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Travelocity refocuses in bid to regain top travel website ranking

April 22, 2012|By Andrea Ahle
  • Travelocity's Roaming Gnome is "just trying to be witty and funny and tries to connect with people," says Elaine Kubik, who handles the travel website's social media duties. Once considered a trailblazer, Travelocity has struggled for the last few years to keep up with competitors such as Expedia and Priceline.
Travelocity's Roaming Gnome is "just trying to be witty and… (Max Faulkner, MCT )

FORT WORTH — With pointy red gnome hats, a cruise giveaway and plenty of balloons, Travelocity turned sweet 16 last month.

But it hasn't been all cupcakes and champagne for the travel website.

Once considered a trailblazer, Travelocity has struggled for the last few years to keep up with competitors such as Expedia and Priceline.

"We weren't moving as fast as we needed to," Chief Executive Carl Sparks said about newer, nimbler competitors. "We're 16 and so sometimes we think of ourselves as one of the elderly companies in the space because we were around since its inception.… Yet 16 is quite young for a multibillion-dollar company."

Since Sparks took the top job a year ago, he and his executive team have refocused the Southlake, Texas, company on hotel products, build-your-own-vacation packages and mobile devices. In February, the company launched its first iPad app, which allows users to book airline tickets, hotels and rental cars from their tablets and offers hotel deals exclusive to its mobile apps.

Although industry analysts say Travelocity is still playing catch-up, they are encouraged by Sparks' initiatives and the disciplined approach he has brought to the company.

"He is refining the team and they are working on platform solutions now," Atmos Group analyst Henry Harteveldt said. "There is a lot they can do, and they have matured into a compelling company."

Created in 1996 by the Sabre Group, then part of American Airlines' parent, AMR Corp., Travelocity first offered travel content to consumers browsing the Web with 28.8 Kbps modems. Within a year, they could buy airline tickets, book hotels and reserve rental cars on the site.

As dot-coms hit Wall Street with soaring initial public offerings, Travelocity became publicly traded in 2000 through its acquisition of Preview Travel. But it faced increasing competition from Expedia, which was adding to its hotel offerings, and Orbitz, a new site founded by a group of U.S. airlines.

As Travelocity slipped out of first place, Sabre Holdings brought the company back into the fold and combined it with Lastminute.com, a European travel site. In 2007, Sabre was taken private by Texas Pacific Group and Silver Lake Partners in a $5-billion deal.

Harteveldt said Travelocity was a pioneer in the online travel industry and the first major website to sell airline tickets. In a survey that he conducted late last year, 13% of consumers said they used Travelocity to book their leisure and personal travel within the previous 12 months, as many as those who used Priceline, Orbitz and Hotels.com. Expedia ranked first, with 21%.

"They outlasted some of their competitors, but I think it shows just because you're first doesn't mean you end up on top," said Harteveldt, adding that Priceline has vaulted over Travelocity into the industry's No. 2 spot. "While I don't think Travelocity was complacent, I don't think they were able to push the meter as well as they would have liked to and certainly not as much as they needed."

When Sparks came in as CEO in April 2011, he recognized that having staff spread among three offices hurt the company by slowing down business decisions. Sparks, who was previously president of Gilt Groupe, an online fashion retailer, and had worked at Expedia and Hotels.com, closed Travelocity's offices in New York and San Francisco, consolidating employees at its headquarters.

He also added more executives with experience in e-commerce and continues to hire developers to create products and apps. And instead of trying to make Travelocity all things to consumers, Sparks decided to focus on three areas: hotels, vacation packages and mobile platforms.

The company was recently named the top travel site by the American Consumer Satisfaction Index and received solid reviews for its iPad app.

But after seven years of providing the content for the American Express travel site, Travelocity was left behind when AmEx chose Orbitz as its private-label travel provider. It also lost its portal deal with AOL to Orbitz this year.

Sparks said Travelocity is shifting away from portals like AOL and American Express to focus on providing customized solutions for businesses and their customers.

With its focus on hotels and travel packages, Travelocity is trying to provide a better user experience. It is heavily promoting its "Top Secret Hotel Deals" and its "Travelocity Guarantee," under which Travelocity will match any lower price and give the customer $50 off another trip.

Ahles writes for the Fort Worth Star-Telegram/McClatchy.

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