Cendant Galileo Merger Sparks Concerns

5th Jul 2001

Following the attention lavished after the launch of Orbitz, concerns have been raised regarding the purchase of Galileo by Cendant Corporation.
Galileo books nearly a third of the worlds travel reservations, but some have expressed a fear that the GDS might favour Cendant`s brands, Avis, Days Inn and Super 8 Hotels, over others.
Legg Mason analyst Thomas Underwood said in a report in the Boston Globe yesterday that, “Tweaking the Galileo system to get an edge would likely backfire” and that “much of the success of Galileo and sister system Apollo hinges on their perceived impartiality.”
Airlines are closely monitored by the U.S. Department of Transportation to ensure that no carriers are featured more prominently on electronic reservation systems, but such oversight doesn`t extend to hotel and car rental companies.
If rival hotel and car rental companies believed their brands were being downplayed on Galileo, they could reduce, or altogether remove, their listings on that network and increase business with other global distribution systems, among them industry leader Sabre Inc. of Fort Worth, Texas, and Atlanta-based Worldspan LP.
According to the Boston Globe, Cendant executives insist they have no intention of introducing bias into Galileo`s systems, which generated revenues of about $1.5 billion in 2000, primarily from airline ticket sales. The company also says it is not looking to use Galileo to take advantage of access to competitors` sales data and other proprietary information. ``We will make very sure there`s a firewall,`` said Mark Miller, chief operating officer for Cendant`s travel business.
The company`s promise to police itself has been met with some skepticism. Cendant will definitely use Galileo ``to figure out how to sell more of their product,`` said Thomas Nulty, president of corporate travel management firm Navigant International.
Randall Warren, chief executive of Global Travel International of Maitland, Fla., said he believes that in buying Galileo, Cendant has found ``a fantastic way to get in front of a captive audience to push their products.``


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