AMERICAN
AIRLINES AND EXPEDIA reached an accommodation, and the
airline's international fares as well as domestic first and
business-class flights were again being sold through Expedia.com. For about
three weeks before the resumption of sales Feb. 2, Expedia.com had
been selling only domestic coach tickets for American. Expedia and
American officials declined to specify what led to the detente. The
dispute, according to a source, hinged on the relative economics of
Expedia's handling American bookings through Expedia.com's two GDS
vendors, Sabre and Worldspan. American and Worldspan concluded a
long-term content agreement in late March 2006, about five months
earlier than American and Sabre came to terms. The economics were
more advantageous to Expedia.com when Sabre processed the AA
bookings than they were when Worldspan handled them, the source
said. So, Expedia.com removed all but American's lower-yield
domestic coach fares to pressure the airline, and to have it exert
some influence on Worldspan, to make Expedia "whole" on the
financials of an AA booking through Worldspan, the source added.
However, Expedia.com spokesman David Dennis said Worldspan was not
involved in the new Expedia-American agreement. When Expedia and
American initially aired the dispute last month, Expedia said it
decided to cease using Worldspan to handle American's bookings, but
officials Tuesday declined to comment on whether Worldspan has
resumed processing some of American's bookings for Expedia.com.
SABRE AND
NORTHSTAR TRAVEL MEDIA, the owner and publisher of Travel
Weekly, signed a contract in which NTM agreed to provide its hotel
classification ratings systems to the Sabre GDS and Travelocity. The
backdrop to the pact is that AAA decided last month not to renew
its contract to provide its Diamond Hotel Ratings to Sabre and
Travelocity as the automobile club moves to develop more traction
with proprietary information on its own Web sites. Agents using the
Sabre GDS gained access to the NTM business-to-business hotel
rating system, based on Official Hotel Guide Worldwide ratings,
last week. And Travelocity, including its extensive network of
World Choice Travel affiliates, is expected to begin using NTM's
consumer hotel classification ratings system in the next few weeks.
Sabre, including its GetThere business, and NTM had pre-existing
relationships in which Sabre used NTM data. "This deal means we are
intensifying and strengthening our relationship with Sabre and
Travelocity," said Sheila Rice, NTM's vice president of content
licensing. "I think it reinforces the credibility and reliability
of Northstar's hotel classification rating system." Northstar rates
far more hotel properties than AAA, including thousands of
properties outside the U.S. Northstar doesn't necessarily visit
each property to issue a rating but creates them based on the input
of seasoned professionals who evaluate properties' amenities and
conduct a thorough review based on information from hotel
officials, travel guide evaluations, travelers' comments and
collateral materials, Rice said.
SABRE'S GDS
BUSINESS, the Sabre Travel Network, increased its
operating income and margin in 2006, with the tallies impacted by
airline agreements and incentive trims in place for the fourth
quarter. Operating income in that division increased 11.4% to $249
million for the year, and the operating margin rose 1.2 percentage
points to 15% on a GAAP basis. "Our confidence in our business
model has never been stronger," Sabre chairman and CEO Sam
Gilliland told analysts as the company released fourth-quarter and
full-year 2006 financial results. Gilliland said Sabre Travel
Network's transactions rose 13.9% to 85.6 million in the fourth
quarter, although the rate per transaction dipped "slightly"
because of the new airline agreements with major U.S. carriers. The
GDS business achieved the margin level it did in part because the
unit has "taken out significant costs," Gilliland added. Sabre in
the future will be better able to manage the growth of incentives,
Gilliland said. The overall 13.9% rise in transactions in Sabre's
GDS business included a whopping increase, propelled by new
business with Expedia.com and Priceline.com, in the number of transactions
processed in the consumer online channel. Those transactions
increased 81.3% to 19.1 million in the fourth quarter. For 2006,
Travelocity's revenue increased 31% to $1.1 billion. Its operating
income for the year was $5 million, compared with a $10 million
loss in 2005.
FARECAST added the former CEOs of Expedia and
NLG (now World Travel Holdings) to its board as well as another
$12.1 million in Series C financing to the corporate kitty. New
board members include Erik Blachford, a former Expedia CEO, who has
invested in Farecast in this latest financing round; former NLG CEO
Brad Gerstner, a current vice president of Par Capital Management;
and Jim White, managing director of Sutter Hill Ventures. Blachford
joined the board in December, while Gerstner and White are new
appointees. This latest financing round, which brings Farecast's
venture funding to $20.6 million, was led by Sutter Hill Ventures,
a Silicon Valley venture capital firm that focuses on technology
start-ups. New investors include Sutter Hill Ventures, Par Capital
Management, Pinnacle Ventures and Blachford. Existing investors
also participated in the Series C financing, including Greylock
Partners, Madrona Venture Group and WRF Capital. Farecast President
and CEO Hugh Crean said the new funding will enable Farecast to
expand its prediction capabilities. The company's Web site, at www.farecast.com, is still in beta and specializes in
advising consumers whether to buy an airline ticket now or later
based on its predictions about whether the fare will stay the same,
rise or fall.
Technology
Editor: Dennis Schaal
Phone:
(201) 902-1904
[email protected]
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