Travelocity

article 12-2006 Travelocity’s Uncertain Skies

Rival Expedia has far better profits at 11 percent, while Travelocity is not yet profitable, though Travelocity still has a lot going for it. Its loyalty program and business travel segments are the most promising, says Diane Clarkson, travel industry analyst at JupiterResearch. “They’ve done a really good job... in a way that’s a win-win for both Travelocity and consumers,” she says.

Yet, there’s no way to look at Travelocity’s costs without blanching. Advertising expenses are likely in the hundreds of millions. It’s also been on a buying spree. In 2005, it paid a jaw-dropping $1.2 billion to acquire European travel site Lastminute.com. More recently, it paid $35 million for Asian online travel site Zuji.

Background Info

source: http://en.wikipedia.org/wiki/Travelocity

Travelocity is an online travel agency operated by Travelocity.com LP. Travelocity is a wholly owned subsidiary of Sabre Holdings Corporation, a publicly traded company, though Sabre/Travelocity is being taken private by Silver Lake Partners. Travelocity is based in Southlake, Texas, with additional offices in New York City, San Francisco, and abroad.

According to Sabre Holdings, Travelocity is the sixth-largest travel agency (the second largest online travel agency) in the United States. In addition to its primary US consumer site, Travelocity operates a full-service business agency, Travelocity Business, and comparable websites in Canada, Germany, France, the Scandinavian countries, and the United Kingdom, and is a partner in Asian travel hubs Tabini and Zuji. Other brands include Site59.com, a last-minute travel technology and content provider, World Choice Travel, a travel affiliate marketing program, and Showtickets.com, a tour and ticket broker in Las Vegas.

Travelocity was created in 1996, as a subsidiary of Sabre Holdings, and was run by long-time Sabre I.T. executive Terrell B. "Terry" Jones. As one of the pioneers of web-based disintermediation, Travelocity.com was the first website that allowed consumers themselves (acting without the help of a travel agent or broker) not only to access Sabre's fare and schedule information, but also to reserve, book, and purchase tickets. In addition to airfares, the site also permits consumers to book hotel rooms, rental cars, cruises, and packaged vacations.

In 2000, Sabre negotiated a merger of Travelocity with another early web travel company, Preview Travel. The resulting company was independently quoted on the NASDAQ exchange, with Sabre continuing to own around 30% of the combined company's stock, but around 70% of the voting rights. In 2002, with Travelocity's fortunes suffering from competition including Expedia and Orbitz, Sabre consummated a tender offer for the remainder of the outstanding shares in Travelocity and remerged the business into Sabre as a subsidiary. Jones left the company shortly afterward.

In 2005, Travelocity acquired lastminute.com to take in excess of 30 more brands under its banner in the UK.