TravelBizBuzz

An airline’s Web site is the last place I’d go to book a rental car, but it looks like CarTrawler will be making this option a lot more appealing for travelers -- and suppliers.

Historically, airlines have had little luck pushing ancillary products like car rentals through their sites, mostly due to poor availability. The airline usually signs a deal with one rental car company -- if that -- and when there’s a supply shortage, “the rental company will hike prices in response, making the product difficult to sell on the airline Web site,” CarTrawler CEO & founder Greg Turley told me in an interview.

However, CarTrawler believes that ancillary services like car rentals are still a “reliable and highly lucrative” untapped potential for suppliers and intends to re-address the current situation by pulling inventory from more than 450 suppliers worldwide, finding the “cheapest rates available” and offering the inventory in a direct feed to airlines.

In fact, CarTrawler has just inked a three-year deal with Star Alliance member LOT Polish Airlines to offer a car rental option for www.lot.com visitors, marking the first time an airline has used a multi-supplier real-time feed for dynamic packaging, according to a press release.

Takeaway: Watch for other airlines to jump on the bandwagon with LOT. CarTrawler has a global presence with offerings in Europe, Asia, the Americas and the Caribbean, Turley points out -- so the option is already there.

The question is, will CarTrawler take the supplier market by storm as pseudo-GDS for cars? Chime in with your thoughts.

--Lindsey Rushmore, Editor-In-Chief, Travel Distribution Report--

Posted by TDR at 02:03 PM | Permalink | Comments (534)

My first tip-off to vacation rental properties’ growing popularity was in an exclusive interview with LeisureLink president and CEO, Erik Hovanec. Noting a “rise of the vacation rental,” Hovanec said hotels might want to keep an eye on the influx of “condo converts.”

In other words, people are beginning to see the practical and emotional benefits of having a kitchen and living room on vacation. And just the other day, I found another source indicating the vacation rental trend -- on the ownership end. My Smith Travel Research daily hospitality news email featured a PricewaterhouseCoopers Survey that noted “a growing segment of the broader vacation home sector.”

The survey said “one-sixth of affluent households indicate they may consider purchasing a fractional ownership resort within the next five years.”

“Fractional ownership is indisputably growing in popularity as the vacation home market continues to evolve,” commented Scott D. Berman, principal of hospitality & leisure practice for PricewaterhouseCoopers, in the report.

Hoteliers take note: Vacation rentals are “starting to mimic the hotel in how they merchandize their products,” Hovanec pointed out. And agents are enjoying the higher commissions that vacation rentals offer as “hotels are cutting back on commissions,” he said. “I’ve seen commission rates as high as 14 or 15 percent when overrides start kicking in.”

Takeaway: Expect more competition between hotels and vacation rentals for the leisure traveler, and eventually competition between the properties themselves.

-- Lindsey Rushmore, Editor In Chief, Travel Distribution Report --

Posted by TDR at 03:17 PM | Permalink | Comments (0)

Sabre Holdings wasted no time announcing its buyout after the rumor mill ran rampant yesterday with predictions that it was up for sale.

The company announced today that is has inked an agreement with Silver Lake Partners and TPG, both of which will acquire it for $32.75 per share in cash. The full transaction “is valued at approximately $5 billion, including the assumption of approximately $550 million in net debt,” according to a press release.

“As a publicly held company, Sabre has had to focus on running its business while at the same time satisfying Wall Street expectations,” said Henry Harteveldt, VP and principal analyst of travel research for Forrester Research, in a press statement yesteday. “That may actually have hampered Sabre’s ability to invest in its technology platforms, business units, or acquire companies.”

And it sounds like Sabre’s buyers will be investing their own dollars in the company’s technology platforms. Sabre Holdings’ “leadership position in travel technology” made the investment an “exciting” one, according to TPG Partner, Karl Peterson. And he believes that Sabre is “well positioned to continue innovating.” In addition, he believes that Sabre’s “strength of Travelocity and its other online brands,” make the company a good investment.

