Further arming its pincers to attack both the heavily and lightly managed ends of the self-service business travel marketplace, Sabre is launching a slew of enhancements. Travelocity Business is set to debut later this quarter and the next version of GetThere will be unveiled in Las Vegas this week at the Association of Corporate Travel Executives conference.
GetThere and Travelocity continue to be Sabre's highest-growth units amid an increasingly gloomy business environment characterized by lower demand for transactions processed by traditional agencies in Sabre's core global distribution system.
Though Sabre's net earnings and overall revenues in the first quarter fell 39 percent and 7.6 percent year over year, respectively, GetThere and Travelocity clocked sales growth rates of 4.3 percent and 8.6 percent. The two online units are getting more than 60 percent of Sabre's development spending, officials said. Sabre said its overall quarterly bookings were "clobbered" in the first quarter—even the consumer online sector recorded 3.4 percent lower bookings—but GetThere's corporate transactions continued their solid growth rate, hitting 56 percent year over year. Although Sabre cut growth expectations in all of its units, Travelocity and GetThere still are expected to enjoy revenue growth of more than 30 percent and 20 percent, respectively.
In large part by reducing operating expenses, GetThere in 2002 cut operating losses in half, Sabre said. The subsidiary in the first quarter reported better than 50 percent growth in corporate revenues.
Sabre officials said GetThere's transaction pricing had stabilized at about $6 per trip and predicted that the unit would enjoy a profitable month in the third quarter. Though it is expected to fall back into the red during the traditionally weak fourth quarter, "We're real close," said Sabre CFO Jeff Jackson.
The same goes for Travelocity, which he expected to "cross over into profitability" during the current quarter.
Timed with GetThere's Release 6, the launch of Travelocity Business further positions Sabre as a competitor to its traditional agency subscribers, meaning it is "becoming a travel commerce company, or more of a retailer," said Ellen Keszler, who last month was named president of Travelocity Business. Keszler previously headed Sabre's relationships with bricks-and-mortar agency subscribers as Sabre Travel Network North American senior vice president. Former senior vice president and controller Hugh Jones replaced her.
A spokesperson said the new GetThere platform, to which both GetThere DirectCorporate and Sabre BTS users will begin migrating in phases starting at the end of the month, offers a better user interface, improved help functions and faster and easier booking.
Tested for six months with some clients and previewed in recent weeks by others, Release 6 enables "even some of the most complex corporate bookings, such as those that compare multiple modes of transportation and fares from many different sources—a key to driving online usage and usage in different global markets," said a spokesperson. Other new features include an unused ticket bank and online upgrades with American and United airlines. Later developments will include improved hotel booking functionality and online refunds and exchanges.
Meanwhile, Travelocity Business is designed for small or midsize companies that do not, or only lightly, manage travel. Powered by GetThere's Direct MidMarket technology—which also is being upgraded to Release 6—the new offering competes with business products from Expedia and Orbitz
(see story). Keszler said basic pricing will start at $5 for self-service transactions and $20 for those that require agent assistance, but additional pricing and revenue details will emerge in May or June.
Keszler reports to Travelocity CEO Sam Gilliland, who launched BTS under Orbitz CEO Jeff Katz, then Sabre's president. Gilliland in February described GetThere customers as those who wish to choose their agency and possibly their global distribution system, but "the question is, what do you do with the low end?"
Sabre had been working on Travelocity Business for "a number of months," Keszler said. "Travelocity Business leverages the unique content and brand name of Travelocity and the expertise of GetThere, and we believe it will leapfrog any similar offering available from Travelocity's competitors."
About 600 clients of a precursor Travelocity business service
(BTN, April 9, 2001) will be transferred to Travelocity Business when it is launched, Keszler said. She claimed the product will include more configurable travel policy applications than Expedia and Orbitz tout in their current business services.
Travelocity's in-house fulfillment operation, which Keszler said employs experienced corporate agents, also will apply corporate travel policies to phone-based dealings with travelers. Officials said there are no plans at the moment to combine Travelocity Business' fulfillment with GetThere's fulfillment operation at TQ3 Travel Solutions.
Travelocity Business will allow the loading of negotiated rates, identification of preferred suppliers, blocking of non-preferreds, messaging, monthly reporting of detailed booked and ticketed data and traveler reasons for noncompliance. Keszler said Travelocity also will offer business clients a form of GetThere's consulting to help increase adoption rates
(BTN, Feb. 26, 2001). Travelocity cited GetThere figures saying clients can save about $100 per trip versus a traditional agency setup.
Asked about channel conflict, Keszler said Sabre remains dedicated to providing the best possible products to its traditional agency subscribers. However, the launch of Travelocity Business is an indication that many agencies serving small to midsize accounts have not been as successful as some hoped in ramping up online bookings—though there are exceptions.
BTN's midmarket research indicated that 75 percent of accounts spending under $2 million annually on air travel in the United States and 23 percent of those between $2 million and $12 million have no intention of buying a corporate self-booking tool. Meanwhile, 53 percent and 20 percent of those groups, respectively, already allow travelers to use online agencies. Added together, these two groups dwarf the large market, in which GetThere continues to ramp up adoption. Its clients' average adoption rate was more than 20 percent in the first quarter.
"There will be some overlap with Direct MidMarket, since we're leveraging all the capabilities of that product," Keszler said. "But the $5 is lower than what agencies charge for it and we're not saying we'll provide high-touch fulfillment services, whereas Expedia is competing for those customers." Asked whether Travelocity Business salespeople would avoid targeting clients of Sabre's agency subscribers, Keszler said the unit's direct salesforce would "focus more" on businesses that do not now use Sabre. An option to enroll online also will be available.
The Travelocity Business announcement followed by two days the realization of an option for Sabre agencies to book on Travelocity or connect their customers to it, something Sabre in October said it was considering.