Cendant’s deal makes it No. 2 online travel agency

Cendant Corp.’s announcement it was buying Orbitz will make it the No. 2 online travel agency, behind only Expedia and No. 4 largest global travel company.

Said Cendant Travel Distribution Services Division Chairman San Katz of the significance of the $1.25 billion deal:  “The transaction provides a foundation for significant synergies in technology…which will allow both Orbitz and CheapTickets to continue to aggressively promote their respective brands while increasing profitability.”

A Cendant spokesperson said key statistics for the transaction include these:

• The combination of Orbitz and Cendant properties CheapTickets.com and Lodging.com enables the company to reach more than 24 million Web site visitors each month. 
• Together, Cendant TDS and Orbitz captured more than $6.9 billion in gross bookings in 2003. 
• With Orbitz, Cendant has a 22% market share of the online travel industry.

“The acquisition is in line with Cendant’s articulated goal of becoming a leader in every business within which the company operates,” said a spokesperson.
She said the deal would provide small-to-large-size companies new access to a broad mix of services, options and deals that can be fully managed, self-directed or bought on an a la carte basis.

Cendant, the 106 largest US company, is a hotel franchisor and real estate service company. Its wide range of products includes Galileo, Avis Rent A Car, Days Inn and Century 21 Real Estate.

Cendant is also likely to try to integrate Orbitz into its Galileo database system, though it is unclear how feasible such a plan would be because Orbitz uses another database system, WorldSpan, with which it has a contract for six more years.

Cendant hopes to use the combination of Orbitz’s reach and its own travel businesses to package deals that include airfare, lodging and car rental.

While Orbitz already offers such packages, Cendant will be able to offer better fares to consumers and at the same time, reap much higher profit margins.

Boards of Cendant and Orbitz have approved the deal. It still has to be accepted by regulatory approvals, which are expected to come in November.  If approved, the deal with provide cash to the five money-losing airlines that own most of Orbitz’s stock. They include American, United, Delta, Northwest and Continental.

Orbitz, the third-largest independent online travel sales Web site, was founded in 2000 by the top five US carriers, which was subsequently modeled by its European and Asian counterparts Opodo.com and Suji.com.

This transaction will make Cendant Travel Distribution Services the 4th largest global travel company behind #1 American Express Travel; # 2 Carlson Wagonlit Travel; and # 3 Interactivecorp, who owns Expedia, Hotels.com, Hotwire, Interval, TV Travel Shop in UK, Classic Custom Vactions, TravelNow, etc.  Travelocity was # 6 in 2003. 

Report by David Wilkening

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