Passkey Gets Millions In Investment Funds From GDSs - 2001-02-26

<B>Passkey Gets Millions In Investment Funds From GDSs</B>

By Chris Davis

Attendee management Web site Passkey.com, contrasting many financially struggling Internet businesses, has raised $14.4 million in new capital--primarily from global distribution systems Sabre, Galileo and Worldspan. The GDSs will integrate Passkey's group housing functionalities into their products for corporations and travel agencies.

The investment marks the next step in Quincy, Mass.-based Passkey's strategy to introduce its functionality to the corporate meetings market after spending much of 2000 signing contracts with more than 30 convention and visitors bureaus. "Our strategy from the beginning was to penetrate all channels of the group housing market," said Passkey executive vice president Tim Durant. "Our initial foray was CVBs, to get hotels in many cities up and running with the system, but CVBs aren't the largest channel out there. We want to integrate with agencies, hotels and corporations themselves."

While Passkey is now a partner with the three GDSs, a move Durant attributed to their "great" products for corporations and their 83 percent market share of the worldwide automated reservations network, Passkey eventually will embrace direct connections through Sabre subsidiary GetThere.

"Direct connections are a hot issue, but we don't think these major GDSs are going to go away overnight. They'll be relevant for a long time," Durant said. "But Passkey is sort of the same type of piece in that we connect directly to the hotel--inventory is allocated directly from the hotel into Passkey. So we're a front-end booking system, a GDS and a property management system. That allows planners to manage inventory in real time and handle all complex sub-blocks going on for group travel. We're building connections to automatically take that data right back into the PMS through the GDS. And we're not adding on the GDSs' $3 segment fees. To the hotel, it's a very cheap distribution network for the group side."

Passkey will charge corporate users $4 per consumed attendee transaction, which will allow any changes to attendee reservations to be handled, at no additional charge, directly in Passkey's inventory without a requirement to contact the property.

Combined with the new deals with Worldspan and Galileo--Sabre and Passkey have been partners since 1999--planners now can handle all end-to-end air and hotel travel arrangements for attendees through the same system. "When someone's booking, the attendee will see an integrated PNR with, for example, air availability coming from Galileo," Durant said. "Though the hotel inventory may be blocked and coming out of Passkey, the PNR will be integrated on the back end, even though the inventory is coming from different places." The streamlining is the next step to reach Passkey's goal of providing an integrated group housing system directly to corporations.

"We have had little corporate business to date," Durant said. "We've had a couple of corporate users, but we know there is a lot of demand to integrate this with the GetThere product, as corporations look to aggregate costs and control. Meetings travel is not usually wrapped up in T&E reporting, but it represents a significant portion of a travel budget. This allows corporations to wrap meeting travel reporting into the rest of the T&E."

Like many tangled dot-com alliances, one of Passkey's related partners, GetThere, has a relationship with rival attendee management site B-there.com, but Durant said that doesn't pose a problem. "We have exclusivities and specific sales and product integration goals with these partners," Durant said. "We plan on working with GetThere, though we have yet to formulate this, and bring this to GetThere's customers."

The $14.4 million investment includes $3 million from TravelClick, which provides digital media and market data to the industry, and unspecified funding from Lazard Technology Partners and the DRV Investment Group.