Tuesday, April 25, 2006

Trimming the edges of the online world

It doesn’t matter what area of business is being discussed, but City analysts appear to be constantly talking about consolidation in an industry.

Now if this was actually played out in real life then there would probably be only one company for each sector of the economy, but obviously this isn’t the case.

It would be deeply cynical to suggest that consolidation gossip is often created to fuel the likes of the hungry business media, which loves the threat of sales, mergers and takeovers.

[In the broadcast and publishing world, for example, analysts are forever speculating that the likes of ITV, Trinity Mirror, owner of the Daily Mirror, or Virgin Radio are on the verge of being snapped up by other companies.]

But perhaps this year there is actually a grain of truth to rumours that there is expected to be a new round of consolidation.

The reason for the latest speculation is this: US travel and real estate giant Cendant has admitted it will listen to offers for its Travel Distribution Services business, which includes the likes of Orbitz, Ebookers, the Galileo GDS, and Gullivers Travel brands.

Reports in the US suggest the TDS could actually fetch a cool $4.5 billion.

Rumours also emanating from the US suggest one of the obvious bidders for such a lucrative business (which would include the much maligned and underperforming EBookers brand) are a string of Wall Street venture capitalists and, perhaps most intriguingly, Expedia Inc.

The TDS business, with access to the all-important Galileo GDS, could be a vital addition to the Expedia Inc armoury, with its existing Expedia travel agency, Hotels.com and Trip Advisor businesses.

A new range consolidation on the horizon? Perhaps not just yet, but those City analysts might earn their money after all.

Kevin May, editor, Travolution

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