Travelocity Gives In, Sites To Be Powered by Expedia
Skift Take
Sabre has come up with its solution for Travelocity: Outsource its operation to Expedia. Sabre gets to basically offload a money-losing operation while holding on for now to its assets in Europe, possibly for a sale down the road.
Travelocity, the online booking site owned by Sabre, has given in to the intense competition in the online booking sector, and gone with the least risky option short of actually selling itself off: it has done a deal with once-competitor Expedia, to use its technology platform to power its North American sites.
The agreement includes a provision whereby Expedia could acquire certain of Travelocity's assets at a later date.
Essentially, Travelocity becomes a marketing arm for the Expedia business in the U.S. and Canada, although Travelocity will focus on promoting its own brand and will remain as part of parent company Sabre.
"It's a virtual merger," says Henry Harteveldt, travel analyst for Hudson Crossing. "This is really the evisceration of the Travelocity product and a great win for Expedia."
As Sabre considers an IPO, this will it enable to reduce an enormous amount of costs and boost its profits, all of which will look good to potential investors, Harteveldt says.
"It’s as if Costco said it would source everything from Walmart and use Walmart's ordering system and inventory management system and everything else," Harteveldt said."Since launching in 1996, Travelocity has grown from a pioneering Internet start-up to one of the leading brands in travel,"
