Cendant eyes Galileo, deal may be valued at $3B

11th Jun 2001

It would mark the first time that a major CRS would be owned outright by a nonairline travel company.
Galileo International and hotel and car-rental franchisor Cendant are in discussions regarding Cendant`s possible acquisition of Galileo, the two companies confirmed.
The deal, which could still fall through on its own or through the intervention of other Galileo suitors, would involve cash and stock valued at some $3 billion, according to published reports. It would mark the first time that a major CRS would be owned outright by a nonairline travel company.
Galileo, whose U.S. agency market share is on a par with Worldspan at roughly 25%, said in October that it was pursuing its strategic options, including a sale or merger, because it felt its stock was undervalued. Cendant, meanwhile, has been on a technology push, and is gearing up to launch a full-service travel portal in the fourth quarter that will sell air, car, hotel and vacation packages - its own brands as well as inventory from competing suppliers.
Cendant owns nine hotel brands, the Avis Group and travel technology firm WizCom International.
Speaking at the May 22 Ramada Annual Conference, John Paul Nichols, executive vice president of the Cendant Hotel Division, said Cendant is building the one-stop shopping travel portal because 75% of hotel reservations will be booked on line in five years.
“In fact, our conversion rate is unacceptably low - as it is with all other hotel-only Web sites - due in no small part to the fact that travelers want to book all of their arrangements in one place, for convenience and ease of follow-up,” Nichols said.
Forrester senior analyst Henry Harteveldt said that “Galileo would round out its [Cendant`s] tech offerings. There would be synergies with its hotel brands and WizCom” as well as with Galileo`s Trip.com.
WizCom, a Cendant subsidiary based in Parsippany, N.J., gives hotel and car-rental suppliers a single communications link to Galileo, Sabre, Worldspan and Amadeus as well as hundreds of Internet sites. For Galileo subscribers, a Cendant deal could mean deeper access, such as last-minute room availability, for Cendant brands, Harteveldt said. The Cendant hotel brands are Days Inn, Ramada, Travelodge, Wingate Inn, Howard Johnson, AmeriHost Inn, Knights Inn, Super 8 and Villager.
The deal could also put WizCom in a stronger competitive position in relation to hotel technology rivals WorldRes and Pegasus, Harteveldt said. As for the Cendant Travel Portal, as it is known within the company, a spokesman said it is being designed to compete with on-line agencies like Travelocity www.Travelocity.com and Expedia www.Expedia.com. In addition, consumers who access a Cendant private-label site, like www.travelodge.com, would be able to book Travelodge rooms, but would also be able to reserve Avis rental cars, offerings from other car-rental companies as well as inventory from a variety of airlines.
Cendant uses its own booking engine on its private-label sites - but that could change if the company acquires Galileo.


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