Distributors' Earnings Point To Strengthening Biz Travel

Publicly traded corporate travel distributors in recent weeks posted higher transactions for the three months ending in March, continuing guarded optimism about a return of growth in corporate travel volumes.

Orbitz Inc. last week reported higher than expected first-quarter net earnings of $1.4 million on 42 percent higher net revenues. The company said its expenses rose largely because of "increased sales support" for its Orbitz For Business corporate travel unit. Overall gross travel bookings rose 38 percent to $1.06 billion.

The company said Orbitz For Business will not earn a profit for 2004, although it is "coming in better than forecast, and the margins are doing better than we thought they would in the early cycle," said president, chairman and CEO Jeff Katz.

Asked by analysts, the company did not disclose the percentage of Orbitz's $1.06 billion in first-quarter gross bookings generated by Orbitz For Business. "It's still a reasonably small percentage of our base, although it is growing faster" than the overall business, Katz said. Orbitz For Business claimed three Fortune 500 clients and five others in the Fortune 1000.

Navigant International raised its earnings expectations as it reported 30 percent higher first-quarter net earnings of $5.5 million on 21 percent revenue growth, partly driven by acquisitions. Navigant in March purchased the Parsippany, N.J.-based corporate incentive and meetings management firm Incentive Connections Inc. Financial terms were not disclosed. The company said its results also reflected an upturn in corporate travel that had been anticipated earlier.

In announcing 1 percent lower net earnings of $51 million on 6 percent revenue growth, Sabre executives said its Travelocity unit is on target to be profitable in the second quarter. The company said its GetThere software in March registered its first-ever month with more than 1 million transactions and overall corporate online transactions grew 41 percent year over year.

Sabre said its worldwide share of first-quarter global distribution system bookings was up slightly at 35 percent. The company processed 12 percent more GDS reservations than it did in the March quarter of 2003, including a 10 percent jump in the United States.

Cendant Corp.'s Galileo reported 5 percent higher worldwide air bookings and 6 percent higher revenues, although the Travel Distribution Services division of which it is a part saw 3 percent lower earnings before income, taxes, depreciation and amortization. Galileo's online gross bookings rose 17 percent, while offline fell 8 percent. Overall, Cendant clocked higher than anticipated, record first-quarter net income of $441 million and cited "improving travel trends."

American Express' record net income was 25 percent higher at $794 million, including $665 million from its Travel Related Services division. TRS revenues grew 13 percent. Overall Amex revenues rose 15 percent, the highest clip in more than one decade. Higher travel sales drove up travel commissions and fees by 23 percent.

Expedia, Hotels.com and Hotwire parent InterActiveCorp also posted record earnings, with its travel unit registering 41 percent higher revenues at $494 million on 51 percent higher gross bookings. Expedia's gross bookings rose 48 percent to $2.7 billion.