Tourico Holidays prepurchased 47,000 room nights through February 2017 at the Hyatt Regency Paris Etoile.
Tourico Holidays prepurchased 47,000 room nights through February 2017 at the Hyatt Regency Paris Etoile.

Tourico Holidays’ prepurchase of the two largest blocks of hotel rooms in the wholesaler’s 21-year history reflects a combination of growing demand from overseas travel professionals and what appears to be a willingness among hoteliers to work more closely with  wholesalers as the OTAs continue consolidating.

Looking to lock in room rates for its travel agent clients during the next 20 months, Tourico agreed to prepurchase more than 90,000 hotel room nights at two Hyatt-branded properties in Paris and New York.

Closely held Tourico bought 47,000 room nights at the Hyatt Regency Paris Etoile through February 2017, suggesting that the wholesaler planned to fill about 80 rooms a night on average at the 950-room hotel. Tourico, which sells 2,100 rooms a day through 425 supplier hotels in Paris, said Paris room-night bookings are up 36% this year.

Tourico also prepurchased 44,000 room nights at the Grand Hyatt New York through next March, suggesting it will book, on average, about 160 rooms a night at the 1,306-room hotel. Tourico said it sold more than a half-million room nights in New York last year.

“Whatever the distribution methodology may be, to allocate that much inventory to one tour operator is staggering,” said Jim Smith, a travel and tourism distribution and marketing expert.

Each of those prepurchases was more than twice as large as the company’s previous largest-ever room-block acquisition at a single hotel, said Lauren Volcheff, vice president of North American sales and marketing at Tourico Holidays. She added that the company typically prepurchases between 2,000 and 20,000 rooms at specific hotels.

“This gives our clients a point of differentiation,” Volcheff said. “The same-day availability, the pure quantity of rooms and, of course, the price point.”

While she declined to disclose financial specifics or pricing terms of the prepurchases, the agreement calls for Tourico Holidays’ rates at the two hotels to run lockstep with their public rates, with discounts of as much as 50% to be passed on to Tourico’s clients.

While Hyatt representatives declined to comment on the prepurchases, the sheer scale of the blocks caught the attention of at least one travel expert.

“Whatever the distribution methodology may be, to allocate that much inventory to one tour operator is staggering,” said Jim Smith, a travel and tourism distribution and marketing expert who served as president of GEM, which became Vacation.com. “Maybe on a good day, a tour operator gets 5% to 7% of a hotel’s inventory. If you’re really huge, it can ramp up from there.”

Tourico continues to try to bring down its costs by buying inventory from suppliers in bulk. The company, whose clients include 4,900 travel professionals in 100 countries, said in March that it would start prepurchasing tickets for activities and attractions such as Las Vegas’ High Roller observation wheel, adding that the discounted rates would enable it to pass on savings to its travel agent customers.

The strategy reflects the growing influence of the Florida-based company. While it maintains a lower profile than either its supplier partners or many of its travel agent clients, Tourico is large and growing rapidly. Volcheff declined to disclose specifics on annual revenue, but she did confirm that it was more than $1 billion and estimated that it was up 16% this year, with 70% of its sales now coming from overseas clients.

Smith said that international influence is key because overseas travelers tend to book longer stays, making the prospect of allocating discounted rooms to a wholesaler a better one for a hotelier like Hyatt.

As for the hotels’ locations, Jan Freitag, senior vice president at hospitality research firm STR, said that Tourico’s aggressiveness made sense because of the propensity of cities like New York and, to a lesser extent, Paris to approach citywide sellouts during particularly busy times of year.

“New York City is running at such high occupancies that it makes sense for them to make sure they get into the city,” Freitag said.

Volcheff said Tourico will likely continue to make more large prepurchases and plans to go beyond global gateway cities like New York and Paris. She said the company was targeting hotels in “secondary” cities like Austin, Texas; Tulsa, Okla.; and Charleston S.C.; as well as Manchester, England.

As OTAs continue consolidating via transactions such as Expedia’s pending acquisition of Orbitz, thus wielding greater negotiating power to wring higher discounts on hotel rooms, hoteliers might be more willing to reach prepurchase agreements with travel wholesalers like Tourico.

“The travel landscape has changed rapidly over the past two years,” Volcheff said. “We want to matter to hotel partners, and we’re working hard to shift business.”

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