Luxury Travel Site Secret Escapes Buys Germany’s JustBook To Square Up To Jetsetter And Hotel Tonight

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Some consolidation afoot in the online travel space: UK-based Secret Escapes, which focuses on luxury travel flash sales, is buying Germany’s JustBook, a mobile-based specialist in bookings in the business travel sector. The companies are not disclosing the financial terms of the deal, but JustBook co-founder and MD Stefan Menden says the cash and shares deal “makes sense for everyone involved.” This is Secret Escapes’ first acquisition.

The merged company will become one of Europe’s bigger purveyors of “discretionary travel” services, and gears Secret Escapes up to launch in the U.S. — a move that will come later in 2014, according to its co-founder and CEO Alex Saint. There, the big competition will be Jetsetter.com, acquired last year by Trip Advisor, Saint tells me. In Europe, he views Voyage Privee in France as a rival.

Both Secret Escapes and JustBook count Index Ventures a common investor, with Secret Escapes having raised between $15 million and $20 million and JustBook around €3 million ($4.5 million). But Menden says that this was more of a coincidental rather than deciding factor for the acquisition. The investments were managed by two different Index partners, both of whom were “supportive” of the deal.

As with other areas of e-commerce like books, food delivery and design/fashion, travel been undergoing a lot of consolidation, with smaller players coming together to compete better against behemoths like Sabre (which owns Travelocity, among others), Priceline (Kayak, Booking.com and more) and others in a business that is built around margins that are always under pressure.

In the case of Secret Escapes and JustBook, the deal makes a lot of product sense, with Secret Escapes wanting to follow more of JustBook’s mobile-first approach, and JustBook wanting to do more on the web and with flash sales — two areas where Secret Escapes has been most active.

“We were weighing both options of going alone and raising more money or joining with someone,” he says. “When we met Secret Escapes, we thought after ten minutes of talking we have to do this. It just made sense from a product and vision perspective to have them together.”

Saint adds that there may be more acquisitions up ahead. “There are quite a lot of smaller players with great skills,” he says. “The great test is to pick the guys that will help you grow the business. JustBook are a great team and technology. Mobile is a real core competency for them, but it’s not something we’ve focused as much as we would have liked.” It also gives Secret Escapes a major entry point into the German market.

While Secret Escapes plans for a U.S. launch, more mobile business and perhaps more M&A activity, one thing that Saint says will not change is the company’s focus on “discretionary travel.”

The difference with OTA-based travel sites like Travelocity.com or Booking.com, he says, is that Secret Escapes “inspires travel by communicating great travel deals,” rather than existing as a place where people visit to book trips they already have in mind. “We can create incremental trips that other portals and OTAs cannot do.” He says nine out of 10 people who book through Secret Escapes weren’t even planning trips to those destinations before doing so.

Right now, Saint says there is no immediate need to raise more money.

“The UK business is generating cash and we’re using that to expand,” he tells me. No details on how much cash that is, although Secret Escapes has had year-on-year revenue growth of over 300% with some 4 million members in the UK, its biggest market. “Capital raising is not really on the horizon until later this year or even 2015.”