Another online travel retailer appears to be on the verge of new ownership. Fresh off the heels of reports that Expedia is acquiring Travelocity, Bloomberg News reports that Orbitz Worldwide Inc., the parent company of Orbitz.com and Cheaptickets.com—is being shopped.
The Chicago-based company, which has long been the smallest player in online travel, has been working with a financial advisor—reportedly Goldman Sachs—as it reaches out to potential buyers, according to Skift. Orbitz officials would not comment on the reports.
The logical buyers would be “someone from the outside looking for a foothold in the industry,” according to Daniel Kurnos, an Internet analyst at Benchmark, an investment bank, including Google.
Google decline to comment about its interest—or lack thereof—in acquiring Orbitz, but the Internet giant got a foothold in the online travel business last year when it licensed hotel-booking software from Room77 Inc., an Expedia-backed startup.
Orbitz’s stock rose 8.6 percent to $9.95 per share mid-afternoon on January 20 following the release of Bloomberg’s report, giving the company a market value of about $1.1 billion.
President and CEO Barney Harford has been successful in turning the troubled company’s stock price around in since being hired six years ago, but Orbitz has been lagging its competitors in the all-important business of booking hotel rooms. While it has made strides in building its hotel business relative to airline travel, with hotels and travel packages accounting for 53 percent of third-quarter 2014 revenues, it still doesn’t compare to its main rivals.
Both Priceline and Expedia Inc. are growing much faster than Orbitz, with a growth of 27 percent and 24 percent respectively in the third quarter of 2014—and from a much larger base. Orbitz showed a growth of just 19 percent. Expedia is probably out of the mix because acquiring Orbitz following its acquisition of Travelocity could trigger anti-trust issues.
Amazon, which reportedly is developing a new hotel platform, is a possible buyer, according to Skift, or possibly the Chinese Internet giant, Alibaba, which has a giant hoard of cash.
