Mrs. Chicke Fitzgerald

GLG News by Mrs. Chicke Fitzgerald, Chief Executive Officer

We need to better understand the entire automotive industry ecosystem

January 12, 2009

Analysis of:U.S. Drivers Keep Autos Longer, Shun Showrooms on Job-Loss Risk | www.bloomberg.com

I was on the phone the other day with a colleague from Freescale and I was frankly surprised to hear that the decline that they are seeing in their production/demand is due to the automotive meltdown.  Because I'm only peripherally involved in the industry (through GPS and indash infotainment), I really didn't think through that car manufacturers were a primary consumer of semi-conductors. 

As oil continues its decline, can it prop up the travel industry's slumping profitability picture?

January 12, 2009

Analysis of:Oil Prices Hit $86 a Barrell | www.msnbc.msn.com

Jet fuel is one of the top 3 cost items for airlines. Since the summer of 2008, the price of oil has declined from $140 barrel to under $40 a barrel today.  This should be very good news for investors in airline stocks, as it should directly flow to the bottom line if airline ticket prices hold steady. Likewise, cruise lines' profitability is closely tied to this volatile commodity and the major players in the cruise industry could benefit from the continued decline in pricing. But right now, what we face is a need to stimulate travel, which is normally done through price reductions.  Will these suppliers pass on the cost reductions to consumers?

The travel ecosystem is shifting, beginning with the GDSs and online players

January 8, 2009

Analysis of:Expedia Vet Takes Orbitz Helm, Sabre Vet Takes Travelocity Wheel | www.btnonline.com

Both Orbitz and Travelocity this week announced new leaders at the helm.  Both have cut costs substantially due to reduced revenues and profitability.  Orbitz now has a technology savvy, operationally capable, marketing focused executive who is talking already about social media, which implies new models afoot for the OTA.  Orbitz had been outpaced by Expedia and Travelocity in the advertising model/social media capabilities, but does it really help them to do a "me too" offering to match Trip Advisor and iGoUGo? Just weeks ago, Amadeus founding CEO Jose Tazon stepped down in favor of his number two, David Jones, who had been the de facto day to day leader for some time, as Jose managed board and investor relationships with their private equity owners, BC and Cinven. Sabre puts its own COO at the helm of Travelocity, not replacing him in the Sabre organization, but instead splitting his job amongst his peers.  Is it time to go from 3 GDS companies down to two? 

The lines of travel distribution are blurring

December 30, 2008

Analysis of:New Report Evaluates Trends in Online Travel Market | www.travelagentcentral.com

The PhoCusWright report that spawned this article reports that the online travel distribution market has shifted to 61% being sold via supplier sites (otherwise known as consumer direct) and 39% is sold via online travel agents. Suppliers are trying to wring more dollars out of frequent, loyal bookers, which means increased focus on personalization, loyalty and community. OTAs, by comparison, are trying to wring any dollars out of their mass of unconverted lookers, as the almighty transaction gives ground to eyeballs and emerging advertising-based lines of business.

What will happen to the gaming industry as travel to Las Vegas declines?

December 5, 2008

Analysis of:Travel Numbers see steep decline [in Las Vegas] | www.klas-tv.com

Las Vegas has always enjoyed occupancy rates higher than the national average, but in the last few months, the economic situation plaguing the country has hit them hard.  Occupancy is down to 84%, which rivals post September 11th levels.  In the month of October, Las Vegas had a drop of 13% year over year, or nearly a half a million visitors.  Historically there has been a direct correlation between occupancy and gaming revenues.  That correlation weakened somewhat in the 90s when Las Vegas attempted to become a family destination.  Now that the city is squarely back in the "Sin City" role, the tie between hotel occupancy and gaming is very strong again. Factors to watch: - Air capacity and frequency declines - Visitor statistics - Occupancy rates - Proportional gaming revenue declines

Financial markets react to the historic election of Obama - what of the travel industry?

