Travelocity Branches Out Beyond Flights with Disney

Online travel company Travelocity.com (Nasdaq: TVLY) has announced an agreement with Walt Disney Parks and Resorts to offer Disney theme park tickets and on-site hotel reservations.

Travelocity Vacations said it will begin selling Walt Disney World Resort vacations in the first quarter of 2002 and will phase in Disneyland Resort packages in California later in the year.

"Travelocity brings Disney the advantage of one-stop shopping," Gartner research director David Schehr told the E-Commerce Times. "Disney's own vacation site does not include flights, so they can now [accommodate] people who want to book the whole package instead of 'walking the sale.'"

The deal aids Travelocity's continued efforts to expand its merchant model and diversify revenue streams for air and vacation sales.

Merchant Model

Under the terms of the agreement, Travelocity -- the sixth largest U.S. travel agency -- will offer land-only and air-inclusive vacation packages for all on-site Walt Disney World Resort hotels. The packages will include admission to Disney's theme parks, according to the company.

"We are putting more resources toward merchant products, where we negotiate directly with wholesalers and sell directly to consumers," Travelocity senior vice president of leisure travel and partner marketing Chris McAndrews told the E-Commerce Times.

Vacation Time

Beyond point-to-point air fares, Travelocity has seen sales of complex travel products like vacations and cruises more than double over the past year, McAndrews said.

The Disney agreement figures prominently in Travelocity's revenue plans for 2002, Schehr suggested.

"Expedia (Nasdaq: EXPE) did a bit better last quarter because they had more hotel inventory and more revenues outside flight bookings," he said. "[The Disney deal] shows Travelocity is trying to boost nonflight revenues."

Because Disney is a well-known entity, there is very little fear, uncertainty or doubt among consumers when it comes to purchasing the packages online, he added.

Disney Demand

The addition of Walt Disney World and Disneyland Resort vacations completes the Disney Destinations portfolio offered by Travelocity, which already features Disney Cruise Vacations.

For its part, Disney will launch dedicated marketing campaigns geared toward Travelocity's more than 32 million members, the companies said.

Travelocity also will incorporate Disney content into its site -- including maps, coming attractions and new rides -- to enhance the shopping experience.

Rival Reaction?

The Disney deal and others like it will bring Travelocity closer to its 2002 revenue growth target of 20 to 30 percent from last year's US$301.8 million, Jones said.

At this point, rival Expedia only offers reservations at the two non-Disney-owned hotels at Disney World, according to Schehr.

But, he added, Expedia probably will cut a similar deal with Disney in the next few months.