Travelocity’s decision to sell TBiz, its corporate travel unit, resulted from the online travel agency (OTA) wanting to focus more heavily on its primary brands, namely Travelocity.com, Travelocity Partner Network and Lastminute.com, according to spokesman Joel Frey.
Travelocity sold its corporate travel business to mega-agency BCD Travel last week.
“TBiz has been successful in building its business,” Frey said, to the point that Travelocity “felt it was at a point for a player like BCD to make a move on it.”
As a privately held company, Sabre is not required to release financial information about TBiz and its performance within Travelocity. Other OTAs, such as Expedia Inc. and Orbitz Worldwide, are publicly owned and have their own corporate booking tools (Egencia and Orbitz for Business, respectively).
Expedia reports that Egencia makes up a small part of Expedia’s business, with less than 10% of total revenue. However, at least in Egencia’s case, business is growing quickly, as gross bookings for 2012 rose 37%, vs. 16% for all of Expedia, and revenue from Egencia jumped 63% vs. 17% for all of Expedia.
John Snyder, BCD global president and COO, said, “The market is reasonably positive in the U.S. but a little less positive in Europe and other parts of the world. In a flat-to-soft global marketplace, we saw the opportunity to expand presence in the North American marketplace, but we hope to bring additional business outside of the Americas.”
According to an April report by the Global Business Travel Association, U.S. business travel grew 1.8% in 2012 and is expected to rise 5.1% in 2013, driving companies to invest more aggressively in business travel.
As a result of the purchase, BCD will gain rights to the TBiz name and employees. The transaction does not include the acquisition of any Travelocity products, services or customers. Additionally, all TBiz clients will have access to BCD’s global network and its services in global program consolidation, business analytics and consulting and meetings services.
Frey said Travelocity will not create a corporate travel product to replace TBiz, and the company will no longer “have a Travelocity-branded website dedicated to a travel management program.”
However, he said Travelocity will continue to serve the business traveler online, and the purchase “doesn’t really change anything our parent company [Sabre] is doing.”
Frey said Sabre “was still definitely the marketplace of choice for management travel programs, and my colleagues and peers there are still interested in driving the corporate travel sector.”
Henry Harteveldt, travel industry analyst and strategist for Hudson Crossing, said the Travelocity deal will “certainly make life more difficult” for the other corporate travel units of the OTAs, since BCD is a global management company.
But he said he did not believe the sale would lead other OTAs to follow suit.
“At this point, I don’t see any need for either Expedia Inc. or Orbitz Worldwide to sell their business travel units,” Harteveldt said. “However, if either Expedia Inc./Egencia or Orbitz Worldwide/Orbitz for Business are approached by third parties about a possible purchase, as publicly held companies they have a fiduciary responsibility to consider any legitimate offer.”
The announcement of Sabre’s decision to sell TBiz to BCD came after months of speculation that Sabre was planning to spin off the unit in preparation for an initial public offering.
In February, the Beat, a travel business newsletter owned by Northstar Travel Media (Travel Weekly’s parent company) reported that “multiple sources” had said Sabre was “working to sell Travelocity Business as it prepares for a public offering later this year.”
However, Sabre had no comment on the Beat report at the time, and no official announcement from Sabre has been made since then regarding a possible IPO.
Last week, Sabre spokeswoman Nancy St. Pierre wrote in an email that “no decisions have been made regarding an IPO.”