Sabre: Expedia beating Travelocity

One of the world's largest providers of electronic booking technology is highlighting Travelocity's shortcomings as it attempts to acquire control of the Web travel agency.

When it comes to which company is winning the Web's travel wars, Travelocity's biggest backer, Sabre Holdings, recently made a strong case for Expedia.

One of the world's largest providers of electronic booking technology, Sabre has taken to highlighting Travelocity's shortcomings as it attempts to acquire control of the Web travel agency, according to documents Sabre filed with the Securities and Exchange Commission last week.

Sabre, which owns 70 percent of Travelocity and is seeking to buy the other 30 percent, commissioned a comparison study of Travelocity and Expedia. The results, according to Sabre, showed that between the first and fourth quarters of 2001 Travelocity's gross bookings fell by 24 percent, from $833.6 million to $630.2 million. At the same time, Expedia's gross bookings rose 4 percent, from $674 million to $704 million.

As for the revenue the companies generated during that span, Travelocity's declined by 7 percent while Expedia's grew by 43 percent. Expedia posted a 26 percent profit margin in the fourth quarter compared with Travelocity's 12 percent.

Sabre's assessment of Travelocity was made in part to justify the buyout offer of $23 per share that it officially tendered for Travelocity last Tuesday. It could also be among the first volleys in a nasty takeover battle, analysts said.

Travelocity's board of directors announced a week ago that a panel asked to review Sabre's offer had called it "inadequate."

Travelocity maintains that the company's share price is due to a down market and the after effects of the Sept. 11 terrorist attacks. A fairer price, Travelocity said in press releases, would range about $30 to $55.

Executives at Travelocity, which have until Friday to reply to Sabre's offer, declined to comment for this story.

Almost since Sabre formed Travelocity back in 1996, the Web travel company has led the industry in the number of fares it booked. But for the past 18 months, Expedia has gained ground, finally surpassing Travelocity in gross bookings last quarter.

Travelocity will be privatized and folded into Sabre's operations, should it be acquired, Sabre said in SEC filings. Sabre has said that it intends to keep Travelocity's management and employees.

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