Despite all the travail in the world of online travel companies, there was a bright spot today as Travelocity launched Travelocity Europe in a $50 million joint venture with Otto, a Hamburg, Germany-based holding company that is heavily involved in retail sales.
Meanwhile, rival travel company Priceline.com
got a vote of confidence as two of its major investors, Cheung Kong Ltd. and Hutchison Whampoa, withdrew their request for the filing of a shelf registration that would have given them the ability to sell shares in the company.
The market liked the news, sending Priceline stock up 40 cents or nearly 20 percent in early trading, to $2.43. Travelocity was up 17 cents to $13.17. Rival Expedia
was up 15 cents at $21.84, and Cheap Tickets
was up 74 cents to $13.08.
The new joint venture — an equal partnership — will sell travel products and services including air, car, hotel and vacation packages both online and off-line across Europe.
Fort Worth, Tex.-based Travelocity.com
said it would contribute its European businesses — Travelocity.co.uk, which recently acquired UK travel company Air Tickets Direct, and Travelocity.de — and privately held Otto will contribute German travel company Travel Overland, a German online travel company.
Travel Overland is a subsidiary of Otto Freizeit und Turistik, which is Otto’s travel division.
Otto operates 90 companies in 23 countries in Europe, the United States and Asia. In the U.S., Otto owns the Spiegel Group, including Eddie Bauer and Spiegel Inc., and it has a majority stake in retailer Crate & Barrel.
Otto said the venture, which has been in the works for several months, allows for future collaboration between Travelocity and other Otto companies, including those in the United States.
“Like our ventures in Asia and Japan, Travelocity Europe continues our growth in the international marketplace, expands our brand presence globally and solidifies our position… ” said Terrell B. Jones, president and chief executive officer of Travelocity.com.
The new venture will be based in Munich and will be staffed by a team from both companies. Dirk Hauke of Otto Freizeit und Touristik will be CEO of Travelocity Europe, and Jeff Lavender of Travelocity.com will be a senior vice president for the new company.
Priceline, whose stock has been badly beaten down after the events of last week (it closed yesterday at $2.03), said that Cheung Kong and Hutchison Whampoa pulled back a request for the filing of a shelf registration that would have given the two companies the ability to sell shares of Priceline.com common stock.
Priceline also said that its board of directors had approved a Cheung Kong/Hutchison request giving the companies the ability to raise their ownership stake in Priceline from their current combined level of approximately 27 percent to 37.5 percent.
The two companies stepped up to the plate last February and again in June to take a stake in Priceline last June, when the name-your-own price e-commerce company was implementing its recovery plan.