Online travel distributor Travel Holdings Inc. has closed on $10 million of an anticipated $15 million round of Series B venture funding led by Pharos Capital Group LLC of Dallas to continue aggressive expansion of a network to resell travel assets.
The new money brings total investment to $26 million, less than a year after the company raised a $16 million Series A round.
Travel Holdings chief financial officer Robert Stockwell said the investment round includes other first round backersBEV Capital of Greenwich, Conn. and Massey Burch Capital Corp. of Nashville, as well as an unnamed strategic investor, and he said the company hopes to bring in as much as $5 million in additional investment.
Orlando, Fla.-based Travel Holdings was formed 18 months ago in a merger of Atlanta-based LastMinuteTravel.com and Orlando-based Tourico Holidays Inc. and Travel Global Systems Inc. The combined company is a powerful aggregator of hotel rooms, rental cars, cruise, air and transfers/attractions products, which are sold across a broad range of travel industry segments including retail customers, travel agents, group travel promoters and wholesalers.
“They have executed a very aggressive growth plan, primarily with hotels, and we see no reason for that to stop,” said Pharos managing partner Mike Devlin. “You invest based on what a company tells you they will execute on and hope for a surprise on the upside, and they have done what they said they would do and more, and if they execute on what they want to do in 2006, we expect this will get them to where they can do a strategic transaction, whether that is a sale or a public offering.”
Travel Holdings expects to use proceeds from the round to add local sales and product procurement offices in Europe, Asia-Pacific and South America.
Devlin said the company has worked closely with travel aggregators abroad to grab market share in a niche that has been less served by incumbent online travel aggregators. He said has been a fruitful market for the company, both for outbound U.S. travelers, and for foreign travelers coming to the U.S. In addition to its emphasis on international travel assets, Travel Holdings business model relies on an Israeli-based technology team that has created an inventory allocation system with back-office capabilities, extranet tools and a caching system and direct connection capabilities through Web Services.
Devlin said Pharos was drawn to the investment because of a previous successful investment in Greenberg News Network, an Internet company Travel Holdings chairman Alan Greenberg sold to WebMD Inc. in 1999.
He said the firm had been looking for a way to get into the online travel business and that Greenberg and technology founder and president Uri Argov had put together a business model that focuses on the underserved wholesale market while leaving open the possibility of expanding retail operations.
The company is working with Frank Sena of Libra Securities LLC in New York as placement agent for the round, and has legal representation from Betty Derrick of Womble Carlyle Sandridge & Rice PLLC in Atlanta.
Doug Franck of Boult, Cummings, Conners & Berry PLC in Nashville represented the investors.