E-Travel In Talks With Megas
<B>E-Travel In Talks With Megas</B>
By Jay Campbell
Neither E-Travel Inc. nor its parent Oracle Corp. would comment on word from inside sources that the massive software firm is considering a sale of its online booking unit, potentially to a mega travel management company.
People familiar with the discussions said that E-Travel is trying to get a sense of what it might be worth. Oracle paid less than $50 million for it two years ago. By contrast, GetThere went to Sabre for well over $700 million last summer--but that was just as the economy began to shift.
"E-Travel is exploring a number of opportunities and it's the result of what a lot of technology companies are doing right now, which is to determine what's core and what's not core," said one insider familiar with the talks. "But it's possible that nothing will happen."
Such other travel technology vendors as Galileo International and OAG now are seeking new ownership.
Sources said any sale of E-Travel would be predicated on keeping Oracle--now using the product for more than 80 percent of its domestic tickets--as a customer.
Perhaps the writing was on the wall.
Vice president of marketing Bart Littlefield recently left the company to join a start-up travel site, called Student Universe, mere months after E-Travel founder, CEO and president John Ackermann departed to pursue undisclosed interests (BTN, Oct. 16, 2000).
It became known earlier this year that E-Travel was in talks with Rosenbluth International (BTN, March 12), of which chairman and CEO Hal Rosenbluth last week said, "Rosenbluth has and will continue to have a relationship not only with E-Travel but also Xtra On-Line and GetThere. Nothing has changed in that regard."
Further, though he was not specifically referring to E-Travel, Oracle CEO Larry Ellison in late April was quoted by Reuters saying, "We have acquired some companies--not very often and never successfully. While it's much easier to write checks than to write software, the pieces don't fit together."
The most likely factor behind the talks is the post-new economy.
"When Oracle bought E-Travel, the market was hot for initial public offerings," said Norm Rose, president of Belmont, Calif.-based TravelTech Consulting. "From my understanding, the company bought E-Travel with the thought of going the IPO route. With the April 2000 dot-com crash, this plan became impractical."
Rose added that all companies are cutting back on expenses or laying off employees, putting at risk any group that is not profitable.
He speculated that Oracle management may be questioning why they are in the travel software business after learning how challenging it is to attain high transaction rates. They also may have found that the travel module is a relatively low priority in the context of Oracle's domain.
In addition to integration with Oracle's main applications, E-Travel's other major differentiator is its work to enable travel reservations that bypass such GDSs as Sabre, now E-Travel's largest competitor. But momentum on that strategy is fading as suppliers continue to work out the kinks (see story, page 1) and buyers see little incentive.
E-Travel customers who were contacted last week by BTN--most of whom bought the system because they have other Oracle applications in place--admittedly were a bit uneasy to hear the news, but not all were surprised.
"We've had a lot of issues with them, and their communication has been terrible," said one buyer who requested anonymity. "The support just hasn't been there." The buyer did say that E-Travel's latest release "improved a lot of problems."
Another E-Travel customer said she had not experienced the customer service issues, but was concerned about the possibility of a sale. "We consider it important to be working with the company that owns the software's source code," she said. "No mega agency has the resources for programming." Referring to the collapse of the AXI product, she said, "Look at what happened to American Express and Microsoft."
Rose lamented the potential impact on competition among tech vendors. "Overall, I am saddened and concerned by this news," said Rose. "The impact of the 'Get Sabre' acquisition is definitely being felt throughout the industry. The overall mood is one of confusion, dissatisfaction and concern.
"If E-Travel goes to a mega agency," Rose speculated, "It may further limit competition and, ultimately, the choices available for the corporate buyer by tying the use of E-Travel to an agency relationship."
Customers of Sabre BTS last week were sent a letter detailing pricing increases Sabre will implement, including a new $1,500 per month maintenance fee. Many corporate travel managers now are seeking an alternative to GetThere--particularly those who do not use Sabre as their GDS--and some new products are sprouting up, including Seattle-based Highwire's Travelport and Galileo's yet-to-be-released Travelpoint 2.0 (BTN, April 9).