Travelocity.com is to buy Site59.com, a seller of last-minute merchant model air, hotel and rental car inventory for $43 million in cash.
Travelocity.com said Site59 will broaden its focus to provide higher-margin merchant hotel inventory to Travelocity.com. At the same time, Site59 will retain its leadership in providing last-minute dynamic travel packages at great values—including specialized last-minute content and packages for Travelocity.com and a broad list of other leading online retailers.
Site59 has already negotiated agreements with numerous hotel chains and properties to deepen its relationships beyond the last-minute niche, so it can provide Travelocity.com with a greater mix of merchant hotel inventory. This new inventory will be used to complement the extensive inventory Travelocity.com already receives through its long-term agreement with Hotel Reservations Network (HRN), while increasing the merchant inventory Travelocity Vacations receives directly from hotel partners.
Travelocity.com said it intends to operate Site59 as a separate unit and that it expects to begin generating revenue from last-minute travel operations immediately. The company said it plans to begin selling hotels using inventory from Site59 in summer 2002, and it expects the deal to be accretive in 2002.
Hotel industry officials also welcomed the transaction. Site59 launched in May 2000 and was developed and backed by iFormation Group, a partnership between The Boston Consulting Group, Goldman Sachs and General Atlantic Partners.