RISKY
BUSINESS AT HILTON INTERNATIONAL: Hilton International,
with its more than 400 properties and rights to the Hilton brand
outside of the U.S., negotiates contract terms related to inventory
risk based in part on whether Hilton and the distributor establish
a direct-connect. When it issued distribution standards last year,
the U.K.-based chain said contracts must ensure that Hilton and the
distributor share room-allocation risk. However, that doesn't apply
to distribution agreements that Hilton International announced last
week with Expedia Inc. and Priceline Europe's Active Hotels because
both distributors are building direct-connects to the hotel chain.
A Hilton International spokesman said the direct-connects mean that
Expedia Inc. and Active Hotels don't get room allocations, but
simply access available inventory directly from the chain's
property management system. In contrast, when distributors don't
establish direct-connects with the chain, Hilton International
negotiates terms on inventory risk that include penalties for
returning unbooked rooms.
ORBITZ AND
WORLDSPAN traded $50 million civil suits in two Chicago
courts last month, bringing to light their conflict over Orbitz's
direct-connect Supplier Link program, where tickets are booked
without GDS intervention through the airlines' internal
reservations systems. Orbitz claims in a suit filed Sept. 16 that
while renegotiating their contract, Worldspan concealed its
objection to the way the Orbitz Web site intermingles flight
information about direct-connect airlines with availability data
about carriers booked through Worldspan. Worldspan has the
exclusive GDS contract for Orbitz.com, and claims that Orbitz stole its seat map
data for direct-connect flights and improperly used Galileo
availability data for non-direct-connect flights. Use of Worldspan
GDS data in flight displays for direct-connect bookings transforms
them into non-direct-connect bookings, for which Worldspan should
be compensated, Worldspan contends. Orbitz also alleges that
Worldspan hid the fact that it would not be giving Orbitz access to
low cost airlines, including Independence Air. In addition, Orbitz
alleges that it didnt know at the time the two parties extended
their agreement to 2011 that Worldspan considered Orbitzs use of
ITA Software, which has a GDS designator code, to be a violation of
the agreement. Worldspan filed its suit three days later, claiming
to be the victim of deception and abuse since August 2000, when its
partnership with Orbitz began. Worldspan also alleged that Orbitz
stole Worldspans data and illegally used ITA Software and Galileo.
Despite the fact that the Worldspan-Orbitz agreement specifically
prohibits Orbitz from using any [GDS] other than Worldspan to
perform certain services, Orbitz has been using two other [GDSs] to
perform the services at issue, the complaint states.
SABRE
REDUCED its 2005 earnings forecast by about 4%, saying
terrorist incidents in London and Egypt had a negative impact on
the performance of recently acquired lastminute.com.
Sabres latest estimate for earnings per share is between $1.27 to
$1.32, down five cents. The incidents in Egypt and London occurred
in the peak travel months of July and August, Sabre
noted.
TRX,
the Atlanta-based technology company, completed an initial public
offering (IPO) and its stock, TRXI, began trading on Nasdaq Sept.
27. In March 2001, the company withdrew an IPO, citing unfavorable
market conditions, but the 2005 version came to fruition. The offer
price, $9 per share, may have been disappointing to the company:
The IPO originally was priced at $11 to $13 per share, but was
trimmed to $9 to $11 per share before the stock's debut. The
company offered 6.8 million shares, but only gets the proceeds from
about half of those shares. That's because 3.4 million were sold by
existing shareholders, including BCD Technology (which owns
WorldTravel BTI), Hogg Robinson Holdings and Sabre, and TRX doesn't
receive those proceeds. TRX, which provides transaction-processing
and data integration services to the travel industry, and markets a
corporate self-booking tool, Resx, plans to use the influx of
funding for general corporate purposes. In 2004, more than half of
TRX's revenue came from Expedia, where it performed transaction
processing for Expedia's vacation package, corporate travel and
cruise businesses.
A PHOCUSWRIGHT
STUDY, Online Travel Shopping and Buying Behavior: Key
European Markets, released in conjunction with the Sherman, Conn.,
company's conference in Paris last week, found that people who
sometimes buy travel online in Germany and France are more likely
to buy online and offline than online travel consumers in the U.K.
For instance, according to the survey, 68% of online travel buyers
in Germany also use other channels, including traditional travel
agencies and tour operators, when purchasing travel. That compared
to just 40% of online travel buyers in the U.K. One of the reasons
that online travel buyers in the U.K. are more Web-centric than
their counterparts in France and Germany is because of the high
volume of airline tickets purchased online via U.K. low-cost
carriers, which lifts Internet usage overall, PhoCusWright said.
PhoCusWright pointed to buying behavior steeped in tradition with
country-by-country variations in noting that 27% of French, 20% of
German and 9% of U.K. online travel buyers also booked travel in
person in the last year. The survey, conducted in conjunction with
Greenfield Online, found that 8 out of 10 U.K. online travelers use
the Internet as the main way they purchase travel. But e-commerce
barriers and embedded habits make German and French travelers more
likely to use offline methods, as well.