Hotel bookings chief sells to Lastminute for £12m

Lastminute.com, the online travel and leisure retailer, has expanded its hotel business with the acquisition of an offline booking agency for £12.1m.

Lastminute.com, the online travel and leisure retailer, has expanded its hotel business with the acquisition of an offline booking agency for £12.1m.

Sheetal Kapoor sold his private First Option Hotel Reservations venture to Lastminute for £10.5m in cash and the rest in shares. The acquisition gives Lastminute a physical retail presence in the form of First Option's 21 kiosks, which are positioned at railway stations and airports.

Mr Kapoor, who was born in Nairobi but grew up in Burnley, Lancashire, founded the First Option business in 1994. He will act as a consultant to Lastminute for six months but in recent years has not been involved in the day-to-day running of First Option, which will see its operational management stay on.

Mr Kapoor, who also has other business interests, said: "'I am delighted that First Option has been acquired by a parent that will help the business to continue to grow as the synergies of the businesses for both corporate and retail customers are compelling."

The combined companies will offer more than 4 million room nights and the deal will increase the "total transaction value" of hotels business for Lastminute by £60m a year.

As well as a retail hotel booking business, the acquisition will bring sizeable corporate booking activities, which is new to Lastminute.

Brent Hoberman, chief executive of Lastminute, said that while the corporate hotel business would continue to be run, this market was not yet ready for a "big push" to take it online.

Mr Hoberman said the acquisition was part of Lastminute's focus on higher-margin business, such as hotels and car hire. He added that the lower-margin activity of selling flights - which Lastminute is most famous for - made up just 10 per cent of gross profit.

"Our competitors are much more exposed to flights," he said. "We're not just travel. We've become a lifestyle utility."

The First Option kiosks will be rebranded as Lastminute retail outlets. As well as being staffed during the day, the kiosks will be fitted with Lastminute computer terminals, offering a 24-hour service.

Mr Hoberman said the Lastminute branding would mean "a call to action, a constant reminder that will keep people thinking of us".

Currently at the kiosks, 90 per cent of the reservations made are for same-day arrival at standby rates. Their locations include Edinburgh, Glasgow and Manchester airports and major railway stations around the country.