Sabre Holdings does not anticipate executive management team changes and plans to keep its corporate headquarters in Southlake, Texas, according to the release. A definitive merger agreement is subject to customary closing conditions, including receipt of stockholder and regulatory approval, but closing of the transaction is expected to occur early in Q2 of 2007.

Posted by TDR at 04:01 PM | Permalink | Comments (4)

I went online to do some holiday shopping the other day, and I decided to try out the ever-popular pricegrabber.com site to see if it was everything it was cracked up to be. As I began browsing through the functions, I wondered how this model might work for travel Web sites.

Then I remembered an interview I had with Terry Jones (principle of Essential Ideas and chairman of Kayak) when I was writing a recent article for TDR on opportunities in the online travel industry. “Nobody has seemed to crack the code of putting community together with transaction,” he said. The online travel agencies (OTAs) have a good start by soliciting consumer reviews, he admitted, but for the most part there’s a divide between “virtual tourists” and those who actually book.

But those outside the travel industry seem to have “cracked the code.” Pricegrabber has mastered mixing community reviews with transactions. You have the option to write a review for each pricegrabber product, and if you hit the “compare prices” button, you’re taken to a page where you can read user reviews, with a “shop now” button placed conveniently nearby.

So who will be the first travel company to offer a site that allows users to:
- select a product type (i.e., hotel, car rental, airline ticket, etc.);
- search for a specific product (e.g. “I want to book a non-smoking room in Hyatt”);
- comparison shop (like a meta-searcher);
- read and write user reviews for a specific product; and
- buy the product you liked based on a good review?

Maybe something like that already exists out there for travel, and if it does, I’d love to hear from you! Otherwise, it looks like travel could learn a thing or two from this retail trick.

--Lindsey Rushmore, Editor-In-Chief, Travel Distribution Report

Posted by TDR at 01:13 PM | Permalink | Comments (597)

Those in the travel community who were sure that Worldspan was a ticking time bomb were right -- especially after Travelport CEO Jeff Clarke’s eye-turning comment at the PhoCusWright Executive Conference that GDS consolidation is “inevitable” and that “there is no economic reason to have four GDSs.”

Not one month later, Clarke’s words rang true today as Travelport released its groundbreaking announcement that it will acquire Worldspan.

As part of its acquisition strategy, the travel conglomerate, which owns Orbitz, Cheaptickets and the Galileo GDS, plans to merge its GDS with Worldpan’s. Travelport contends that this GDS combination is rife with opportunity. Currently, more than 750 travel suppliers and 63,000 travel agencies rely on the two GDSs’ travel distribution services, according to a press release.

Technology is another asset Worlspan will bring to Travelport, particularly in the online distribution segment, Travelport said. Management sees opportunity in cross-selling Worldspan’s technology products to Travelport’s global customer base.

As far as overall technology integration of the two companies, Travelport believes that “consolidating technology and administrative operations,” will result in “near-term cost savings of approximately $50 million.”

The new GDS will also stand stronger against the increasing competition of alternative distribution channels and the supplier-direct channel that’s making a mark for itself these days, according to Travelport, citing Forrester Research’s data that says more than half of US travel bookings are already processed through alternative non-GDS channels and that globally, sales from supplier direct websites are expected to continue to grow -- especially as airlines encourage direct bookings through frequent flyer programs, exclusive fares and potentially through removal of content from the GDSs.

Jeff Clarke will lead the combined company as CEO, and Rakesh Gangwal will continue to lead Worldspan the completion of the merger.

Transaction details: Travelport’s proposal values Worldspan at $1.4 billion. Simultaneously with the execution of the merger agreement, Worldspan completed a recapitalization plan, in which Travelport loaned $125 million to Worldspan in exchange for a payment in kind (PIK) note, which Travelport funded through cash on hand. In addition, one of Travelport’s parent companies also loaned Worldspan $125 million in exchange for a PIK note.

-- Lindsey Rushmore, Editor-In-Chief, Travel Distribution Report>