The proposed merger between Travelocity.com and Preview Travel, the announced IPO plans of Getthere.com and Expedia.com, and the entry of Amazon.com into the interactive travel industry, have got this business buzzing like never before.
More to the point, people are scared. Industry pundits are saying that there’s only room for a few big players in this business and that everyone else is pretty much doomed.
One insider at a large travel agency I spoke with this week reported that since the Travelocity.com deal was announced, he’s never gotten more calls offering to sell him an online travel business.
“The feeling,” he told me, “is that we’re playing a game of musical chairs. The last one standing loses.”
Well excuse me for going against the grain here, but nothing could be further from the truth. The soothsayers who claim that there’s only room for the big guns either have a really short memory or are stupid. Probably both.
Weren’t they saying that more than two years ago, before William Shatner was beaming users over to Priceline.com? Before Buy.com decided to get into the travel business? And when Amazon.com was still a bookseller?
How can the critics interpret a single merger of a weak travel site with a better-financed one as The Beginning Of The End?
One reason, I think, is that we need easy answers. We look for trends when there are none. We don¹t want to do any of the thinking for ourselves, either, so we hire consultants to think for us — even when they think wrong.
What do a merger, two IPOs and a cyberbookstore going into the travel business have in common? Nothing. What does it mean for our industry? Less than we’re being led to believe.
Travelocity/Preview Merger While the industry focuses on the fact that Travelocity basically bought the foundering Preview — technically it was a merger, with Sabre owning 70% of the new entity — this view ignores several other interesting questions. Such as: What were Preview’s alternatives? Its stock was lagging and it was under pressure from every imaginable corner to make something happen fast. Should it have floated more shares, restructured or just faded away in the ultracompetitive leisure market?
But the desperation move wasn’t Preview’s. It was, arguably, Sabre’s. The few Sabre executives who don’t have their heads buried in the sand know that during the next decade, the travel agency distribution chain will collapse, leaving GDS’ as the leading distributor of nothing. Preview and Sabre needed each other desperately. I just can’t figure out who needed who more.
Prediction: Online pioneer Jim Hornthal, who becomes Travelocity.com’s vice-chairman, won’t last past spring in Sabre’s suffocating corporate culture.
The IPOs Getthere.com (formerly ITN) and Expedia.com think they can do better than Preview as publicly-traded companies. I wish them luck. Unlike many of the other observers, I am not surprised that they filed their registration statements recently. I am surprised that they didn’t do it any sooner. For the last three years, I’ve been predicting an ITN IPO, but the company has been slow to get its act together. Microsoft, which owns Expedia.com, signaled its intention to get out of the travel business more than a year ago. I think it may have unloaded Expedia.com sooner if Bill Gates weren’t so distracted by the antitrust trial, among other things.
Prediction: Expedia.com stock will sizzle but Getthere.com might well fizzle. Getthere.com is seriously devoid of name recognition and the former ITN has a history of either making brilliant decisions or bumbling around the interactive travel business.
Amazoning Travel? Word that Amazon.com was getting into the interactive travel business through its zShops subsidiary was greeted with either puzzlement or shock. The puzzled ones suspect Jeff Bezos and company are spreading themselves too thin and believe there’s nothing to worry about. The shocked ones remember what Amazon.com did for books and they’re afraid that a venture with Amazon.com’s technological savvy could actually make shopping for travel online easy. Say it isn’t so! For now, it appears there’s no need to panic — or deride — the new zShops. As far as travel goes, the only real product that’s being trumped up is timeshare accommodations. I also spotted a few all-inclusive packages and hotel rooms. Things you could basically pick up off a half-decent newsgroup. All that could easily change by the time this article appears, of course.
Prediction: Amazon.com lacks the focus with its zShops travel offerings. As it is, the new service doesn’t represent a threat to the dominant players. Bezos should either stick to books or get a better game plan.
Trying to make sense of the news in these turbulent times isn’t easy. The herd is running out there and trying to sell itself because of irrational fear that the sky is falling, when in fact, nothing of the sort is happening. We’ve just had a very busy month in the business. Nothing more.
Christopher Elliott is the author of Scammed: How to Save Your Money and Find Better Service in a World of Schemes, Swindles, and Shady Deals. Critics have called it “eye-opening” and “inspiring” — it’ll “grab your attention and won’t let go.” Order your copy now on Amazon, Barnes & Noble or iTunes.
Elliott is consumer advocate 
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