, CEO of TUI Travel says:

“We’re not in a hurry…We’ve loads of people knocking on the door, particularly private equity. No thanks. We’ll do it in our way and in a controlled way.”

The fate of these businesses lays in the hands of William Waggott who will be CEO of the Online Accommodation and Specialists & Activity units.

The raison d’etre for the merger is to create a tour operator business with unique content – hotels exclusive to TUI, cruise ships exclusive to TUI, a fleet of planes ferrying TUI passengers around the globe with TUI branded transfers taking  them to the aforementioned TUI hotels. It is a model a million miles away from a hotel booking site.

Laterooms has always sat awkwardly in the TUI Travel portfolio (although the online accommodation unit generated more than £2 billion cash and a EBITA of £40 million in 2013). It would make a good buy for someone looking to buy scale (or for someone looking to take out a rival).

NB: Financial markets image via Shutterstock

Original author: Martin Cowen