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Online Travel Market Heats Up

Sabre Holdings today announced that it was acquiring European discount travel site lastminute.com in a deal valued at up to $1.08 billion.

According to Sabre Holdings, the deal will provide greater scale for their Travelocity online travel portal. Lastminute.com offered a rival service to Sabre Holdings Travelocity Europe portal.

Following the close of the deal, the plan is for Travelocity to re-evaluate its various brands in different markets and to position lastminute.com as a lead brand. In an effort to maintain a broad online presence, multiple brands are expected to be operated.

Brent Hoberman, CEO of lastminute.com, is expected to become the CEO of the joint Travelocity Europe and lastminute.com operations. Sabre Holdings also expects key management and senior executives from lastminute.com to remain with the new operation.

Sabre Holding did not reveal whether there would be any staff reductions as the result of the acquisition. Though Sabre noted in its press release that it expects to recognize revenue synergies and cost savings by streamlining spending, operations and administrative platforms.

"This acquisition would bring together two well-regarded brands and two great teams to create the leading position in European online travel," said Michelle Peluso, president and CEO of Travelocity in a statement. "Lastminute.com's diverse mix of flights, holidays, hotels, car hire and non-travel ties closely with Travelocity's strategy of continuing to expand our range of offerings to consumers beyond basic air travel."

Sabre's acquisition of lastminute.com comes at a time when the online travel business appears to be booming, though more so for travel search engines than online travel agencies like Travelocity.

According to a report released yesterday by online research firm Hitwise, the top five online travel agencies (Expedia, Travelocity, Orbitz, Yahoo Travel and CheapTickets) increased their share of Web visitors by 11.3 percent over the past six months.

In contrast the top four travel search engines increased their market share by 304 percent.

The top travel search engine in terms of visitor market share increase was Kayak.com, which was up by over 6,000 percent in the last six months. AOL recently tapped Kayak as the search engine behind its new travel search site, PinpointTravel.

Yahoo Fairchase, which recently added hotels to its search, was up by 659 percent. Mobissimo jumped 350 percent and Cheapflights was up by 56 percent.