Travelocity Checks Out of Hotel Reservations Network

Internet travel agency (Nasdaq: TVLY) said Wednesday that it has sold its stake in online discount hotel broker Hotel Reservations Network (Nasdaq: ROOM).

Travelocity spokesperson Jennifer Tweeton told the E-Commerce Times the company sold its 9.4 percent stake in HRN simply to “monetize its investment and turn its equity into cash.”

The move came two months after the two online travel companies extended an affiliation agreement through July 2005. However, Tweeton said that the stock sale does not change the affiliation between the two companies in any way.

“The way the agreement works is Travelocity will continue to get warrants as long as the relationship is in place,” Tweeton said. “This does not hurt the relationship or the agreement between the two companies at all.”

The affiliation agreement between Travelocity and HRN originated in January 2000.

Still Buddies

As of January 31st, public filings showed Travelocity holding 1.7 million Class A common shares of Hotel Reservations Network, including warrants to buy 1.3 million shares.

The affiliation agreement between the two companies calls for Travelocity to integrate and promote a wide array of HRN’s negotiated discount rates through its hotel offerings, as well as enable it to provide vacation rental units through HRN’s HRN offers and promotes Travelocity’s air and car rental products through its Web sites.

Tweeton also said the sale will not affect the number of discounted hotel offerings available over the Travelocity network.

Travelocity stock closed at US$34.50 Wednesday, down $1.50. The stock remains near its 52-week high of $37.85. Meanwhile, Hotel Reservations Network also slipped, falling $2.30 to close at $37.45.

Visitation Rights

According to a February report published by the U.S. Census Bureau, online shoppers spent US$7.8 billion on airline tickets and $2.1 billion on hotel rooms in 2000.

However, a recent report from Jupiter Media Metrix said that there is ample room for growth in the online travel sector. According to Jupiter’s survey of U.S. online consumers, 42 percent do not use the Internet at all for travel shopping, while 29 percent buy online and another 29 percent research online but buy offline.

Two weeks ago, Travelocity announced a deal to sell airline tickets, hotel bookings and car rental reservations over the Netbusiness Marketplace, a joint venture by AOL Time Warner (NYSE: AOL) and online business-to-business developer PurchasePro (Nasdaq: PPRO).

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