Travelocity Europe, a joint venture of Sabre Holdings Corporation`s Travelocity(R) and the Otto Group`s Otto Freizeit und Touristik GmbH (OFT), has announced a restructuring that will further strengthen its businesses throughout Europe….
Travelocity Europe, a joint venture of Sabre Holdings Corporation`s Travelocity(R) and the Otto Group`s Otto Freizeit und Touristik GmbH (OFT), has announced a restructuring that will further strengthen its businesses throughout Europe.
In a move that positions it for further growth in Europe, Travelocity will acquire the remaining 50 percent of the Travelocity Europe joint venture it does not already own, excluding the operations in Germany, Europe`s largest travel marketplace. Travelocity and OFT will continue their joint venture in Germany and further it by leveraging OFT`s superior strength and travel know-how in Germany along with Travelocity`s industry-leading products.
In the transaction, expected to be completed in the fourth quarter of 2004 subject to regulatory approvals, Travelocity will pay OFT 26.6 million euro (approximately $33 million) for the businesses, which include operations in the U.K., France, Norway, Sweden and Denmark. Outside Germany, Travelocity retains the sole right between the partners to any new operations in any countries in Europe. Sabre Holdings said it expects the transaction to be $0.02 to $0.03 dilutive in the fourth quarter.
This move allows the partners to put additional focus on their respective core competencies: Travelocity`s and OFT`s continuing joint venture in Germany will allow OFT to focus its expertise and investment in its home country of Germany, where it has extensive knowledge of the marketplace and runs more than 400 travel outlets. At the same time, Travelocity will roll out its industry-leading capabilities in both Germany and elsewhere under the leadership of Dirk Hauke, CEO of Travelocity Europe.
During the past two years, Travelocity has developed best-in-class capabilities for its U.S. business — including dynamic packaging, an advanced merchant hotel program and revolutionary site design — and the company can now begin making these available across its European businesses. These capabilities, which helped Travelocity almost triple its U.S. non-air transaction revenue during the period, will be tailored to local needs in Europe, where online travel purchasing is expected to grow more than 40 percent in the next year alone, according to PhoCusWright.
Through this agreement, we gain tighter operational alignment, which will help us gain additional efficiency across Europe. We plan to grow in Europe by leveraging our industry-leading capabilities across multiple brands in a growing list of countries, said Michelle Peluso, Travelocity CEO. At the same time, we continue to benefit from OFT`s unparalleled travel industry expertise in Europe`s largest travel marketplace.
Gerd Massheimer, Member of the OFT Executive Board, said: We have opted for concentrating our travel activities on Germany, where we already hold the number one position among those businesses which operate independently of tour operators. The joint venture with our outstanding partner Travelocity in the online sector is an ideal reinforcement of our successful multi-channel strategy and is designed to support our ambitious growth targets in the German travel business.
Travelocity Europe includes Travelocity.co.uk in the United Kingdom, Resfeber.se and Box Office in Sweden, Rejsefeber.dk and Arte Udland in Denmark, Reisefeber.no and Ticket Service in Norway, and Boomerang in France. The Travelocity-OFT joint venture in Germany owns and operates Travelchannel.de, Travelocity.de, Travel Overland and Flug.de. All of these companies together have more than two million customers.
Travelocity and OFT have been equal (50/50) partners in Travelocity Europe since they launched their joint venture in December 2001.
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