Malvern Travel Technology, which owns the Laterooms and Superbreak brands, has gone into administration.
The company was unable to find a buyer after shareholder Cox & Kings defaulted on loans, calling the future of its other brands into question.
Tracey Pye, joint administrator, KPMG, said: “The directors of Malvern Group embarked upon an accelerated sales process to bring further investment into the business. However, with the cash position of the company deteriorating rapidly, this process was unfortunately unsuccessful, prompting the directors to take the difficult decision to appoint the administrators.
“We continue to invite offers for the business, and would urge any interested parties to make their interest known as soon as possible.”
Executive chairman Hugo Kimber said: “This is a devastating blow for all of our wonderful employees who have invested so much time and effort into building Malvern, its brands and trips technology platform. To be so close to delivering our goal of an integrated, dynamic and commercially successful business, that could provide significant value through its innovative products, is heartbreaking.”
In the company’s most-recent accounts, for the year to the end of March 2018, the group said: “The hotel-only OTA environment continues to be a challenging environment for LateRooms with the continued increase in costs and lower brand awareness. The company has responded by introducing a new online acquisition strategy to maximise profitability within the paid search channel and also by increased focus within the affiliate and business markets.
“Looking forward, The Malvern Group is embarking on a strategic change programme to position itself as the UK’s leading B2B travel technology provider. The Malvern Platform will be able to support the existing brands as well as providing a white-label solution to other travel industry partners to support customer retention, loyalty and profitability by providing the first multi-product online marketplace for the travel industry.”
Ebitda for the year was GBP7m, down from GBP7.3m in the previous year.
The Manchester-based companies had recently come under significant cash flow pressure following news that Cox & Kings had defaulted on its debt repayments and would not be able to support the business in the short term.
In a statement to the Bombay Stock Exchange on 16th July, Cox & Kings said: “The company proposes to meet its financial obligations through a combination of internal accruals and monetising its assets. The company is working towards plans to make good its obligations.”
At the end of the month Indian bank Yes Bank acquired 18.55% stake in Cox and Kings on invocation of pledged shares. It has also acquired 30% stake in Ezeego One Travel & Tours, which is promoted by Cox & Kings.
“Yes Bank has, pursuant to invocation of pledge acquired shares – 3,27,50,139 equity shares having nominal value of INR 5 a share, constituting 18.55% of the post-issue paid-up share capital, of a listed company, Cox & Kings; and 34,080 equity shares having nominal value of INR 10 (USD 0.15) per share, constituting 30% of the post-issue paid-up share capital, of an unlisted company, namely, Ezeego One Travel & Tours,” it said in a regulatory filing.
Cox & Kings had a debt of Rs3,238 crore at end of FY19, comprising of both short-term and long-term debt.
Cox & Kings sold LateRooms and Superbreak to Malvern Enterprises in 2016, a business in which it acquired a 49% stake for GBP6.37m. The remaining 51% stake was held by an unnamed European private equity company before being sold to Cayman Island’s based Adiuvat Investment Fund. The company said that the move would allow Malvern to move into the “under-penetrated city-breaks market”.
Malvern Enterprises bought LateRooms from Cox & Kings for GBP20m, while Superbreak has been sold by the Indian company’s subsidiary, Holidaybreak, for GBP9.25m.
Malvern included Cox & Kings CEO Peter Kerkar and Darren Neylon, managing director at Superbreak, as directors. Kerkar remained a director.
TUI Group sold LateRooms for GBP8.5m to Cox & Kings Group in 2015. LateRooms was bought for GBP120m in 2006 by First Choice, which the following year merged to form TUI Travel.
HA Perspective [by Katherine Doggrell]: Brand recognition in online travel is, as the hotel sector will tell you, a difficult thing to achieve, and if you’re not part of the Expedia Group or Booking Holdings stable, it’s something of an uphill pickle.
But, as one observer pointed out to this hack, it’s not as though these were small businesses. But, as with many in this sector, the sale of rooms online is an ever-changing beast and if you’re going to shift your strategy, as LateRooms was, it would be a tremendous assistance if one of your shareholders doesn’t start defaulting on their loans and having to look down the back of the sofa for cash.
KPMG had been unable to find a buyer for the businesses, although it remains not beyond the realm of possibility. Unfortunately, it looks as though time has passed at Malvern, with potential buyers not looking for more of the same, but innovators such as Hopper.