Online Travel Deals Make for Strange Bedfellows at Sabre

Firm selling its products to rivals

For Sabre Inc., which runs one of the airline industry's largest computerized reservations systems and Internet-based booking agency Travelocity.com Inc., the growth of the online travel industry is putting the company in all kinds of interesting positions when it comes to sorting out its friends and its foes.

Earlier this month, for example, Hotwire.com - an airline-backed venture that plans to start selling discounted plane tickets via the Internet next month - announced a deal with Sabre in which Sabre will provide the necessary connections between Hotwire's Web site and the airlines on which its customers will book flights. Sabre will also provide fare-searching capabilities and manage reservations for Hotwire, the two companies said.

Building Up Business

With six of the seven largest U.S. airlines acting as silent investors in Hotwire, the San Francisco-based company is positioning itself as a challenger to Norwalk, Conn.-based Priceline.com Inc. in the online discount-fare business.

But Sabre is now a key technology provider to both Hotwire and Priceline. Last month, Fort Worth, Texas-based Sabre said it had signed an agreement to handle some of Priceline's reservations, which previously were handled exclusively by Atlanta-based computerized reservations system provider Worldspan Inc.

The deals with Hotwire and Priceline also create the likelihood that Sabre will book flight reservations in competition with its own Travelocity unit. But that's just the nature of the Internet, said Tom Klein, president for emerging business at Sabre.

"We're looking for diverse business models in the e-commerce world," Klein said. "We want to be the largest provider of business-to-business products on the travel side, and sometimes that means dealing with [multiple] competitors or competing against ourselves."

Another twist is Travelocity's vocal opposition to Orbitz, a soon-to-be-launched airline ticketing site funded by the nation's five largest airlines. Last month, Travelocity CEO Terry Jones claimed at a Senate Commerce Committee hearing that Orbitz would pose a threat to fair competition by allowing the airlines to offer exclusive fares via the Orbitz Web site.

Chicago-based Orbitz insisted that it won't offer special deals that undercut fares that are available through other travel agents.

Orbitz spokeswoman Carol Jouzaitis said Sabre's deal with Hotwire indicates that there may be some gamesmanship involved in Travelocity's opposition to Orbitz. "It appears Sabre doesn't think airline-backed sites are that bad, particularly if the money's green," she said.

But Klein said Sabre doesn't see the same kind of threat in Hotwire that it does in Orbitz, because the airlines don't have as prominent an ownership role in Hotwire. "The primary issue is not whether Orbitz should or should not be in business," he said. "It's that they need to make information available in a fair and equitable way."

Hotwire CEO Karl Petersen noted that his airline investors are nonvoting partners.

Petersen said he sees no conflict in having Sabre support his site along with Priceline's and Travelocity's. Hotwire is developing front-end ticket auctioning capabilities and needed a reservations system to provide it with schedules and flight-booking capabilities, he explained.

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