Travelocity Network Was Orbitz Worldwide’s Secret Weapon in 2014

Orbitz Worldwide has to be very thankful about its February 2014 acquisition of Travelocity’s private label business, the Travelocity Partner Network, for $10 million because it keyed a lot of Orbitz Worldwide’s growth last year.

Such is the convoluted world of online travel that the Travelocity Partner Network will spur additional growth for Expedia Inc., which already owns Travelocity and likely will also own Orbitz Worldwide and its Travelocity Partner Network, should Expedia’s acquisition of Orbitz close later this year.

Confused yet?

To recap, the Travelocity Partner Network provides behind the scenes travel services to financial institutions, such as RBC Bank and Capital One, and other e-commerce sites. Prior to Sabre Corp. selling Travelocity’s North America sites to Expedia Inc. in January 2015, Sabre sold the Travelocity Partner Network to Orbitz Worldwide on February 28, 2014 in an asset sale for $10 million in cash plus up to another $10 million if the network hits performance targets.

In Orbitz Worldwide’s 10-K report, filed with the Securities and Exchange Commission March 9, the company disclosed that for full-year 2014 the Travelocity Partner Network contributed:

• 9 percentage points — or virtually all — of Orbtiz Worldwide’s 9% growth in gross bookings;
• 8 percentage points — or almost half — of Orbitz Worldwide’s 19 percent increase in hotel net revenue;
• 9 percentage points of Orbitz Worldwide’s skimpy 3 percent jump in air net revenue, averting a decrease;
• 2 percentage points of Orbitz Worldwide’s 5 percent increase in vacation package net revenue, and
• 5 percentage points — or half — of Orbitz Worldwide’s 10 percent increase in “other” net revenue, which includes travel insurance, car rentals, cruises and attractions.

Expedia Inc. would ironically reunite the Travelocity Partner Network with Travelocity, after a fashion, although it is an Orbitz Worldwide service, if the Orbitz Worldwide acquisition passes antitrust regulatory muster.

These types of assets are part of Expedia Inc.’s growth strategy. After all, in the fourth quarter of 2014, Travelocity and then-newly acquired Wotif contributed 5 percentage points of Expedia Inc.’s 28 percent growth in hotel room nights.

A boost from the Travelocity Partner Network fits right in with the plan.