Skift Take

Terry Jones and Rich Barton, the founders of Travelocity and Expedia, respectively, offer verdicts on what were once hot-button issues, as well as lessons for travel startups and more mature companies, as well.

Terry Jones, who founded Travelocity within Sabre in 1996, says it’s “sad” that Sabre recently gave up on Travelocity, although he understands that Sabre wanted to clean up its balance sheet in preparation for an IPO.

Too bad Travelocity couldn’t have executed even a modest turnaround of sorts, such as Orbitz Worldwide did over the last few years, Jones says.

But, first Jones wants to talk about the Skift story, “These Are the 5 Things That Killed Travelocity,” which included comments by his chief rival of the late 1990s and early 2000s, Rich Barton, who founded Expedia.

Barton had pointed to Travelocity’s merger with Preview Travel in 2000 and Travelocity’s focus on distribution deals with AOL and Yahoo as contributing factors to Travelocity’s losing its perch as the leading online travel agency.

And, to a certain extent, Jones agrees.

Barton was correct that Travelocity’s merger with Preview Travel turned out to be a distraction, Jones says, and he laments the fact that Travelocity poured lots of money into AOL and Yahoo distribution deals and got lots of volume, but sacrificed building its own brand.

That could be a lesson for brands, such as Orbitz Worldwide, which are putting so much energy into building affiliate networks.

Part of the reason that Travelocity went after distribution deals with the big online portals of the day is that “we thought Expedia (then owned by Microsoft) would build travel in the browser,” but antitrust concerns got in the way, Jones says.

Travelocity “doubled down on hotels,” but did so through a partnership with Hotel Reservations Network — which later became — and made a lot of money selling cruises. But Expedia bet on dynamic packages, and “they passed us in two quarters,” Jones says.

Many people have pointed out that Sabre was focused on airlines, not hotels, and wasn’t exactly known for being nimble and forward-thinking.

“It was nice to be owned by Sabre and it was hell to be owned by Sabre,” Jones says, adding that when Travelocity was returned 100% into Sabre in 2002 after being a Sabre-controlled public company for awhile, things “slowed way down.”

Jones left Travelocity soon thereafter, in May 2002.

Travelocity did a lot of bungling after Jones left, including its problematic and distracting acquisition of in 2005.

Jones won’t get into “personalities,” namely which Sabre or Travelocity executives were responsible for major decisions that worked or didn’t. “We looked at a lot of things,” including acquiring, but didn’t want it, Jones says.

Jones looks at two of the big success stories of online travel, namely Expedia and Priceline, and says Barton, then with Expedia, and Jeffery Boyd, now the chairman of Priceline, “hit it perfectly.”

Barton bet on dynamic packages, and Boyd bought, Jones says.

No one could have envisioned in 2005 just how game-changing the Priceline acquisition of would turn out to be, Jones says.

“You have to be smart and lucky,” he adds.

Jones looks at a company such as Orbitz Worldwide, which saw its stock trading at $1.24 a few months after Barney Harford was appointed CEO in early 2009 and closed at $9.01 on March 14, as an example of what might have been done at Travelocity.

Both companies were late to building a hotel business, and they both were owned or controlled by huge global distribution system companies.

Orbitz Worldwide hasn’t exactly set the world on fire, but it is growing modestly and making money.

“Barney took an asset and turned it around,” Jones says.

“If you owned the stock, you’d be happy,” Jones says of Orbitz. “Why couldn’t it have been done with Travelocity?”


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Tags: expedia, startups, travelocity

Photo credit: Travelocity founder Terry Jones.

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