Travelport: will sell Orbitz stake if price is right
The company owns approximately 48% of Orbitz Worldwide (the mothership behind the main Orbitz brand, Ebookers, HotelClub and Cheaptickets consumer sites) and would collect a tidy £350 million if it sold its stake at today’s prices.
Speaking after its Q1 2014 earnings call, CEO and president Gordon Wilson told Tnooz that it could potentially offload its stake in Orbitz “if the price and market conditions are right”.
The decision to shift away from minority ownership of a major consumer-facing business could be part of a number of initiatives to alleviate some of its debt, a figure currently standing at $3.2 billion (down from $3.3 billion at the end of 2013) after some debt-for-equity transactions were completed in March this year.
Additional debt-for-equity swaps or further refinancing are options also being considered, Wilson says.
“Our strategy as a business is to be creative so that we can de-leverage the company… nothing is off the table and we will explore all options.”
The comments follow what Wilson says was a “strong financial performance” in the first quarter of 2014, with net revenue for the three months up 4% year-on-year to $572 million and adjusted EBITDA increasing by 7% to $151 million over the same period.
However, the company saw its adjusted net income fall by $11 million in Q1 due to an increase in interest costs.
Commenting on the wider financial markets following rival tech provider Sabre’s recent public listing in New York, Wilson says “the good news is that they got the IPO away” and having it public (alongside Madrid-listed Amadeus and Travelport’s ongoing disclosures on its trading performance due to its publicly traded debt) means the wider market can see how the distribution business is evolving.
Where Travelport is (and, for the time being, remaining) different from its two competitors is the growing battle around airline hosting and passenger service systems, with Wilson preferring the company steers clear to concentrate on providing technology services around merchandising and distribution (via its “Travel Commerce Platform”, as its now known).
There are significant challenges with running a hosting business, Wilson says, including the length of time required to build and maintain systems, the costs involved and the inherent risky nature and failures rates of providing services, especially during the migration phase.
Elsewhere the company says it now has around 580,000 hotels available for booking via its Rooms & More agent platform, all of which are now also available via its Universal API, with Wilson estimating there is probably an upper limit of around 600,000 unique properties worldwide.
Travelport is now in a “very good position” to provide a wide range of hotel content to agents (both leisure and corporate), Wilson claims, not least on the business travel side where some predict a blurring of the lines between in and out of policy means that some TMCs will be looking for a larger array of options for clients when securing accommodation.
NB: A Tnooz-Travelport webinar discussing the challenges around corporate policy and hotel booking takes place on Thursday 15 May 2014.
Kevin is senior editor and a co-founder at Tnooz. He was previously editor of UK-based magazine Travolution and web editor of Media Week UK from 2003 to 2005.
He has worked in regional newspapers (Essex Enquirer) and started his career at the Police Gazette at New Scotland Yard in London. He has a degree in criminology, a postgraduate diploma in magazine journalism and publishes his first book - a biography about Depeche Mode - in early-2017.