An Irish owned company whose core business is to control travel agents’ desktops for all hotel transactions is planning to raise new capital by way of an institutional placing on the Alternative Investment Market (AIM) of the London Stock Exchange. CNG, which has exclusive agreements with four of the five largest US corporate travel agents, is targeting the US$35bn corporate hotel market.
CNG, whose business is engaged in distributing hotel room nights to travel agents, controls the travel agent’s desktop for all hotel transactions through its own software TLC, which is compatible with all the major global distribution systems (GDS) used by travel agents and airlines.
The company operates through strong distribution channels, which includes exclusive agreements with four of the five largest US corporate travel agents, including a joint venture with WorldTravel BTI, the third largest corporate travel agent in the world.
According to the company, the net proceeds of the placing will be used to provide additional working capital to increase sales and marketing initiatives, increase revenue both organically and via selective acquisitions and fund the global rollout of the TLC software.
TLC, an application based on proprietary technology, is used by travel agents to access its merchant inventory (inventory secured by travel agents) and allows agents to back merchant inventory as well as the standard inventory found on the GDS using the same system and process that they currently use. This maximises adoption rates and minimises the need for behavioural change. In effect, TLC prioritises the high margin CNG merchant pool over the low margin GDS pool when a search is made.
The chief executive of CNG, Finbarr Power, commented: “CNG is ideally positioned to benefit from the rapid changes taking place in the hotel room distribution market. The fund raise and flotation will raise our profile with our partners, customers and the industry, and assist the company in developing our business as we look to aggressively dominate our chosen markets.”
CNG’s core business is the distribution of hotel room nights to the Corporate sector, a sizeable market which turned over US$35bn in 2003 and accounts for circa 51pc of expenditure on hotel room nights. The corporate segment remains relatively untouched by the large online travel agents. Through a centrally managed database of hotel room night inventory, CNG is able to distribute to the corporate and leisure sectors and has a net rate hotel inventory of over 16,000 hotels, making CNG one of the largest distributors of hotel room nights in the world.
The Internet has radically altered hotel distribution in the leisure segment of the travel sector. Attention has now moved to the more complex corporate segment, a huge market that remains largely uncolonised by the online giants such as Expedia. CNG is set to gain significant share through a mixture of innovative technology and strong supply and distribution arrangements.
By John Kennedy
