Online travel play Travelocity.com aims to expand to Europe and boost revenues through a joint venture with direct marketing and retailing giant Otto.
Through the agreement, Fort Worth, Texas-based Travelocity.com will consolidate its UK and German sites into what the companies say will be a new, independent online travel company. Otto, best known in the U.S. as the owner of Spiegel and Eddie Bauer, will contribute its Travel Overland site to the venture.
Dirk Hauke, who hails form Otto’s travel division Freizeit und Touristik (which previously oversaw Travel Overland) will assume the post of chief executive at Travelocity Europe, while Travelocity.com’s vice president for Europe, Jeff Lavender, will become senior vice president. Each company will own half of the Munich-based venture, which they valued at $50 million.
Otto said it would throw some of its hefty direct marketing weight behind the venture. Otto owns one of Europe’s largest consumer databases, and also said it might craft deals combining Travelocity Europe packages with offers from its retail and mail-order divisions.
Thursday’s agreement also allows for future collaboration between Travelocity and Otto’s companies, though the companies did not elaborate on such plans.
At any rate, the effort comes as long-suffering online travel sites are feeling the added effects of last Tuesday’s terrorist attacks in the U.S. Earlier this week, Travelocity warned about its third-quarter revenues while competitor Expedia.com said bookings had dropped by more than 60 percent during the previous week.
By teaming up with Otto, then, Travelocity.com has hopes of finding some stability in the market, and it has a good start in Germany, where Travelocity Europe becomes the top player in the online travel markt with the addition of Travel Overland. The firm also said it has plans to continue expanding throughout the continent, potentially through the addition of other strategic partners.
“The combination of Otto’s leading consumer marketing know-how and our technology and travel expertise creates a travel marketing powerhouse, something none of our competitors can replicate,” said Travelocity.com president and CEO Terrell Jones. “We have worked for many months to craft the very best structure for this venture, and we are very pleased with the outcome.”
Privately-held Otto, meanwhile, will benefit from minimizing its exposure to the online travel industry through the move.
“The focus for Otto’s strategy has been on strengthening our multi-channel approach,” said chairman Michael Otto. “To that end, we were searching for partners who are leaders in their field and Travelocity, as the world’s leading online travel company, meets that criterion. The synergies for both companies are clear and we see our joint venture as the best platform for establishing a leading position in the European travel market.”
