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Article Excerpt
The major players within travel distribution continued jockeying for position last year as the federal government deregulated global distribution systems last summer. Results so far have occurred behind the scenes, with content-for-discount deals between major airlines and GDS operators set to expire later this year and early next year. During the past 12 months, suppliers more clearly conveyed their intentions to alter GDS economics and advocated distribution alternatives.
Meanwhile, GDS companies continue to prosper. Amadeus, Galileo owner Cendant, Sabre and Worldspan each reported significantly higher net profits in 2004 and, absent one-time items, in this year's first quarter. Travel distribution revenues grew steadily in 2004 and accelerated early this year as overall travel demand increased.
Much of the transaction volume growth reported by GDS operators came from rapidly expanding online channels--corporate and leisure--as traditional agency proportions slip. To capitalize on these trends, GDS companies have used their relative financial strength to fund acquisition strategies and build broad distribution portfolios.
Focusing on core travel and real estate verticals while divesting in other areas, Cendant's big play in 2004 was acquiring Orbitz for $1.25 billion. The company said it is on schedule to bring the best elements from Travelport and Orbitz for Business to its corporate clients, and the best elements of CheapTickets and Orbitz to consumers.
Cendant in March also completed the acquisition of European online travel provider Ebookers and in April completed the acquisition of U.K.-based Gullivers, Europe's largest travel wholesaler. "Cendant is now a global player in merchant hotel room distribution and tour packages, with leadership in Europe and Asia," said CIBC World Markets analyst Paul Keung in a research note.
At the same...
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