) and Travelocity recently announced a strategic long-term
marketing partnership to strengthen the latter's core business.
Financial terms of the deal were not disclosed.
Based in Texas, Travelocity is an online travel agency and a
wholly-owned subsidiary of Sabre Holdings Corporation. The
company offers corporate travel services, under which it books
plane trips, hotel rooms and car reservations. These services
help companies to plan, buy and manage their travel through its
online and offline capabilities.
As per the agreement, Expedia will handle the majority of
Travelocity's operations. It will pick up the orders for
Travelocity, collect the fees from providers (hotels, airlines
etc) and pay Travelocity a commission for the sales generated on
the Travelocity platform. Infact, Travelocity will now become
more of a brand of Expedia's website than a true travel
Management stated that the marketing agreement covers only
Travelocity's brands in North America. However, Travelocity-owned
lastminute.com in Europe and the Travelocity Partner Network
brands are not included in the deal.
We believe the deal will help Travelocity to cut the cost of
operating the platform and divert resources to marketing. It will
give Travelocity access to a more powerful search tool and
The deal will help Expedia to better position itself in the
competitive online-travel industry. The deal will boost Expedia's
already large corporate travel portfolio and expand its business
worldwide in a much more effective way. Recently, the company
acquired 61.6% equity stake in hotel search website, Trivago, to
expand into the European online travel market and gain market
We believe these strategic alliances and acquisitions will
help Expedia to grow in the future.
Expedia, one of the leading online travel companies in the
world, reported second-quarter earnings of 14 cents, missing the
Zacks Consensus Estimate. However, revenues were $1.21 billion,
up 19.0% sequentially and 15.9% year over year.
Despite the positive long-term trends in online travel
booking, currently the company is not doing very well. It is
seeing increasing competition from players like
). Also, Google has entered the travel search and booking market
through its purchase of ITA Software in 2010.
Expedia's shares carry a Zacks Rank #3 (Hold). Another stock
that is performing well at current level includes
Ctrip.com International Ltd.
), carrying a Zacks Rank #1 (Strong Buy).
CTRIP.COM INTL (CTRP): Free Stock Analysis
EXPEDIA INC (EXPE): Free Stock Analysis
ORBITZ WORLDWID (OWW): Free Stock Analysis
PRICELINE.COM (PCLN): Free Stock Analysis
To read this article on Zacks.com click here.