The boss of Tui-owned Spanish bed bank Hotelbeds has predicted continued consolidation in the sector as tight margins put pressure on suppliers.

Speaking to Travel Weekly at World Travel Market, Carlos Munoz, general manager, said he expected there to be failures and buyouts while new players will continue to enter the space.

This year saw the collapse of Holiday Brokers, part of the On Holiday Group, and in recent years many bed banks have moved their operations overseas to avail themselves of more advantageous tax regimes.

This week saw the announcement of the arrival of Australian wholesaler Excite Holidays’ entrance into the UK market. Former Thomas Cool chief Manny Fontenla-Novoa backed supplier Magic Rooms also launched this year.

Munoz said: “With the level of investment needed in technology and contracting it is very difficult to make this a profitable business in the long run. There are plenty of businesses entering the bed bank space, small and medium sized companies.

“The investments required can make it unsustainable if you want to compete and make profits unless you have big volumes. Margins are very small in this space. You need to be extremely efficient and have a lot of volume. At some point in time there will be consolidation.”

Hotelbeds this week announced it has seen its business grow global by 19% and it now offers 67,000 properties to the trade.

Munoz said the planned restructure of parent Tui after the merger of Tui Travel and Tui AG which will see

Hotelbeds put in a separate division to the firms’ mainstream vertically integrated businesses would underline to the trade that the bed bank is run separately and does not compete with other parts of the business.

He dismissed speculation that Tui had structured the merged business with a view to selling businesses outside of its core operators and retailers.

He said Tui will continue to run Hotelbeds to maximise value and all options are open as to how that is done.

But he said: “What is clear is there has been no conversation around disposal of this business. This has been confirmed internally. Hotelbeds is a business unit of Tui and we will keep developing and performing as we have done in the past.”

Hotelbeds division Hotelopia hopes to is continuing to prepare the ground for a launch with new partner EasyJet Holidays by the 2015 turn if year peaks, said Munoz.

The firm won the contract in April after current supplier Lowcost Beds opted not to re-tender after its three year contract expired. Lowcost has continued to supply EasyJet Holidays since then pending the switch to Hotelopia.

“We are still working on the technology and pricing,” said Munoz.