SEATTLE -- Expedia plans to enter the managed corporate travel
market by acquiring Metropolitan Travel, a $150 million agency
here.
The company established Expedia Corporate Travel Services, a
division under which Metropolitan will operate. For the
"foreseeable future," Metropolitan will retain its name, said
Expedia.
The transaction, the terms of which weren't disclosed, should be
completed before the end of July, Expedia said.
The company expects the the combination of its brand recognition
and "depth in technology" to propel Expedia to a leadership
position in the online corporate travel market, said director of
product marketing Suzi LeVine.
Initially, Expedia will be targeting companies that spend up to
$2 million annually on travel, she said.
Through Metropolitan, Expedia plans to offer corporations a
managed self-booking solution, which is due to reach the market by
the end of the year.
Most Metropolitan clients -- which include Amazon.com, Nordstrom
and Starbucks -- are companies whose annual travel volume is
between $1 million and $5 million, said Patricia Elliott, president
of Metropolitan Travel.
LeVine said she believes Expedia has a head start in the
business market because its Web site already is popular with
business travelers. She estimated that 25% of all sales on Expedia
are made by business travelers.
By joining forces with a travel agency, LeVine said Expedia will
be able to offer corporate clients online booking and travel
management services from a single vendor.
Some of Metropolitan's customers already use an online booking
tool called Travelport, a product offered by Highwire, a
Seattle-based subsidiary of Galileo.
Highwire originally was a subsidiary of Metropolitan Travel, but
the agency sold it to Galileo last year, about the same time
Galileo was acquired by Cendant.
Elliott said Metropolitan will continue to support Travelport,
but when asked if there will be a time when the company no longer
will do so, she said, "We haven't really talked about it yet."
After the acquisition, Expedia, a competitor of Cendant in the
consumer online marketplace, will become a Cendant customer in a
sense because Metropolitan is a Galileo agency.
Metropolitan will continue to honor its GDS contract with
Galileo, Elliott said.
Worldspan is Expedia's GDS vendor.
Expedia's purchase of Metropolitan marks the company's most
aggressive move to date into the corporate travel field, but not
its first.
In the late 1990s, Microsoft -- which owned Expedia before
selling the company to present majority owner USA Interactive --
partnered with American Express to create American Express
Interactive, an online booking tool that is now defunct.
Metropolitan Travel also has been influenced by Microsoft, as
present and past executives have connections with the software
giant.
Former Metropolitan chief executive officer Marka Jenkins, now
the chief executive at Highwire, used to manage the Microsoft
account when she worked for American Express.
Chief technology officer Gary Ferguson is a former Microsoft
employee.
Expedia's entry into the corporate travel market follows a
similar move made by Orbitz in May. In its IPO prospectus, Orbitz
said it intends to "integrate negotiated fares and rates into our
matrix display."
Also in May, Orbitz struck a deal with mega agency Navigant
International to give travel agents direct access to Orbitz fares
from their desktops.
"The line between consumer online travel and corporate online
travel are blurring," said Norm Rose, industry analyst and
president of Travel Tech Consulting in Belmont, Calif.
"It's going to be a wild ride."
Adding bricks to clicks
By Dennis Schaal
BELLEVUE, Wash. -- With Expedia's acquisition of Metropolitan
Travel, the online agency will become a bit less Webcentric.
Clients of the new Expedia Corporate Travel Services will have
access
to both call-center res agents and online booking tools, as well
as the option of staffing on-site offices with Expedia agents --
adding a brick-and-mortar dimension to the online giant.
Byron Bishop, Expedia's senior vice president of corporate
travel, said, "Our vision is to bring together the best of both
worlds."
There will be no move, however, to open storefront agencies and
"there are no plans at this time for further acquisitions in this
area," he added.
Expedia has not disclosed the details of the corporate products
it will promote, but Bishop said it will give clients the ability
to access their negotiated fares and rates.
"Underneath the negotiated rates will be Expedia technology,"
Bishop said.
Asked how much money Expedia will commit to battling it out with
Orbitz and Sabre's GetThere, which is widely seen as the market
leader, Bishop replied, "Sufficient resources that we will become
the market leader."