Dnata set to buy UK’s Stella Travel Services

Emirates Group's dnata is looking to buy British travel company Stella Travel Services as it seeks to increase its market share.

The UAE was Stella Travel’s most popular destination last year, according to dnata. Jaime Puebla / The National
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Emirates Group-owned dnata plans to acquire the British travel agency Stella Travel Services as it expands its global reach.

The Dubai-based travel operator will buy the entire issued share capital of Stella Travel, which includes its TravelBag, Travel2, Sunmaster, Global Travel Group and Triton Rooms brands,

They operate across long-haul travel, holiday packages, online and call centre business segments among others.

Last year, the UAE was Stella Travel’s most popular destination, according to dnata.

The deal, which is awaiting merger control clearance, is the latest such purchase by the company as it seeks to channel more international tourists through Dubai.

In February, dnata acquired Gold Medal Travel Group from the British global travel services operator Thomas Cook for £45 million (Dh269.88m) as the British company looked to pare its losses.

In 2012, dnata signed a joint venture with Travel Counsellors, which designs holiday packages, and acquired the major UK online travel agent Travel Republic in 2011 for an undisclosed sum. In 2008, it bought a 20 per cent stake in Hogg Robinson Group, which is an association of business travel companies, for £30m, as well as 49 per cent in Mind Pearl, a contact centre operator.

Wholly owned by the Investment Corporation of Dubai, dnata has about 200 retail outlets globally and says it handles 2.9 million bookings and 2 million airline tickets annually.

Such mergers and acquisitions by dnata are expected to drive the tourism sector in Dubai as it enables the company to provide end-to-end services such as ticketing to hotel bookings.

“In terms of further mergers, it’s likely that dnata and other Dubai-based firms will continue to look for small but significant piecemeal deals like this that almost instantly add value because such specialist firms already have a big and established customer pool,” said Saj Ahmad, the chief analyst at StrategicAero Research.com.

The global travel booking industry is consolidating as people increasingly use websites to book flights, hotels and hire cars. Last year, the online portal Expedia acquired the German hotel search website Trivago, and in the previous year another US travel portal, Priceline, purchased Kayak. Expedia paid €434m (Dh2.06 billion) for a majority stake in Trivago. Priceline bought price comparison website Kayak in a $1.8bn deal.

In May, Saudi Arabia’s Al Tayyar Group acquired the British travel company CTM for £13.5m. Four months earlier, it bought Elegant Resorts, a luxury tour provider, from Thomas Cook for £14.3m.

India, one of the fast-growing outbound travel markets, is also experiencing a shake-up in its travel sector. In February, Makemytrip.com, an online travel portal that gives access to hotel bookings, tickets and holiday packages, bought the Dutch company EasyToBook.com, which provides bookings in North America and Europe among others, for $5m. In 2012, it bought a majority stake in the Thai travel company ITC Group for $3.2m.

Stella Travel made a profit of £1.33m in the fiscal year ending June 2013, the most up-to-date figures available from the UK’s Companies House. That was an improvement on the £722,000 it made a year earlier as it sold more holiday packages to Dubai and the Middle East. It had 375 employees at the time.

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