Under terms of the deal, Travelocity, a division of Sabre Holdings Corp. (TSG), will pay $50 million in cash for a 70 percent stake in Preview Travel (PTVL), and the two companies will combine services under the Travelocity name.
Terrell B. Jones, president of Travelocity.com, will be the president and CEO of the new company, and James Hornthal, founder and chairman of Preview Travel, Inc., will serve as vice chairman.
The merger combines two leaders in the online travel industry, said Krista Pappas, senior analyst for Gomez Advisors. Travelocity.com has approximately 8.7 million members, while Preview Travel currently has 9 million members.
“It’s been pretty clear that Preview, Travelocity and Expedia have been the major players in the online travel space,” she said. “Now I think with new deals with AOL & Yahoo for Preview and Travelocity through this merger, it clearly gives them a lead in the travel space. And we’ll start seeing a lot more consolidation going on with the smaller players. . .”
Pappas referred to the five-year, $200 million agreement announced Monday with America Online, Inc. (AOL) in which Travelocity.com will be the exclusive reservations engine for all travel-related services within the AOL service, AOL.com, CompuServe, Digital City and Netscape. Also, Yahoo! Inc. (YHOO) extended its existing contract with Travelocity.com and will invest in the combined company.
“Bringing together the innovative technology solutions of Sabre’s Travelocity.com with Preview Travel’s effective integration of content, community, commerce and world-class customer service will benefit our customers and our partners,” Hornthal said. “We expect the additional scale that we will achieve throughout the enterprise to translate into long-term consumer and stockholder value.”