November 6, 2008

Analysis of:Asia cheers Obama win, but Europe down | robots.cnnfn.com

With the economy as a clear priority of the new administration, the world markets reacted to the election of Barack Obama, with investors voting with their wallets. In Asia, the Nikkei, the major index for the Tokyo Stock Exchange, closed up 4.5%. South Korea's Kospi composite index finished with a 2.4% advance, according to Dow Jones. The Hang Seng index in Hong Kong ended up 3.7%. The Australian All Ordinaries index was up almost 3% at its close and the markets in Taiwan and the Philippines ended lower. European stocks and U.S. futures fell after Democrat Barack Obama was projected to have been elected President of the United States. London's FT-100 and Paris' CAC-40 eeach fell more than 2%, while Germany's Dax was about 1.5% lower. It remains to be seen how the markets will close today in Europe and how the US markets will react. But it is the longer term results that will matter.

Is the reported "airline recovery" just the upside of the jetfuel roller coaster?

November 4, 2008

Analysis of:US airlines pull out of a tailspin | us.ft.com

Airlines are enjoying much lower fuel costs than they did in the summer of 2008.  Perhaps the use of the word "enjoy" and the notion that recovery is around the corner is a bit like a weatherman in the middle of a hurricane talking about tomorrow's sunshine.  At least that was the observation of a writer in Airline Weekly this week.  When the prices were high, the airlines kicked into high gear, cutting costs, trimming schedules, parking aircraft in the desert and finding ways to charge passengers for various services, previously offered gratis.  Now that the prices are low (remembering that everything is relative), will they hand off a slice of those profits to consumer?  Not likely! And what will be the impact on the other sectors of the industry?  The GDS companies depend on airline ticket sales for 90% of their revenues.  And the hospitality industry also caters to the air traveler as their primary market.  What will become of them?

Is the reported "recovery" just the upside of the jetfuel roller coaster?

November 4, 2008

Analysis of:US airlines pull out of a tailspin | us.ft.com

Airlines are enjoying much lower fuel costs than they did in the summer of 2008.  Perhaps the use of the word "enjoy" and the notion that recovery is around the corner is a bit like a weatherman in the middle of a hurricane talking about tomorrow's sunshine.  At least that was the observation of a writer in Airline Weekly this week.  When the prices were high, the airlines kicked into high gear, cutting costs, trimming schedules, parking aircraft in the desert and finding ways to charge passengers for various services, previously offered gratis.  Now that the prices are low (remembering that everything is relative), will they hand off a slice of those profits to consumer?  Not likely! And what will be the impact on the other sectors of the industry?  The GDS companies depend on airline ticket sales for 90% of their revenues.  And the hospitality industry also caters to the air traveler as their primary market.  What will become of them?

Totally myopic view of the travel industry will not stimulate growth

September 9, 2008

Analysis of:Sector Snap: US online travel stocks mostly fall | biz.yahoo.com

Orbitz stock fell 7.2% on Thursday, largely attributed to the fact that 87% of its bookings are US domestic and 74% of their product sold is comprised of air tickets. Priceline also fell, but not as substantially.  Only Expedia reported a rise in value. The following facts substantiate this observation about the online industry being myopic in its approach to the travel marketplace. •  Just 15% of US overnight travel is by air •  85% is by car, motorcycle, RV or other •  Just 8% of all travel in the US is for pure vacation travel to top 100 destinations •  Just 26% is business travel • That leaves 66% that do day trips, weekend jaunts close to home, visit friends and family and "life event" travel (weddings, funerals, sports tournaments, graduations, family reunions, etc.) to the other 86,900 cities, towns and villages in the US. The online players (and their offline counterparts alike) virtually ignore all but the vacationing and business travelers.

