expedia and travelocity

Expedia buys Travelocity for $280 million

Sabre has finally offloaded its interest in consumer-facing businesses by selling Travelocity to Expedia for $280 million in cash.

The acquisition will not come as a huge surprise to many (not least because a deal was rumoured last week) given that Expedia has effectively been powering Travelocity for the best part of 18 months.

Sabre and Expedia signed what the pair touted at the time as a “strategic marketing agreement” in August 2013.

The move shifted technical operations behind the scenes at Travelocity over to its former arch rival and gives the smaller OTA the chance to “focus its efforts on promoting its brand and marketing the broad offering of travel services and supply made available through this agreement”.

In other words: Travelocity became an affiliate of Expedia.

But roll forward a year and a half, with Sabre’s listing on the public markets now behind it, wider strategic moves to reorganise the business are taking effect.

The signs were actually there in February last year, six months after the Expedia affiliate deal, when Orbitz bought the private label division of Travelocity for an undisclosed fee.

Sabre then admitted in August of 2014 that it would be trying to offload Travelocity’s sister brand Lastminute.com.

Four months later and a buyer was found in the shape of Bravofly Rumbo, who shelled out $120 million for the UK-based business.

Lastminute.com’s sale price was a tenth of the value Sabre acquired it for in 2005.

Sabre CEO and president, Tom Klein, says:

“Our primary focus at Sabre is to provide mission-critical software solutions to our global airline, hospitality, and travel agency customers – and to help them support their customers every day.

“We have had a long and fruitful partnership with Expedia, most recently by partnering to strengthen the Travelocity business, so our decision to divest Travelocity is a logical next step for us both.”

The deal today comes as fellow OTA Orbitz is known to be exploring its own strategic options.

Travelocity’s new parent and Orbitz’s likely shift illustrate that the marketplace for big, bruising OTAs from 10-15 years ago has trimmed significantly.

It was worth noting that the vast global empires which Travelocity and Orbitz built in the early-to-mid 2000s (Ebookers, Lastminute.com, HotelClub et al) feel like a strategy from another age now.

Global mega-brands such as Priceline-owned Booking.com and Expedia (and the gradual creep of the Chinese OTAs) appear to have replaced the region-by-region operations which were once previously favoured.

Dara Khosrowshahi, president and CEO of Expedia Inc, adds:

“Travelocity is one of the most recognized travel brands in North America, offering thousands of travel destinations to more than 20 million travelers per month.

“The strategic marketing agreement we’ve had in place has been a marriage of Travelocity’s strong brand with our best-in-class booking platform, supply base, and customer service.

“Evolving this relationship strengthens the Expedia Inc. family’s ability to continue to innovate and deliver the very best travel experiences to the widest set of travelers, all over the world.”

The decision to sell off the Travelocity brand ends a 19-year parenting role for Sabre with what was its first significant play in the consumer online travel arena.

The agency was created in 1996, but immediately found itself with two formidable competitors in the guise of Expedia (owned by Microsoft) and the fledgling Orbitz.

The business took an upward turn in March 2003 when it acquired popular last-minute travel provider Site59 – a deal which saw Site59’s CEO Michelle Peluso eventually take on the top job at Travelocity.

– See more at: http://www.tnooz.com

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