Heres our first impression of Cendants
proposed acquisition of Orbitz: It looks like a good deal.
Its good for the
airline owners of Orbitz, who need the cash more than they need to
be in the travel distribution business. Were not sad to see them
leave that business, and we suspect we are not alone.
Its also good for
Orbitz because the company will now have an owner that can afford
to invest in it and take its various innovations to the next
And its good for Cendant in
various ways. For one thing, it puts the company in a position to
marry the best of the legacy technology from Galileo and the new
technology of Orbitz. This will be good for other Cendant brands,
but, more to the point, this marriage could be good for the rest of
the industry, in the way that royal weddings used to be arranged to
end feuds and wars.
travel agents originally feared Orbitz because of its threat to the
GDS and travel agency sales channels, and some still do. To those
agents, it should be a cause for some optimism that the next phase
of Orbitzs evolution will occur under the auspices of a company
that understands those channels and is already invested in their
That is a matter of
no small consequence.
There even may be
an upside for suppliers in this consolidation. Generally speaking,
we tend to be suspicious about consolidation and bigness, but there
is a downside to fragmentation, and we suspect that suppliers are
growing weary of the proliferation of sales channels and Web sites
demanding preferred arrangements and merchant deals. Viewed in that
light, the possible integration of Orbitz with CheapTickets.com
and/or Lodging.com may be welcome prospects.
Of course, the
pundits have been saying for quite some time that theres room for a
lot more consolidation in travel technology and distribution, both
within the U.S. and in overseas markets.
The real test of
this deal, and the deals that will surely follow, will come in a
few years when we and other armchair strategists look back and try
to remember what all the fuss was about.
Shortly after its creation 33 years ago,
Amtrak made the decision to have a tour program, and it has had a
tour program, of one kind or another, ever since.
After the demise of
its private-label operator last week, Amtrak did the right thing
and made it clear to agents and consumers that it would make good
on all paid-in bookings.
Still unclear is
Amtraks future commitment to offering a nationally branded vacation
product. We hope Amtraks decision-makers vote to keep and expand
the product. In fact, Amtrak should take this opportunity to make
it easier for travel agents to learn about and sell vacations built
around rail travel.
We believe there is
and ought to be a place in the industrys product line for more and
better rail tours.