GLG News by Wyndham Hotels Experts

Chicke FitzgeraldChief Executive OfficerSOLUTIONZ HOLDINGS

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). 

Chicke FitzgeraldChief Executive OfficerSOLUTIONZ HOLDINGS

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. 

Chicke FitzgeraldChief Executive OfficerSOLUTIONZ HOLDINGS

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.

Christopher DanePresidentHRG-Executive Travel Associates

Blackstone's Probably Won't Put Others in Play...

July 6, 2007

Analysis of:Will Blackstone’s Hilton Deal Put Others in Play? | online.wsj.com

* Blackstone/Hilton deal is unique on several levels * Hotel Industry metrics have probably peaked in terms of RevPAR. * New Construction in the piptline is at an all time high * Starwood's management is weak and no apparent strategy. *  Marriott is not about to sell the family business

Christopher DanePresidentHRG-Executive Travel Associates

Marriott Knows What They Are Doing

June 18, 2007

Analysis of:Strange Bedfellows: Marriott, Schrager | online.wsj.com

•Marriott is very good at managing multiple brands. •Marriott has successfully kept brands/cultures separate. •Marriott Needed a boutique brand. •Marriott has a history of success in developing brands.

Christopher DanePresidentHRG-Executive Travel Associates

Increasing CAFE standards is not the answer

May 7, 2007

Analysis of:CAFE Break | online.wsj.com

* CAFE  standards never had the intended outcome.
* relies on something to happen in the future when what is needed something for today.
*  Making car makers accountable for conservation rather than the end user is illogical.
*  Drivers are ultimately responsible for conservation.
*  The solution is to follow the Europeans...charge what the charge for fuel and invest that money into the highway and road infrastructure.

Chicke FitzgeraldChief Executive OfficerSOLUTIONZ HOLDINGS

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.

Chicke FitzgeraldChief Executive OfficerSOLUTIONZ HOLDINGS

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.

Stephen MagrillAdjunct ProfessorUNLV, the University of Phoenix Inc; Regis University (Denver)

Sunterra – Is there Light at the End of the Tunnel?

March 30, 2007

Analysis of:Diamond Resorts to Acquire Sunterra for $16.00 per Share in Cash Creating Leading Vacation Ownership Company | biz.yahoo.com

The big conversation piece at this years ARDA convention which took place in Orlando, March 25-29 was the acquisition of Sunterra by Diamond resorts which was announced on March 12, 2007. The industry remains strong, but can Sunterra succeed with its new leadership in an intensely competitive field.

Few pure timeshare companies will remain once Sunterra goes private. Many analysts benchmarked Sunterra’s financial data to help evaluate other timeshare operators. The only public timeshare players left in the industry are: Bluegreen (BXG) 80% timeshare, 20% land sales and two small niche operators, Silverleaf (SVLF) and ILX Resorts, Inc. (ILX). They are not large enough to provide meaningful trend line information.

From a public information standpoint we can only rely on the minimal disclosure from the major hotel brands and vacation exchange companies. On an annual basis PricewaterhouseCoopers provides an excellent timeshare financial benchmark study.
Can Cloobeck who has had somewhat of a litigious past (I’m sure he justified these legal actions for this deal) and essentially ran a family owned timeshare operation rise to the challenge in rebuilding Sunterra? An interesting fact is that Cloobeck apparently has an $8 million buyout clause if his leadership is no longer warranted.

 

Stephen MagrillAdjunct ProfessorUNLV, the University of Phoenix Inc; Regis University (Denver)

The University of Phoenix – On the Right Track Again Toward Graduation

March 26, 2007

Analysis of:Apollo Group, Inc. Reports Fiscal 2007 First Quarter Unaudited Financial Results | phx.corporate-ir.net

This fiscal first-quarter report issued on Feb. 7, 2007 from Apollo Group. Inc., the for profit educational provider that runs the University of Phoenix (UOP) appears to represent a key turning point for an improved outlook with most analysts. The University of Phoenix, with more than 300,000 students at some 160 learning centers and 100 campuses (including an online campus) is the US’s largest private university. With fears subsiding regarding competition, earnings restatements and an investigation into options backdating, Apollo Group (APOL) is up a healthy 17% year to date through March 22.

Once a glamour stock in the for profit educational sector, peaking at $94 a share in 2004, Apollo has faced a seemingly endless list of challenges in the past few years including the strength of its senior management team, accounting irregularities, the options back dating, changing demographics of adult students, the law of big numbers (can it continue to grow at its strong historical growth rates), questions relating to its strategic direction, federal financial aid issues, and even calculations of its graduation rates, etc.

Analysts seemed mostly impressed with this quarterly report and senior management statements about its future despite the fact that the report itself was unaudited. Apollo was upgraded by Thomson Financial – Gradient, and; Columbine Capital Services; Argus (Buy), Morningstar (Buy), Morgan Stanley (“we remain bullish”), S&P (Sell). Apollo expects to file the audited statement for the first quarter of 2007, third quarter of 2006, and its report for the 2006 fiscal years by April 30. See commentary section below for short and long term outlook; key positives and challenges.

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