Until we get to "intent-based, situationally relevant" search, there is no vision

August 25, 2008

Analysis of:Is Microsoft's Vision of Search Enough to Catch Google? | www.businessweek.com

We are still in the world of Search 1.0 at best.  As long as search engines don't care what my intent is or what my current circumstances are, then I will still get 563,000 results when I enter Travel Tampa in a search bar.  Is there anyone out there that really thinks that this is effective search?

Who will win - the device manufacturers, the carriers or the applications providers?

June 16, 2008

Analysis of:T-Mobile invests $6m in deCarta's location based platform | www.thestandard.com

Following Nokia's recent investment in Navteq and Apple's announcements last week about having full GPS on the iPhone, T-Mobile announced an investment in DeCarta, a leading provider of mapping tools and location based services. In the article, DeCarta CEO Kim Fennell states that he believes that Nokia and Apple will introduce their own set of location based services, but that they will be tied to a particular device.  Since T-Mobile is device agnostic as a carrier, it will be interesting to see what they have planned to leverage the investment in DeCarta.     

Impact of Airline Capacity Cuts on the Hospitality Industry

June 6, 2008

Analysis of:Hotel CEOs Lament Softening Demand, Foresee Some Discounting | www.btnmag.com

All key metrics are still up (occupancy, demand, supply, average daily room rate), but what impact  will the economic downturn and reduction in airline supply have on the hospitality industry? Air travel represents less than 12% of all travel in the US today by Americans, yet all tools in the industry are air-traveler centric. Hospitality executives cite reduction in weekend demand and softening of business travel midweek.  They do not look at tools (other than online itself) at playing a role in driving traffic to their brands.

Is the travel pie still growing? Where are the GDS companies in non-air travel planning?

October 12, 2007

Analysis of:LeisureLogix Takes Back the Road with Its Personalized Road Trip Planning and Booking Tool | www.forbes.com

The GDS industry, which earns its money primarily from the travel agency community (both online and offline) booking airline tickets, has been said to be totally commoditized and destined for decline.  In 2005 (the last year that all reported their earlings publicly), globally the GDSs processed 1.3b bookings and earned $8.7b in Gross Revenues and yielded $774.1m in EBITDA collectively. The interesting statistic behind all of this is that out of the total US Travel market, which in the same year yielded 1.4b trips, of those trips, less than 10% of them were by air.  The balance of travel was by car, motorcycle, RV, train or bus.  Yet, the GDS companies do not have a product that addresses the drive market. For 2007 the Travel Industry Association reports that US spending on travel was $733.9b.  Of that, just 35% was sold electronically (which includes travel agencies and online agents). 

What is the real value of mapping and content aggregation players?

October 1, 2007

Analysis of:Nokia to buy Navteq for $8.1b, Take on TomTom | www.bloomberg.com

In July of this year TomTom acquired TeleAtlas for $29.39 per share or $2.7b USD (28x EBITDA).  Today, Nokia paid $78 USD per share or $8.1b for Navteq (35.7x EBITDA). What value can they both now extract?   With mapping services like GoogleMaps, Mapquest, Yahoo!Maps and even AAA's TripTik available via web enabled phones of all brands, what kind of differentiation is possible for Nokia in making this move.  Who is the real competition and what is the size of the pie that they are all after. Like any acquisition, the proof will be in the integration post transaction and the plans to make their tools ubiquitous.   The other challenge is to tap into the 88% of all Americans (and untold international users of Nokia's platforms) that use a car for the $1 trillion in leisure travel spending annually.  Less than $100b of this spending in the US is currently done by traditional online travel sites, such as Orbitz, Expedia and Travelocity. 

Is content king, or is it relevant content that matters?

