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Compensation boost for Orbitz international business head signals its strategy

@denschaal

Jan 15, 2013 12:28 am

Skift Take

Giving the head of your international businesses a monetary incentive to improve their performance is just plain old capitalism and a bow to human nature.

— Dennis Schaal

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Just three days after Orbitz Worldwide’s latest CFO left the building for good, the company quietly gave the head of its international businesses his second raise in less than six months.

In an SEC filing, Orbitz revealed that it is giving Tamer Tamar, senior vice president, international, and president of OWW’s London-based ebookers, a 3.6% salary increase to around $450,000, and hiked his target bonus percentage to 100%, up from 75%.

Importantly, Tamar’s amended employment agreement, which also had been revised upwards in August 2012, now makes him eligible for approximately $100,470 bonuses for each of four milestones related to a hoped-for souped-up performance at ebookers and HotelClub.

For several years, Orbitz has been struggling for relevance, and to turn around its flight-heavy business, and to improve its prospects in the all-import hotel arena.

Tech platforms and compensation packages

Orbitz took years to build a global tech platform to integrate its far-flung businesses, and is incorporating data analytics and SEO best-practices to increase conversions, but when it comes down to it, as the latest Tamar compensation package attests, Orbitz is also using good-old-fashioned greed, namely monetary incentives, to spark some life out of its international businesses.

In 2009, Tamar became president of ebookers, which had struggled for years, but until the third quarter of 2012, had been a recent bright spot among Orbitz’s online travel agency holdings. ebookers’ hotel room night growth slowed during the third quarter of 2012 because of the overall problems in the European economy, Orbitz stated.

One of the persistent roadblocks to  Orbitz Worldwide’s international growth has been poor results at Australia-based HotelClub and RatesToGo, hotel businesses with operations primarily in Asia-Pacific and Europe.

“Our efforts to stem the decline in our HotelClub business are beginning to bear fruit,” Orbitz Worldwide CEO Barney Harford said in November, perhaps hopefully.

Focus on HotelClub

With Orbitz likely to publish its fourth-quarter of 2012 results in mid-February, and amidst the revolving door in its CFO office, what does Tamar’s new compensation package mean?

Perhaps he’s secured his second raise within the last six months because he is making headway in reviving Orbitz’s international businesses, and maybe that will be reflected in the fourth quarter earnings announcement.

But, there are other views on the subject.

“The light interpretation is that this rewards program is simply linking him to the two businesses [ebookers and HotelClub] he is responsible for,” one industry wag speculated. “The heavy view is that rather than a reward for great performance, it is a play to get him to focus even more on HotelClub.”

If the latter interpretation is on the mark, Orbitz Worldwide, which saw its stock trading around $2.85 per share today, may be running out of time.

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