he Travelocity brand will live on under the company’s new agreement with Expedia Inc., but it will be an “empty shell,” according to Henry Harteveldt, a travel industry analyst at Hudson Crossing.
The agreement calls for Expedia to power Travelocity’s North American websites beginning in 2014, providing technology, inventory and customer service.
Travelocity will focus on “further building its brand while at the same time providing consumers with an enhanced suite of travel products and services.”
Calling the deal a “virtual merger,” Harteveldt said, “Travelocity is nothing more than a hollow brand. It has outsourced the most important – and expensive – parts of the business: sourcing content and servicing customers.
“All they have left is the front end and the ability to do their own marketing and promotion.”
Meanwhile, Expedia filed a document with the Securities and Exchange Commission (SEC) stating that the agreement includes “certain exit rights which, if exercised, could result in the acquisition of certain assets relating to Travelocity’s business by Expedia at a later date.”
It also said that Travelocity “will be compensated through a performance-based marketing fee related to bookings powered by Expedia made through Travelocity-branded websites in the US and Canada.”