In mid-spring, CDS Groupe announced the acquisition of Rydoo's travel business. What are the reasons for this acquisition?
Ziad Minkara - When Rydoo Travel & Expense decided to spin off its travel business to concentrate on its expense business, we entered into discussions, convinced as we were that we could creating leaders in business traveleach in its own business segment. CDS wanted to become the number one operator in France, which it did in 2020, just before the pandemic. From then on, the ambition was to expand in EuropeThe problems in the main European markets are similar to those in France. In fact, all the major accounts listed on the equivalent of the CAC in France are eligible to set up a direct hotel reservation platform. As for the large ETIs, they concentrate their hotel expenditure with their partner agencies, with which we hope to develop. Rydoo's travel branch, with customers in Switzerland, Italy, Benelux and the UK, and an R&D team based in Poland, gave us that European dimension straight away.
So expanding in Europe and increasing distribution to travel agents are the main objectives of this takeover?
Z. M. - In Spain, Italy and the UK, travel agents are looking for an online booking tool that is independent of TMCs, GDSs or expense tools. The market is waiting for this type of agnostic solution. Rydoo Travel, which we have just renamed Goelett, will be completely independent of CDS. For its part, CDS will remain the benchmark direct hotel booking tool for companies, while distributing its content to travel agencies, whatever their online booking tool. Including, of course, Goelett's.
In concrete terms, what new possibilities will you be offering travel agents?
Z. M. - With the acquisition of Rydoo Travel, which works with Havas Voyages, Voyage Expert and FCM, in addition to CDS's partnership with Selectour, for example, we have this coverage of human-sized agencies that need technology and services. Our aim is to provide European travel agencies with the technology that will enable them tobe competitive with new entrants such as Tripactions, Travel Perk and Egencia, which was recently acquired by American Express. We're going to continue to invest so that agencies have an integrated online booking tool, hotel booking tool and payment tool. This will enable them to win bids from the leading TMCs and offer their customers the best possible service.
Our aim is to provide European travel agencies with the technology they need to compete with new entrants.
The acquisition of Rydoo Travel's online booking tool also demonstrates the weaknesses of the online booking tools model?
Z. M. - An online booking tool, thanks to its business model, with a very low cost per transaction, cannot be viable on its own. This is why Neo, from KDS, is backed by a TMC such as American Express GBT, Cytric by a GDS such as Amadeus, and Concur by an expense tool such as SAP. Similarly, Rydoo Travel is now supported by a hotel booking tool such as CDS. While CWT and BCD do not have their own online booking tool, the market is looking for solutions, as there are no longer many available.
With the acquisition of Rydoo Travel and now the launch of Goelett, your Group's position in the business travel ecosystem is even stronger.
Z. M. - Our strategy is to be at the heart of business travel distribution. We don't just offer content, as has been described, but also a complete service to our corporate customers and travel agencies. This service includes hotel sourcing, integration into online booking tools, reporting and payment methods. As early as 2020, we realised that this aspect was going to become essential. That's why we have accelerated the in-house development of CDS Smart Pay in order toinclude payment methods in our solutions. And all with technology that we own, without having to look elsewhere. as Sabre and HRS have recently done. At the same time, we have invested in digital technology and distribution to offer new solutions to travel agents.
What are the next steps after the unveiling of Goelett?
Z. M. - The last quarter of 2022 will be devoted to integrating CDS and Goelett to offer this online booking tool, first in Southern Europe, then in the UK, followed by the German-speaking countries. In an increasingly complex market, our development strategy is to work on simplicity simplicity of interface, ease of use for travellers, ease of implementation for corporate customers and integration with agencies.
In the 20 years of its existence, this is the strongest inflow that CDS has seen in terms of flows, for major accounts, ETIs and agency business alike.
How do you see the business hotel sector developing alongside this acquisition?
Z. M. - In my opinion, it has emerged stronger from the crisis. The last summer season was very good, with the return of foreign leisure customers, particularly Americans boosted by a strong dollar. But business travel has also recovered strongly. Small and medium-sized businesses are back on their feet, and large groups, apart from internal and intercontinental meetings, are back to where they were before the crisis. There has been a lot of talk about "essential travel", and I believe that business travel is still just as essential to the growth of companies.
Despite pessimistic estimates of a full recovery in the sector, you seem rather optimistic?
Z. M. - In its 20 years of existence, it has CDS's strongest ever return to revenue in terms of flows, both for key accounts, ETIs and agency business. In the last days of August, we already had as many orders for September as we did last year for the whole month. Without September even having started, and with an increase of 20% in the average basket! That's considerable, at least in France and in our core business, which is mid-range business travel.
However, this recovery is also marked by room prices well above 2019 levels. Will this rate growth continue?
Z. M. - With high occupancy rates, fares have logically risen in line with demand. It's unfortunate, we now have this accelerating factor linked to the geopolitical and energy crisis. This has had an impact on the hotel industry, firstly through the high cost of energy, but also, in the face of inflation, through an increase in salaries. As a result, rates in France are currently rising by almost 20%, a rate hike that can also be seen in the UK and Spain.
Against the backdrop of the economic crisis, won't this put a brake on business travel in the months ahead?
Z. M. - It's obvious. Firstly, because the energy crisis will put the brakes on the economy, since we're talking about a recession. And, consequently, fewer business trips in the long term. Especially as we'll also have to consume less and therefore travel lessparticularly by air. In this context, as a large part of the train + hotel CDS business, the combination that emerged victorious from the crisis, we should be less affected. All in all, we have learned to live with recurring crises. Our customers now have agile tools and can adapt their travel policy in real time. This is one of our strengths.
