Travel Weeklys Technology E-letter: Oct. 6, 2004

CENDANTS $1.25 billion acquisition of Orbitz, if approved, could change the online agency balance of power and deal another blow to Worldspans e-commerce clout. Cendants Web businesses, including CheapTickets and Lodging.com, would edge out Travelocity in online market share, 22% to 20%, according to Legg Mason, enabling the Cendant sites to take the No. 2 position behind IAC/InterActiveCorp. For now, Cendant plans to maintain the Orbitz, CheapTickets and Lodging.com brands and to consolidate their operations -- and platforms -- in Chicago.

MEANWHILE, WORLDSPANS CONTRACT with Orbitz runs through 2011, and Sam Katz, the chairman and CEO of Cendants Travel Distribution Services division, said the agreement stays in place. Many observers, however, expect that relationship to dissolve well before the next decade. In other GDS matters, Orbitz was known to be working on an agency desktop solution. With Galileo the only GDS without a viable browser-based desktop, merging an Orbitz solution with Galileos GDS expertise may enable Cendant to fine-tune a new GDS offering. This acquisition gives us the ability to go after a browser-based desktop for agents with a better offering, a stronger offering than anyone else, Katz said.

UNITED AND ORBITZ went live with the agencys Supplier Link direct-connect technology, making United the seventh carrier to do so. An eighth carrier, Delta, is in the implementation phase, Orbitz said. Once Delta is onboard, all of Orbitzs founding airlines plus Alaska and AmericaWest will have gone to the direct links. In bypassing Worldspan in its Orbitz bookings, the airlines pay Orbitz a $4 fee per ticket.

LUFTHANSA tapped IBM and Amadeus to operate Lufthansa.com. Under a five-year agreement, Amadeus e-Travel e-commerce business will provide and operate booking and faring functionality on the Web site, and IBM will offer consulting, maintenance and hosting operations. The two companies will also provide infrastructure, middleware and network technologies for the project, the airline said.

PRICELINE.COM increased its hotel clout in Europe with the acquisition of Active Hotels, a reservations service and distributor, for some $161 million. Active Hotels, which will operate as an independent business, has relationships with about 8,000 properties in the U.K. and Europe, Priceline said. Active Hotels gross bookings are expected to come in at $160 million through the 12 months ended Sept. 30, Priceline said.

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