HotelPlanner, Reservations.com near deal to merge and go public

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HotelPlanner and Reservations.com are nearing a deal to merge and go public through a special-purpose acquisition company, people familiar with the matter said.

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The combined online travel-booking firm, which would still be called HotelPlanner, would be valued at about $685 million while combining with the SPAC Astrea Acquisition Corp., the people said. The merger could be announced as soon as this week.

The talks come as online travel companies cope with last year’s decline in demand due to the coronavirus pandemic and amid concerns that the Delta variant could halt this year’s rebound. HotelPlanner — which already owns the business-focused site Meetings.com — expects to post record sales this year that top 2019’s figure, the people said. The combined company projects roughly $170 million in revenue next year.

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Smaller than many of its competitors, HotelPlanner hopes to sell public investors on its growth potential, discounted group rates and what it terms a gig customer-service system in which independent workers around the world do short-term work for the company, the people said.

HotelPlanner, founded in 2004, would be expected to use some of the money held by the SPAC to cover transaction costs and compensate existing investors in the combined company who are selling a small portion of their stakes, the people said. Current investors are still expected to own most of the company, which would be expected to have about $105 million left over in cash proceeds.

HotelPlanner and Reservations.com are nearing a deal to merge and go public through a special-purpose acquisition company, people familiar with the matter said.

A SPAC is a shell company that raises money and lists on an exchange to merge with a private firm and take it public. The private company then replaces the SPAC in the stock market and is allowed to make business projections when going public. Those aren’t allowed in a traditional initial public offering. SPACs have exploded as faster IPO alternatives in the past few years, raising a record of nearly $120 billion so far in 2021, according to SPAC Research.

Astrea raised $172.5 million in February.

The hotel is taking that correlation further by opening bookings starting on Aug. 11 at 11 a.m. BST on Hotels.com. A one-night stay will cost £111 ($154 USD) per room per night, the announcement said. 

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The HotelPlanner deal wouldn’t be expected to have an associated fundraising round called a private investment in public equity, or PIPE, that often accompanies mergers and lets companies do larger SPAC deals. Shares of companies that raise PIPEs have historically performed better because PIPEs are raised from institutional investors and can validate a company’s valuation.

PIPEs have become harder to complete, with shares of many companies that went public via SPACs struggling in recent months and issuance slowing. Some firms that don’t need as much cash have also chosen to keep more control of their companies by not using PIPEs.

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