Expedia buys Travelocity for $280 million

By Barry Eitel

SAN FRANCISCO 

Expedia bought travel booking site Travelocity on Friday for $280 million in cash, purchasing it from parent company Sabre Corporation.

Travelocity claims 20 million travelers use the site every month.

The underwhelming buyout follows almost two years of partnership between the former competitors. Expedia agreed in 2013 to let Travelocity use its technology for customers in the United States and Canada. Expedia also offered up its supply and customer service program.

Sabre entered the agreement to cut Travelocity’s expenses in the months before going public. After inking the deal with Expedia, Sabre carved Travelocity’s North American staff to roughly 50, mostly focused on marketing and based around Dallas.

“The strategic marketing agreement we’ve had in place has been a marriage of Travelocity’s strong brand with our best-in-class booking platform, supply base, and customer service,” Dara Khosrowshahi, Expedia’s president and CEO, said in a statement. “Evolving this relationship strengthens the Expedia Inc. family’s ability to continue to innovate and deliver the very best travel experiences to the widest set of travelers, all over the world.”

Under the 2013 agreement between Sabre and Expedia, the latter received options to purchase Travelocity for a fair market price.

In a press release, Tom Klein, Sabre’s chief executive, claimed selling off Travelocity to Expedia was a commonsense solution considering the ongoing partnership.

Sabre, Klein believes, can now better focus on its global airline and hospitality business.  

"We have had a long and fruitful partnership with Expedia, most recently by partnering to strengthen the Travelocity business, so our decision to divest Travelocity is a logical next step for us both," Klein explained.

TripAdvisor paid $200 million for travel site Viator in 2014, just $80 million less than Expedia paid for Travelocity, once the leading online travel company.

Expedia already operates a series of other well-known travel web properties, including Hotels.com, Hotwire and CarRentals.com.