Travelocity warns of weaker revenue

Citing lower holidays sales and the continuing impact of the Sept. 11 terrorist attacks, Inc. warned last week that its revenue won't meet expectations for the fourth quarter, which ended Dec. 31.

The Fort Worth, Texas-based online travel agency expects to earn about US$68 million, about 9 percent less than it had projected in an Oct. 17 announcement, according to spokesman David Carpenter.

The company said tickets sales during the December holiday travel period were unexpectedly slow because of airline schedule reductions. This factor, combined with the effects of the terrorist attacks, was expected to reduce transaction revenue to 15 percent to 20 percent below prior expectations.

The news isn't entirely unexpected, said Lorraine Sileo, an analyst at PhoCusWright Inc. in Sherman, Conn.

"I don't see any surprises in here," she said. And, considering the gloomy prospects for the travel industry as a whole, the fact that Travelocity has and probably will continue to post profits means this drop in expectations is not dire news, she said.

In a statement, Travelocity president and CEO Terrell B. Jones said the company expects "strong revenue growth of 20 percent to 30 percent" in 2002.

Commenting on the projected revenue growth, Sileo added, "How many travel companies can look at that and say they will have double-digit growth next year? Most will be lucky to do single-digit growth."

The travel portal also signed an agreement with Houston-based Continental Airlines Inc. to market special deals for the airline through Travelocity's Web site.

Online travel sites have fared relatively well overall, as customers turn online to get the best deals during the recession, Sileo and other travel analysts said.

A report issued earlier this week by Chicago-based outsourcing firm Challenger Gray & Christmas Inc. indicated online travel was one of the few e-commerce industries to do well in a year of record layoffs.

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