Sabre, GetThere Begin Integrating

<B>Sabre, GetThere Begin Integrating</B>

By Jay Campbell

Sabre Holdings on Oct. 17 closed its acquisition of GetThere Inc. and the two organizations promptly went to work on their integration, letting go a number of key senior execs and focusing on the GetThere platform for new clients.

GetThere president Gadi Maier said the integration "is going wonderfully well. The issues and potential conflicts that we prepared for--on philosophy, culture and compensation plans--never materialized. BTS was working very much like a subsidiary prior to this, so it was like two independent companies coming together."

At the close of the deal, GetThere founders Dan Whaley and Bruce Yoximer, CFO Ken Pelowski, vice president of sales Christopher Andrews and vice president of services Bill Coors all left the company. Maier said the founders already had been working toward "diminishing roles" and the departure of the other senior GetThere managers should give no one "the feeling that the complexion has changed dramatically." Coors' and Andrews' roles were filled by Sabre's Scott Smith, now senior vice president and general manager of the corporate market. Pelowski will be replaced by someone from Sabre.

In the field sales organization, "some territories were rearranged and a few people were released, but there were no substantial changes," said Maier. "We made changes for performance reasons and now expect to bring in new people."

Addressing customer speculation that one of the two corporate travel products--Sabre's Business Travel Solutions or GetThere's DirectCorporate (formerly Global Manager)--would be selected as the final offering, Smith said, "There is a high level of expectation among our customers and the message is loud and clear. We have already launched efforts to use the best functionality, features and operating characteristics of both to create a final product that everyone will upgrade to late next year."

Still, new RFPs should address the GetThere product. "We want the organization to focus on a single product, and the biggest issue is multiple GDS access," said Smith. "BTS was more recently enabled for multi-GDS, but GetThere is farther along in that market penetration." As for outstanding RFPs, Smith said Sabre BTS "won't cancel any current proposals."

On a conference call with analysts to discuss Sabre's third-quarter earnings, CEO Bill Hannigan said BTS has "not lost momentum and continued to chalk up impressive wins between the merger announcement and the closing."

The concept of GDS independence for this new unit of Sabre has flowed readily from the lips of Hannigan, Maier and Smith, but customers and industry pundits are skeptical. Attempting to appease those concerns, the new organization has set up an "arm's-length" agreement with Sabre's travel marketing and distribution unit using a European Commission model governing data privacy and security issues.

Among other things, the agreement adjusts how much access former Sabre BTS employees have to big Sabre. "This will culminate in an audit by a Big Five firm to certify data security and to make sure customers and partners are comfortable," said Smith. GetThere in November will host a customer summit in California, but BTS clients will not attend. The next such event will include both customer sets.

Meanwhile, Sabre said in its third-quarter earnings report that BTS bookings grew 290 percent year over year, to 456,000. BTS added 63 new accounts during the quarter and now has more than 550 corporate clients that buy more than $5.9 billion in air travel. Adoption rates among the top 20 customers averaged 17 percent, up from 15 percent in the June quarter, with "some as high as 60 percent to 90 percent," Hannigan told analysts. The GetThere acquisition will dilute Sabre's 4Q earnings by 12 to 15 cents per share, but Sabre sees earnings growth in the "mid to upper teens."

Sabre plans to announce its 2001 GDS pricing early in December, Hannigan said. "We're talking to several suppliers about more opportunities for channel-based pricing," in which online bookings are cheaper for suppliers than GDS bookings. "Those booking fees are more than offset by the trip fees we get from corporations. When we rolled channel pricing out 10 months ago, the corporate space was pretty fragmented, with six to eight players. Now, 70 percent to 80 percent are with Sabre/GetThere and we expect to get more attention in talking to suppliers about shifting the costs to the traveler from the supplier.