Despite the squeeze in the private equity markets, Travelocity continues to invest in consolidating its disparate hotel platforms, particularly in Europe, from five systems to “one or two,” and is even considering making relatively small acquisitions.
Jeffery Jackson, the chief financial officer of Travelocity parent Sabre Holdings, which was bought by private buyout firms Texas Pacific Group and Silver Lake Partners a year ago, tells Travolution that there has been little change in Sabre’s basic strategy and Travelocity’s execution of “heavy-duty technology” work in Europe and Asia despite “the turmoil in the capital markets”.
Jackson says Travelocity’s US and European businesses have seen a “tiny slowdown” over the past three or four months, but it is not “significant”. That softness has been felt less in Europe than the US, he added.
In addition to investing in rationalising Travelocity’s multiple hotel platforms, a legacy of the Lastminute.com acquisition in 2005, Sabre continues to put monies into improving Lastminute.com’s financial systems and marketing, Jackson explains.
While these sorts of activities are under way in Europe, Travelocity presses on with other global investments in the online business as it operates in India and expands elsewhere in Asia through Travelocity’s Zuji brand, Jackson adds.
On the acquisition front, Jackson says Sabre is mulling small-scale acquisitions across its three business segments, which include Travelocity, the Sabre GDS network, and airlines solutions.
Jackson acknowledges that the credit crunch has been a factor in Sabre’s choice to put off any consideration of large acquisitions for now.
It would be difficult to make any acquisitions today that need to be debt-financed, he says.
But apparently, the private equity crowd still has access to capital for some acquisitions.
For example, Jeff Clarke, the president and CEO of Sabre rival Travelport, which operates Galileo, Worldspan and Gullivers Travel Associates, and owns some 48% of Orbitz Worldwide, also tells Travolution that Travelport, too, is contemplating “secondary investments”.
Such acquisitions are under consideration despite the stilted credit market, because companies like the Blackstone Group, one of Traveloport’s three owners, “have very deep pockets,” Clarke says.
Meanwhile, in July 2007, private firm Travelport spun off Orbitz Worldwide into a publicly traded company, and Sabre’s Jackson said his company could carry out some type of public offering or a partial public offering in about a year.
The markets “are not particularly receptive receptive right now”, and Sabre is “not in any big rush,” Jackson says.