Travelocity and Preview Travel Complete Merger

Online travel sites Travelocity.com (Nasdaq: TVLY) and Preview Travel (Nasdaq: PTVL) announced the completion of a merger today that reportedly creates the largest travel site on the Web and the third-largest e-commerce site overall.

Travelocity.com has a long history in the travel market. The company was founded in 1996 by SABRE, which possesses a database containing flight information for 700 airlines. It also has reservations capabilities for 95 percent of the world’s airline seats, more than 47,000 hotels, more than 50 car rental companies and more than 1,800 vacation packages.

Combined gross sales for Travelocity and Preview Travel totaled 1.2 billion (US$) in 1999 and combined membership is more than 17 million.

Growing Online Market

The merger allows the new company, to be known as Travelocity.com, Inc., to take advantage of the growing travel online market. Research released in February by Travel Industry Association of America (TIA) showed that the number of people who booked reservations online in 1999 was 16.5 million — an increase of 146 percent over 1998 numbers.

By combining vacation planning features and the strength of the SABRE reservation database, Travelocity.com is positioned to capture the lion’s share of the 35.7 million people who use the Internet to plan travel but do not currently book reservations online. Another advantage that Travelocity.com has over competitors is a strategic alliance, announced in December, that allows Travelocity.com members to name their own price and purchase tickets through Priceline.com.

Travelocity.com will also draw upon strategic alliances with Web heavy hitters to increase its share of the travel market. Travelocity.com currently has agreements with America Online, Yahoo!, Lycos, Go Network, Excite@Home and Road Runner.

Inside the Deal

Under the terms of the agreement, SABRE Holding Corporation will invest $50 million in the new company and hold approximately 70 percent. The remaining 30 percent will be publicly held.

The new company will be based in Fort Worth, Texas and have offices in San Francisco and New York. Customer service centers will be located in San Antonio, Texas, San Francisco and Sacramento, California.

Leadership of the new company will include Terrell B. Jones as the president and CEO, and Ramesh Punwani as the chief financial officer. The Travelocity.com board is composed of nine members. William J. Hannigan, chief executive officer and president of Sabre, Inc., serves as chairman of the board. James Hornthal serves as vice chairman.

Integration of the two sites is expected to be completed by the third quarter of 2000. Both sites will remain open until the integration is completed.