Gulf Capital, one of the leading and most active alternative investment firms in the Middle East based in Abu Dhabi, announced its successful closing of the management buy-out of Destinations of the World (“DOTW”), a leading multi-regional hospitality distributor. Established in Dubai in 1993, DOTW has grown into one of the World’s largest accommodation wholesalers, operating an exclusively B2B distribution model. Gulf Capital partnered with DOTW’s impressive senior management team to acquire 100% of the Company. Post-transaction, Gulf Capital will retain a controlling 57.5% stake, with the balance held by DOTW management.
DOTW secures access to hotel room inventory in different travel destinations and sells hotel room bookings to its multi-regional distribution network of travel agents, online travel agents, airlines and tour operators. The company has established a solid leadership position across MENA, with 95% penetration of the region’s travel retailer agency market.
Dr. Karim El Solh, Chief Executive Officer of Gulf Capital said: “This is a landmark deal for Gulf Capital. This was our largest management buy-out to date, in which once again we demonstrated our focus on identifying strong management teams with a demonstrated track record and partnering with them to acquire and grow a business to the next level. The accommodation wholesale sector is the fastest growing segment of the global travel market and DOTW has a solid track record of driving top-line growth and achieving significant scale economies.”
Keith Fernandez, Group Founder & CEO of DOTW said: “We are excited to partner with Gulf Capital. From the outset, the investment team approached the opportunity with the mindset of adding value to our business. My team and I are very proud of the business that we have built and we look forward to taking it to even greater heights with our new partners.”
The global accommodation wholesale market is estimated at over USD 30 billion and is forecast to grow at c. 8% per annum over the next 5 years.
Richard Dallas, Managing Director – Private Equity at Gulf Capital, commented: “Hospitality distribution is characterized by very high fragmentation on both the supply-side (hotels) and the demand-side. The costs of direct distribution can be prohibitive, particularly for independent hotels or small/regional chains. Consequently, hotels will continue to have a high dependence on intermediaries like DOTW. We look forward to working with DOTW’s great management team on expanding their destination and distribution markets”
Muhannad Qubbaj, Managing Director – Private Equity at Gulf Capital, said: “DOTW is an excellent addition to our portfolio, exemplifying our strategy of investing in control growth buyouts in sectors that are structurally aligned with the growth dynamics of our region. With this transaction, Gulf Capital Equity Partners Fund II, our $533 million buy-outs fund, is now fully deployed.”
Tarek Mounib, Executive Director – Private Equity at Gulf Capital, explained: “Market consolidation is occurring across the industry, driven by the potential to realize significant scale economies and enhance complementarily of destination and distribution markets. DOTW operates an asset-light business model with opex-funded growth, high operating leverage and a negative cash cycle. We will work with DOTW on leveraging these features to scale the business into a truly global leader in the accommodation wholesale sector.”
The transaction was funded by a combination of equity provided by Gulf Capital and the management team and acquisition finance provided by HSBC. Gulf Capital was advised by Boston Consulting Group, Freshfields Bruckhaus Deringer LLP and PriceWaterhouseCoopers.