Friday, October 10, 2014

Transhotel's Collapse

The website for the Madrid-based Group Transhotel is still up but the company, one of Spain's leading tourist services concerns, a global organisation specialising in online reservations, is to file for bankruptcy. Coming on the back of the collapse of Marsans and Orizonia, Transhotel's failure represents a severe blow to the Spanish travel industry and to its credibility.

This diminishing reputation has not been helped by the way in which Transhotel has conducted itself over the past few months. Last December its employees had been informed by its owners that the company was in financial difficulty. At the Fitur travel fair in Madrid early this year there had been a protest at the Transhotel stand led by various hoteliers with which it was associated. The response was to announce that the sale of the company to Springwater, the Swiss-based investment concern, was imminent. It wasn't. There was a memorandum of understanding with Springwater, but the investment company later announced that it had no interest in making the purchase.

Prior to the statement to employees in December, Transhotel had been in discussions with another reservations company, Hotusa. These discussions broke down but Hotusa were approached again once Springwater's lack of interest became apparent. In August further announcements were made. One said that there was an agreement in principle for the sale of shares to Hotusa; another that Hotusa had actually bought the company. A few days ago any agreement was no more. Transhotel's owners wanted far more than Hotusa were prepared to pay. Transhotel, despite boasting on its website that it has "the latest technology", was considered to have systems that were all but obsolete, something which had deterred Hotusa originally.

Debts that Transhotel have outstanding to hotels are said to be in the region of 30 million euros, though the total debts may be almost double this amount. Travel agencies may also be affected though their exposure through pre-paid bookings is considered to be low. The company's 500 or so employees, left this time to apparently hear the bad news via the media, are also quite clearly affected.

There is some potentially bright news in that Hotusa, despite not going ahead with the purchase, has offered to take over Transhotel reservations. Questions are being raised, however, as to why Transhotel was continuing to accept reservations when it was planning to file for bankruptcy. The company has been given a period of administration for three months, extendable to four, to try and secure its viability and to negotiate with its creditors.

The fallout from this failure will be good news for Hotusa and other reservations companies such as Hotelbeds, but it is bad news for the industry, which is currently having to watch on while legal proceedings involving Marsans are being publicised and made known to an international audience which can only have its faith in the Spanish industry undermined further by the failure of such a well-known brand name.

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