Inside the EUR 82 mln Szallas Group Sale to Wirtualna Polska

BBJ: Szallas.hu is one of the few companies that has been able to compete with international giants in the tourism sector since 2007. What attracted the attention of Wirtualna Polska to the company?

József Szigetvári: The key to the group’s success is its expansion in the CEE region, its strong regional technology background and the work of its local customer service and marketing teams. This is why, for example, Szallas.hu is the market leader among Hungarian accommodation booking platforms in domestic travel, outperforming even prominent international players. In many cases, it is advantageous that Hungarian-speaking customer service is readily available to help travelers. Alongside this, the marketing team is data-driven, using databases to understand guests’ interests and preferences and plan their activities accordingly so supply and demand match at the end of the day. An advantage at home can also be a competitive advantage for Hungarians traveling abroad, especially in neighboring countries that are relatively easy to reach by car or public transport and where we have accommodation. Alternatively, the domestic travel market has untapped potential in neighboring countries.

This is how, together with former owner PortfoLion, we defined our growth path in CEE, which we achieved through acquisitions in addition to natural growth. Overall, our strength lies in cross-border synergies; we are more competitive together and share the motivation to remain so. That, in itself, is an attractive investment. Add to this the fact that the new owner, Wirtualna Polska, also operates a tourism product in the local [Polish] market, and it expects this to be further strengthened following the integration of the well-established Hungarian system. As they are currently not yet working in a commission-based system, there is plenty of untapped potential in digitalization, which Szallas.hu and the Szallas Group has already proven on several occasions. If they had to make this technological transition on their own, it would take at least five or six years; with us, this will be significantly accelerated, and the operation of the other markets will increase the total revenue during the development.

Erzsébet Szalay: Szallas Group can compete successfully with global players because it has built a system that is efficient in its internal operations and can easily be integrated into other markets. The legal processes are also integral to this and show why this company could be a successful acquisition target. The legal function was outsourced by the management several years ago to an external strategic partner, BLS-CEE Law Firm. This acquisition has shown that they made the right decision. A regional presence and cross-disciplinary expertise are challenging to build up locally within a firm, so it is essential to have the support of partners with such competencies. As a strategic legal partner covering five countries, BLS-CEE has been supporting the portal since 2019, and we have been able to assist the sales team as consultants, working almost in-house with management daily. I am convinced that close client-consultant relationships working in a similar way significantly increase the value of the firm for potential customers.

Erzsébet Szalay, partner at the BLS-CEE law firm.

BBJ: Aside from this acquisition, what do you consider the most significant milestone Szallas.hu has achieved in the past 15 years?

JSz: Everything is based on a good idea and identifying the target group: we focused on the lower-spending domestic travel planners, so we defined our market position without investor support. Central Media Group first recognized the viability of the model. Then, in 2015, PortfoLion acquired the company with funding from EXIM and OTP. This was perhaps the first significant milestone that paved the way for the others, as it was then that we had a capital-strong background, and the decision was made to create the largest operator in the CEE region in terms of bookings. Through subsequent acquisitions and organic growth, Szallas Group offers its customers accommodation booking services in Hungary, the Czech Republic, Romania, Poland, and Croatia through four major brands (szallas.hu, noclegi.pl, hotel.cz, and travelminit.ro,). The group also operates websites offering spa packages (spa.cz), hotel discount vouchers (maiutazas.hu and szallasguru.hu), tour operator services, tourist attraction vouchers and B2B services. In the five markets covered by our activities, Szallas Group offers accommodation in a total of 87,000 establishments in 2022, operates 16 products in five countries, has six offices and 330 colleagues.

BBJ: What new opportunities will the acquisition open up for the company in the region? What are the main target markets for expansion?

JSz: We believe in strengthening our Polish portfolio in the Polish market, expanding our accommodation offer, and the strength of our regional expansion, which is essential to achieve our goal of becoming the leading tourism player in the Central and Eastern European region.

BBJ: BLS-CEE Law Firm has worked with Szallas Group for several years. What is the secret of your successful cooperation? What is the secret of your successful cooperation?

ESz: We support Szallas Group with a full spectrum of legal services in all areas, from data protection and human resources to IT. The cooperation is supported by good client-consultant communication: if, for example, a development is started, we are involved immediately, even in the planning phase, so that we do not have to come up with a legal solution afterward, but we can support each other’s work as real strategic partners.

BBJ: What have been the biggest challenges you have tackled together?

ESz: The rapid growth of Szallas Group has also brought a variety of new challenges, and the fact that we provide seamless legal support for its development in five countries has been a great help. Data protection is a serious challenge these days, and we have managed to find a solution that works well. We provide an outsourced data protection officer to ensure that we comply with data protection legislation.

BBJ: What other services does the law firm provide in the region?

ESz: We cover the full spectrum of business law, from corporate law to transactions and financing to litigation, with a strong focus on regulated industries and innovative players. For BLS-CEE Law Firm, the business focus is essential in all cases: with our regional expertise, we do not approach a particular area from a theoretical perspective, we do not pile up unnecessary paperwork, but we strive to provide solutions that work in practice.

This article was first published in the Budapest Business Journal print issue of December 16, 2022.