LateRooms Owner TUI Books Travel Site Exit

The European travel giant which owns Thomson and First Choice is checking out of LateRooms.com, the online hotel booking service, as it seeks to raise hundreds of millions of pounds from the sale of non-core assets.

Sky News understands that TUI AG has appointed Arma Partners, a London-based advisory firm, to oversee an auction of LateRooms.com.

The company, which was established during the first dotcom boom in 1999, began as an 'on the day for the day' booking site for unsold hotel rooms.

It was taken over by First Choice in 2007 in a deal valued at more than £100m, although it was unclear on Tuesday whether TUI would expect to recoup a similar sum from a sale this year.

LateRooms.com, which has a database of more than 55,000 properties around the world, is part of the Hotelbeds Group division of TUI, which has been designated as non-core by the German company’s board.

TUI itself has undergone significant change in recent months with the merger of its UK and German entities creating a new force in the travel industry with a market value of €10bn (£7.3bn).

A capital markets presentation scheduled for next week is intended to provide more clarity on restructuring, anticipated cost savings and the sale of non-core businesses.

Analysts have described the merger as logical and played down integration risks because the companies were already so familiar to each other.

TUI will, however, face competition to identify buyers willing to pay premium prices, with a glut of European travel assets on the market.

Kuoni is working with bankers at Morgan Stanley to sell a portfolio of operations, including brands such as Jules Verne Travel in the UK.

A number of specialist businesses including Iglu, which is being bought by the private equity arm of Lloyds Banking Group, and Lastminute.com, a poster-child of the UK’s internet boom, are also in the process of changing hands.

Arma has a track record in the online travel sector, having secured tens of millions of pounds of new funding for Momondo Group, the owner of Cheapflights.com, last year from Great Hill Partners, an investment firm.

Spokesmen for TUI and Arma Partners both declined to comment.