expedia everywhere
244 days ago
 

Expedia agrees to power Travelocity websites in US and Canada

Big news in online travel agency land as two of the industry’s giants sign a “strategic marketing agreement” which will see Expedia run the technology behind the scenes at Travelocity.

The partnership also gives Travelocity access to Expedia’s product supply line customer services and is expected to come to fruition in 2014.

A joint statement from the pair stresses that Travelocity will remain wholly owned by Sabre Holdings and independent from Expedia.

The agreement covers only Travelocity’s brands in North America, with Lastminute.com and other Travelocity Partner Network brands not included.

The move effectively shifts technical operations behind the scenes at Travelocity over to its former arch rival Expedia and, in the words of the statement, 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 is now essentially a marketing brand where it will be paid through a “performance-based marketing fees related to bookings”, the statement says.

Expedia CEO Dara Khosrowshahi says:

“Over the years, Travelocity has become one of the most recognized travel brands in the US and Canada. Going forward, this agreement will enable Travelocity to focus on further building its brand while at the same time providing consumers with an enhanced suite of travel products and services.

“This announcement stands as a true testament to the advanced capabilities that our significant technology investments over the past several years enabled us to build. We believe volume generated through the agreement will add further scale to Expedia’s global supply and customer service capabilities.”

Travelocity Global president and CEO Carl Sparks adds:

“In staying true to our core values of meeting the needs of both consumers and travel suppliers, we have elected to evolve and strengthen our business model in the US and Canada by working with Expedia, Inc. to offer a top-notch booking platform and a more robust supply of travel options, allowing us to focus increased resources on building our competitive strengths in marketing and retailing.”

The agreement will perhaps set off alarm bells around the industry that this is the first step towards some kind of larger deal between the pair.

But equally it could simply be that Sabre is lightening the load placed on Travelocity in terms of operational costs in return for a simpler model (and improve the balance sheet at parent company level).

It is the third significant piece of business development at Travelocity in the space of a few months following the sale of the Travelocity for Business corporate travel division to BCD Travel in June.

That deal came just hours after Travelocity-owned Lastminute.com offloaded its HolidayAutos car rental brand to CarTrawler.

 
 
Kevin May

About the Writer :: Kevin May

Kevin May is editor and a co-founder of Tnooz. He was previously editor of UK-based magazine Travolution for nearly four years and web editor of Media Week UK from 2003 to 2005.

He has also worked in regional newspapers (Essex Enquirer) and started his career in journalism at the Police Gazette at New Scotland Yard in London. He has a degree in criminology and a postgraduate diploma in magazine journalism.

 

Comments

  1. eyeye

    Another case of Sabre/Travelocity leadership failing to stick with a cohesive strategy over the past several years and flip-flopping from one thing to another.

    Also, another case of being owned by PE firms. The focus has always been on Sabre while the Travelocity has languished. You would have think they would leveraged the technology behind Sabre more effectively.

     
  2. Mowbaggie

    Plus the Zuji offload in Asia by Travelocity

     
  3. Ahmed

    @Tim Peter, very well said. Exactly on the money in my honest opinion. I think Orbitz will soon do a similar deal or lose it’s influence (what little it has left).

     
  4. F.

    Despite all CEO’s contribution – and all relevant comments added – underlying strategy is quite ‘bizarre’.

    Renouncing to ‘technology’ really means renouncing to PRODUCTS.
    This truly means renouncing to a direct control over the business models, revenue management etc etc, having indeed more difficulties to fight competitors.

    You do not give up with product because technology costs are too high – this would be a true myopia.

    Furthermore, by renouncing to product, you indeed have MORE DIFFICULTIES IN DOING MARKETING
    It’s not easier to concentrate on…. it’s more difficult to manage!

    How can you manage double presence on metasearches, without cannibalization?
    What if your main competitor is also your supplier having – for sure – higher margins?

    - Moving to a WhiteLabel solution means having more difficulties in all marketing channels, mainly SEM and metasearches, now contributing more and more on overall volumes mix.

    I would understand renouncing to OTA technology and product ONLY IF new solid business lines are ready to be pushed.

    Is Travelocity going to focus on a marketing plan going to pushing its internal metasearch? maybe…
    But this mean HIGH investments – higher than IT cost now put off balance sheets

    Furthermore metasearches models as assets are at high EBITDA contribution, but – in my opinion – less stable than a proper OTA model and more short-medium term plans.
    In case Sabre has blessed this change because of IPO, are they that sure that this is a long-term strategy? I think quite few would disagree on that

     
  5. RobertKCole

    In a word, Travelocity becomes an Expedia affiliate.

    The move certainly works as tactical triage for operational losses on the Sabre P&L and platform investment on the Sabre balance sheet.

    However, not exactly sure what message this sends for a potential Sabre IPO – particularly Sabre’s hotel strategy, since it appears the decision confirms that Travelocity is strategically better served by using Expedia’s platform and supply network than Sabre’s…

    Wow.

     
    • Joe Lima

      Robert, you’re assuming that Travelocity will still be part of Sabre when they are ready to IPO. :-)

       
  6. Tim Peter

    Pretty clear indicator of the competitive pressures TripAdvisor, Booking.com and Priceline are putting on these guys. With the growth of mobile, Google’s metasearch in maps, and the like, I’d expect more of these among the traditional players in the coming months.

     
 
 

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