Worldspan’s decision not to invest in its own online agency made a merger with a rival global distribution system supplier inevitable, according to a senior analyst.
A deal with Galileo operator Travelport, announced last week, values Worldspan at $1.4 billion and is due to be completed in the second quarter of 2007, subject to regulatory approval.
Worldspan focused on supplying the growing online market in the 1990s, but saw its bookings dwindle as rival GDSs started to take control of its main customers.
Sabre purchased Lastminute.com, Amadeus took control of Opodo, and Galileo’s owners Cendant Travel Distribution Serrvices (now Travelport) purchased Ebookers and US online giant Orbitz.
Worldspan’s third quarter bookings fell 17% compared to the same period in 2005 and news of the merger comes after Expedia suggested it might switch away from Worldspan, its sole GDS.
Paul Richer, senior partner of travel technology consultancy Genesys, said: “Worldspan, as the smallest GDS, made the wrong decision not having a business-to-consumer offering. Not competing with agents didn’t help its market share.”
Travelport chief executive Jeff Clarke has said GDS consolidation was “inevitable”, a view shared by Worldspan chairman Rakesh Gangwal.
Travelport’s new owner Blackstone Group’s senior managing director Chip Schorr used to work for rival venture capitalist firm Citigroup Venture Capital – joint owners of Worldspan.
The merger will create by far the largest UK GDS, controlling around half of the market. Worldwide it will serve more than 63,000 agencies.
Worldspan and Galileo will remain competitors until the deal is complete when decisions will be made on staffing levels and future operations.
Clarke will run the merged GDS with Gangwal moving aside.