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InterActive Severs Hotel-Booking Deal

The company, which is shifting the discount service to Expedia, says Travelocity breached an exclusive agreement.

September 03, 2003|From Bloomberg News

InterActiveCorp on Tuesday ended an agreement between its Hotels.com unit, which sells discounted rooms on the Internet, and Sabre Holdings Corp.'s Travelocity.com, and is shifting the business to its own Expedia Inc. travel site.

InterActiveCorp, which is owned by Barry Diller, stopped offering hotel rooms on Travelocity.com because it said the site breached an agreement that gave Hotels.com the exclusive right to be featured.

Expedia is the world's largest Internet travel site, followed by Travelocity.

InterActiveCorp said it would speed up plans to sell rooms and other travel services on the Hotels.com and Expedia sites, and would offer more hotels and vacation packages at lower rates.

"Expedia and Hotels.com have complementary strengths in hotel inventory, technology and business processes," Expedia Chief Executive Erik Blachford said in a statement.

"Combining these strengths will result in better rates and inventory for the hotels and packages offerings on our sites," he added.

Travelocity was surprised by InterActiveCorp's action.

"Hotels.com hadn't provided any notice of breach," Travelocity Chief Executive Sam Gilliland said. "We're certainly not in breach, and we're hopeful that any such concerns can be resolved in a confidential manner, consistent with our agreement."

Hotels.com and Travelocity.com had an exclusivity agreement through December 2004 that required Travelocity to feature rooms offered by Hotels.com, said Robert Diener, president and co-founder of Hotels.com.

Travelocity said Friday that it would no longer feature Hotels.com exclusively, and it started displaying other hotels on AOL Time Warner Inc.'s America Online, Yahoo Inc. and other Web sites ahead of offerings from Hotels.com, Diener said.

Hotels.com offers rooms at more than 9,000 properties in about 400 markets in North America, Europe, the Caribbean and Asia.

Shares of InterActiveCorp fell 41 cents to $36.58 in Nasdaq Stock Market trading. Sabre Holdings rose 75 cents to $23.37 on the New York Stock Exchange.

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