HOTELS.COM terminated its distribution agreement
with its largest affiliate, Travelocity, as Hotels.com stopped
offering its hotel inventory on Travelocity.com. Hotels.com claimed
Travelocity breached their contract on Aug. 29 by terminating "the
exclusivity to which Hotels.com was entitled under the hotel supply
agreement." Hotels.com claimed Travelocity breached their agreement
other times during the past year, but did not elaborate. According
to a Securities and Exchange Commission filing Aug. 29, Sabre,
Travelocity's parent, said Travelocity "exercised its right,
pursuant to Travelocity's affiliation agreement with Hotels.com ...
to expand the distribution of its own merchant hotel inventory."
MEANHWHILE, HOTELS.COM is turning to sister
company Expedia as a partner. The two companies, both owned by
InterActive Corp, are "commencing full-scale cooperation and
cross-selling initiatives," said Hotels.com. With Travelocity out
of the picture, marketing strategies between Hotels.com and Expedia
can be implemented at "a much faster pace," said Bob Diener,
president of Hotels.com. In another development, Travelocity Sept.
2 trumpeted the growth of its merchant hotel program. The program
now includes more than 7,000 hotels, said Travelocity, which
exceeds its year-end goal of 4,000 signed and operational merchant
hotels.
ORBITZ narrowed its losses to $5.3 million in
the first six months of this year, according to a Securities and
Exchange Commission filing last week. That compares with a $16.5
million loss in the first six months of 2002. The company, which
lost $167.4 million since its inception, said its airline owners
invested $214.8 million. The figures were in an Orbitz amended
registration statement for an initial public offering of stock, but
the date, number of shares and price for that offering were not
provided. Orbitz filed its original registration statement in May
2002.
WORLDSPAN, MEANWHILE, may limit the growth of
Orbitz's supplier link business, Orbitz said in its amended IPO
statement. Orbitz explained that unless it can "modify the terms of
the agreement with Worldspan, it will be necessary for us to
control the number of supplier-link segments we can complete in a
particular year." If Orbitz falls short of its quarterly threshold,
it must pay Worldspan a segment fee for each segment it falls
short. Orbitz's car rental and airline bookings, which are
processed through Worldspan's GDS, don't utilize direct-connect
technology.
TRAVELERS WHO BOOK MIDPRICE and extended-stay
properties on the Internet pay rates that are on average 2% to 5%
more than travelers who book rooms through "traditional routes,"
according to a study by J.D. Power and Associates. "Doing your
homework when booking a hotel, whether by calling the hotel
directly or booking on line, can certainly pay off in terms of
getting the best rate and in helping to ensure you're satisfied
with what the hotel provides," said Linda Hirneise, partner and
executive director of the hotel practice at J.D. Power.