Travelocity Signs Discount Deals

Travelocity.com continues to narrow the competitive gap with rival Expedia.

The Sabre Holdings Corp. unit this week revealed deals with Lufthansa and Spirit Airlines to offer discounted airfares to business fliers and made a foray into package deals by acquiring All State Tours Inc., a distributor of Las Vegas shows tickets and tours, for $25 million. Last week, Travelocity introduced a set of tools for booking rental cars. The discounted Lufthansa and Spirit Airlines airfares, which are available on the company's Travelocity Business site, are part of the online agency's effort to leverage its buying power to better target small and midsize companies. "Some of the customers that we target would not, on their own, be able to negotiate discounts," says Scott Hyden, general manager of Travelocity Business. "We bring the buying power of our entire customer base."

Travelocity's actions are good news for business travel departments, Forrester Research analyst Henry Harteveldt says. "If you're a small business or even a moderate-sized business that spends less than $10 million a year on travel, it's likely that Travelocity and other sites can get better deals than you can," he says. The company's moves are reflective of an industrywide trend toward using the Web to assemble travel packages for business travelers based on their needs, Harteveldt says.

Travelocity is beating the discount drum: It has signed up a half-dozen airlines to offer discounts to preferred customers and is in discussions with more. It also sells discounted rooms from hotel chains such as Best Western and InterContinental, hotel-booking site Utell, and car-rental companies Hertz and Avis. By integrating these, Travelocity can sell package deals, Hyden says. Travelocity Business customers pay a $149 onetime access fee and $5 to $20 for each transaction.