October 1, 2007

Analysis of:BBC Acquires Lonely Planet | www.bbc.co.uk

BBC Worldwide bought Lonely Planet in a deal that insiders value at over $203m.  The question is whether content alone is enough to propel BBC Worldwide into the forefront of the $2.8 trillion global leisure travel market? Founders, Maureen and Tony Wheeler, will keep a 25% stake and presumably have been given a reason to stay around long enough to help BBC Worldwide figure out how to integrate it into their media empire.   Their take from the sale is reportedly  $143m.  This is the BBCs first major foray into the travel industry, but interestingly enough, they see themselves as just being in the content business, which could sell them short on monetizing the investment.  The deal will help the BBC become "one of the world's leading content businesses," BBC Worldwide Chief Executive John Smith said. The broadcaster also aims to grow online brands and to increase its operations in Australia and North America, Smith said.

Iberia offer by TPG - Back door to Amadeus???

April 13, 2007

Analysis of:Iberia board to study TPG Capital offer | www.breakingtravelnews.com

Iberia is one of the owners of Amadeus, currently the #1 Global Distribution System in the world.  TPG most recently purchased Sabre, the #1 Global Distribution System in the largest GDS market in the world, the US.

TPG also has an interest, through its venture arm, in G2Switchworks, one of the early GDS New Entrants (otherwise known as GNEs). 

So could this be a back door move to buy a share in Amadeus, in order to merge Amadeus, G2 and Sabre?d

Time will tell.

Private Equity now dominates ownership of Global Travel Distribution companies

March 30, 2007

Analysis of:Silver Lake and TPGN Complete Acquisition of Sabre Holdings | news.morningstar.com

All four GDS companies are now operating on a similar playing field, all owned by private equity companies.

Cost cutting and surfacing operating efficiencies is generally the order of the day for the companies purchased by private equity firms. 

The industry is watching with a careful eye to see the impact of TPG and Silver Lake's purchase of the Sabre Group.

GDS - and then there were three.......Travelport and Worldspan to merge

December 7, 2006

Analysis of:Travelport Ltd. and Worldspan, L.P. to Merge to Create Leading Travel Solutions Company | www.prnewswire.com

On the B2B side, this will make the combined entity the #1 player in the global GDS space, based on both revenues and billable bookings, the traditional measure of success in the GDS world.  Once the merger is approved by regulatory authorities, the combined entity will have 63,000 travel agency locations and will service over 750 travel suppliers.

When the merger is final, it will put Sabre in the #2 spot in the US for the first time in its nearly 30 year company history and will knock Amadeus out of its #1 global spot.

Travelport also owns Gullivers Travel, Orbitz, eBookers, Trust/Wizcom, aiRes and Cheaptickets and provides IT services to United Airlines.  Worldspan powers Expedia, Priceline and Orbitz and provides airline IT services to Northwest and Delta.

BCD selects Farelogix for connectivity to airlines

November 17, 2006

Analysis of:Farelogix Hooks Up BCD With Any Inventory’ Access | www.travelbizbuzz.com

For over a quarter of a century, travel agencies have used the Global Distribution Systems (GDS), including Sabre, Worldspan, Galileo and Amadeus for access to airline inventory.

BCD is the world's 5th largest travel agency, and the 4th largest brick and mortar agency in the US.  They are responsible for $12 billion in global sales and have 12,000 employees.  They previously operated as World Travel BTI.  They are part of one of the largest privately held family owned companies in the world, BCD N.V., a Dutch company.

Farelogix is part of a group known as "GDS New Entrants" or GNE's for short.  They provide connectivity to all four GDS companies, a number of airlines directly and airline consolidators.  Their economics are significantly more appealing to suppliers than the GDS.

GDS implications of US Air's bid for Delta

November 16, 2006

Analysis of:US Airways offers to buy Delta for $8 billion | ca.today.reuters.com

Yesterday's hostile bid by USAir for Delta has significant implications on the GDS business. 

Today USAir uses the Sabre system as it's inventory and operational system.  Delta has its own system, Deltamatic, which is hosted and operated by Worldspan. 

Should USAir succeed in its bid for Delta, Worldspan will lose yet another customer, as USAir has stated its intention to migrate the reservations system to a single environment (which would no doubt be Sabre).

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