The Roaming Gnome himself whispers to us that he is very happy about the Expedia acquisition of Travelocity. It was touch and go under Sabre ownership for such a long time as Sabre, with priorities elsewhere, totally bungled ownership of Travelocity and Lastminute.com.
Now that Expedia Inc. owns Travelocity, how much love is Expedia going to give to the Travelocity brand?
One of the key reasons that Expedia acquired Travelocity outright, after powering Travelocity.com and Travelocity.ca since signing a 2013 marketing agreement, is that while Expedia ran much of the Travelocity operation behind the scenes, Travelocity still did its own marketing and Expedia had no control over it, and little visibility into what kind of resources Travelocity would put into the marketing effort.
Now Expedia gets to control Travelocity all the way, including its marketing activities.
So Now What?
Expedia has expressed a commitment to retaining the Travelocity brand, so it will take its place among Expedia Inc.’s other consumer brands, including Expedia.com, Hotels.com, Hotwire, Trivago, Venere, eLong, and CarRentals.com, among others. Expedia Inc. CEO Dara Khosrowshahi and team showed off the acquisition’s spoils on Twitter on Friday, the day the deal went down.
My @roaminggnome is proudly on display today as @travelocity comes to @expediainc. pic.twitter.com/CuVp7vhQaP
— dara khosrowshahi (@dkhos) January 23, 2015
The Roaming Gnome joins Expediabear and Yoda in my office. #gnome pic.twitter.com/BVCwufJnLl
— dara khosrowshahi (@dkhos) January 23, 2015
“We absolutely intend to run the Travelocity business as a strong, independent North American brand,” said Sarah Waffle Gavin, Expedia Inc. spokesperson.
Several Expedians, including David Doctorow, Expedia’s chief marketing officer, met with Travelocity staff in Southlake, Texas on January 23. Doctorow joked that when he meets people and tells them he works for Expedia, they often tell him that they love the Roaming Gnome, which is actually the Travelocity mascot.
Expedia is already making changes in Travelocity’s leadership. Travelocity president Roshan Mendis is staying with Travelocity parent Sabre in a new role, and Travelocity chief marketing officer Brad Wilson heads to Expedia as general manager of Travelocity. Wilson reports to John Morrey, general manager of Expedia.com.
It is believed that there may be some realignments in which portions of the Travelocity business will remain under Wilson’s purview, and which won’t under the new ownership structure.
There were only about 50 remaining Travelocity employees in North America, and Gavin says Expedia is looking for a new office for “a majority” of them in the Dallas area.
Expedia Inc. has lots of experience in running a multi-brand operation and keeping Travelocity as a viable brand makes total sense as Expedia can take advantage of a sizable contingent of Travelocity brand loyalists. The acquisition would provide little upside to Expedia if it mothballed the Travelocity brand.
What Is Gnome and Unknown
The burning question, though, is how will Expedia market Travelocity.
The Roaming Gnome, Travelocity’s uncanny mascot/advertising spokesperson since 2004, has lived nine lives already, having been downplayed and then brought back to the fore a few years ago when Travelocity shuffled advertising agencies.
Gavin says the Roaming Gnome will continue to be central to Travelocity marketing “as long as the Travelocity team wants it to.”
One source says where Expedia can really help Travelocity the most is in search engine marketing, which has long been a weakness.
Gavin seems to back that theme, saying there has been a lack of investment in Travelocity over the years. “We have a strong online marketing organization,” Gavin says, adding that Travelocity can benefit from a lot of these efficiencies and tools.
How Much Emphasis
It remains to be seen what sort of resources Expedia Inc. will commit to Travelocity versus the Expedia brand. When it comes to budgetary decisions, will Travelocity be on par with the flagship Expedia brand? That’s doubtful.
On the other hand, Expedia Inc. actively does TV advertising for its Trivago, Hotwire, and Hotels.com brands alongside Expedia.com so it is clear that the Travelocity brand won’t wither and die.
Expedia’s Gain is Sabre’s Gain
One thing is sure about the Expedia Inc. acquisition of Travelocity from Sabre — Expedia’s gain is mostly Sabre’s, too.
The previous Travelocity marketing agreement between Expedia and Sabre enabled Expedia to accelerate its global room night growth last year. At the same time, during the first nine months of 2014, Travelocity contributed negative 2 percent to Sabre’s adjusted EBITDA so Sabre can trim some losses from its bottom line by shedding its online travel agency businesses.
Sabre has a deal in place to sell Lastminute.com, which is essentially Travelocity Europe, to Bravofly in Switzerland. Bravofly will take on Lastminute.com’s liabilities and Sabre will receive no proceeds from the deal, which is expected to close in the first quarter.
In other news, Sabre, which completed an IPO last year, today filed a public offering of $400 million worth of shares.
That’s just a placeholder amount; the amount of shares and pricing is to be determined.
Sabre will not get any proceeds from the public offering — and the Roaming Gnome and Travelocity, which are now owned by Expedia, definitely won’t benefit, either.
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Tags: expedia, gds, lastminute.com, marketing, sabre, travelocity
Photo credit: Expedia CEO Dara Khosrowshahi, center, celebrating the acquisition of Travelocity by donning a gnome cap and lifting the Roaming Gnome. Expedia Inc.