Travelocity
Company: Travelocity - Southlake, Texas
Company Description: Travelocity’s industry-leading technology and honest information help travelers take more rewarding and affordable trips. With millions of users and booking $4.9 billion of travel in 2004, Travelocity® negotiates thousands of low-priced deals with the world’s most reputable travel providers – top airlines, hotels, car rental companies, cruise lines, and other destination attractions and services
Nomination Category: Company, Office & Product Awards Categories
Nomination Sub Category: Best Business Turnaround
Nomination Title: Travelocity - A leader in online travel
1. Tell the story about what this nominated company achieved in 2004 (up to 500 words). Focus on specific accomplishments, and relate these accomplishments to past performance or industry norms. Be sure to mention obstacles overcome, innovations or discoveries made, and outcomes:
Launched in 1996, Travelocity (a unit of Sabre Holdings) transformed the way
people plan/buy travel by inventing the online travel market. Within five years, it
became the nation’s 6th largest travel seller.But as the online travel industry rapidly expanded, Travelocity watched its share
steadily decline. Profitability dwindled, and Travelocity soon trailed a
competitor in gross bookings and revenue.
Additional challenges included:
• An outdated, unfavorable revenue model
• An inconsistent, languishing brand
• Excessive costs
• Passive relationships with airline, hotel and car rental suppliersA change had to be made; challenges had to be tackled head-on to pull itself out
of the red. In 2002, Sam Gilliland, then CEO of Travelocity, and a new leadership
team stopped the bleeding by rethinking long-standing policy.In 2003, Gilliland’s was promoted to head Sabre Holdings and Michelle Peluso
took over as president/CEO. Through her inspiring/determined leadership and
employees’ tireless work, Travelocity catapulted into high-growth mode by
instituting sweeping core changes, including:
• Adopting a higher-yielding merchant model hotel program. Previously,
Travelocity focused heavily on airfare sales. In 2001, revenue from airline
commissions significantly decreased and competitors adopted higher
revenue “merchant” hotel models. Travelocity improved the industry standard with a
first-of-its-kind offering that yielded better hotel partner relationships, and
addressed a major problem with competitor sites – dropped reservations.
• Diversifying revenue streams by expanding distribution through Europe,
Travelocity Business and alliances with AARP, American Express Leisure Travel
and Southwest Airlines to sell travel to their brand-loyal customers.
• Launching industry-first products like TotalPrice for CarsSM, as well as
high-yielding dynamic packaging capabilities and a new air and hotel shopping
experience.
• Rebranding Travelocity externally/internally through a complete
site/logo redesign and extensive nationwide marketing campaign featuring the
adventurous “Roaming GnomeSM” to create an emotional connection with
consumers/employees.
• Renegotiating a costly, unfavorable contract with AOL and positioning
the AOL and Yahoo! partnership for growth
• Building a true win-win philosophy for Travelocity and its supplier
partners.
These initiatives netted substantial results. Travelocity shifted from a
2002 loss of $37 million and 2003 loss of $55 million, on an adjusted basis to an operating income of $13 million on an adjusted basis in 2004 – more than a $68 million swing in 12-months. Further examples include:
• Total Revenue Growth- full-year growth of 30%
• Transaction Revenue Growth- full-year growth of 46.5%
• Non-Air Transaction Revenue Growth- full-year growth of 85%
• Packaging Revenue Growth- full-year growth of 118%While Travelocity’s financial results demonstrate the company’s turnaround,
industry experts further illustrate the evolution:Lehman Brothers – Jeff Kessler, financial analyst
“While Travelocity had struggled throughout 2003, management appears to have
successfully put this important growth business back on track with quality
performance throughout 1H04. We believe that investors view Travelocity as the
future of Sabre, with its results being paramount to future potential.”Thomas Weisel Partners – Jake Fuller, Hotels Restaurants & Leisure Analyst
“For the last two years, Travelocity largely underperformed on both internal and
external expectations, but they are headed in the right direction now.”
2. List hyperlinks to any online news stories, press releases, or other documents that support the claims made in the section above. IMPORTANT: List each link on a separate line, begin each link with http://, and enclose each link in square brackets; for example, [http://www.website.com]:
Articles
New York Times - Travelocity once ruled the online travel business. Then it was
trounced by Expedia. Now, it's back in the black.
http://travel2.nytimes.com/mem/travel/article-page.html?res=990DE1D91F3DF931A3575BC0A9629C8B63New York Times – Business People; Born and Raised for the Job
http://query.nytimes.com/gst/abstract.html?res=FB0615FB39590C748CDDAB0994DB404482&incamp=archive:searchFast Company – Connecting For Growth
http://www.fastcompany.com/fast50_04/winners/peluso.htmlDallas Morning News – CEO, on a New Journey
http://www.dallasnews.com/s/dallas/business/stories/122103dnbuspeluso.c0f93.htmlDallas Morning News – Booking loyalty with trip
http://www.dallasnews.com/s/dws/bus/stories/030105dnbustravelocity.4260c.html
Elle – Uncommon Women
http://www.elle.com/article.asp?article_id=6366§ion_id=36&page_number=1&magind=5792
Sydney Morning Herald - US travel giant expecting to ride on online boom
http://www.smh.com.au/articles/2004/10/04/1096871805262.html?from=storylhs&oneclick=trueForrester Research - Travelocity's New Flight Navigator Soars
http://www.forrester.com/Research/Document/Excerpt/0,7211,35794,00.html
3. Provide a brief (up to 100 words) biography about the leader of this nominated company:
Michelle Peluso is president and CEO of Travelocity. She previously served as
COO and SVP, product strategy and distribution. Before joining Travelocity,
Peluso was CEO for Site59®, the leading last minute travel provider Travelocity
acquired in 2002. The Wall Street Journal ranked Peluso #4 of “50 Women to
Watch” in 2004 and she received the Ernst and Young Entrepreneur of the Year
Award in 2002. Additionally, Travel Agent Magazine selected her as one of the
Most Powerful Women in Travel, 2001 and 2002. Peluso received her master's
from Pembroke College at Oxford and bachelor's from the Wharton School of
Business.