Arguments over which company was leading in the business-to-business travel procurement space were put to rest yesterday as Sabre Holdings Corp. purchased its chief competitor, GetThere Inc. in Menlo Park, Calif.
Sabre, in Fort Worth, Texas, also announced plans to cut 1,200 jobs companywide over the coming months, or about 11% of its workforce, to improve growth and profitability. Sabre and GetThere officials said the business-to-business operation will go largely untouched, adding that the majority of the cuts will come in Sabre's traditional travel agency support business. In a statement, Sabre said the job cuts would be achieved by a combination of attrition and layoffs and are expected to bring annual savings of $100 million beginning next year.
Sabre will pay $17.57 per share for GetThere, or a total of $757 million, bringing under one roof more than $50 million in expected earnings this year.
The new entity will retain the GetThere name, and Sabre will put its Business Travel Solutions (BTS) division under the leadership of GetThere President and CEO Gadi Maier.
This spring, GetThere announced its plans to launch a supplier-direct network that put corporate buyers in direct contact with airlines, hotels and car rentals, bypassing traditional computer reservations system like Sabre.
GetThere Chief Operating Officer Ken Pelowski said the merger actually may "accelerate" the supplier-direct plans.
Rob Wald, director of product marketing at E-Travel Inc. in Waltham, Mass., an Oracle Corp. subsidiary that operates a supplier-direct network and has been running third in the business-to-business travel race, wasn't convinced that GetThere would be able to build systems that don't rely on Sabre's travel architecture.
"It's easy to say this won't change things, but I think it's questionable as to whether Sabre will ultimately commit to that business model," Wald said.
In fact, Peter Stevens, Sabre Business Travel Solutions' vice president for business and product development, openly questioned the supplier-direct concept this spring.
"In our minds, you're just replacing one intermediary for another," he said. "We don't think it doesn't make sense; it just hasn't proven itself out yet."
Yesterday, Stevens said those questions still exist, but he added that Sabre "wants to be there if this is the market that's going to break."
Pelowski said GetThere intends to remain neutral on which reservation systems handle its customers' reservations as well. "We're not surprised if there's skepticism, but the only way we can prove them wrong is to stay neutral over time," he said.
The deal has been unanimously approved by GetThere's board of directors and will commence next week, with an expected close 50 to 70 days later.
Pelowski said many of the details of the merger, such as which company's customers will be migrated to new systems or whether more of GetThere's systems will use Sabre's reservations backbone, will be disclosed after the deal is finalized.
Stevens said that with less than 1% of corporate America actively using a business-to-business booking tool, the market is still wide open for competitors to challenge the Sabre/GetThere alliance.
"We want to stay ahead of the market because, in the next six months, I expect there'll be a whole lot of new competitors," he said.
- Online travel makes for strange bedfellows at Sabre, Aug. 7, 2000
- Travelocity and Expedia continue to slug it out in online travel, Aug. 2, 2000
- Sabre starts travel agency B-to-B marketplace, July 17, 2000