Galileo International Inc., which operates one of the big computerized reservations systems, Monday said its third-quarter bookings were lower than planned due partly to the continuing shift toward online ticketing. But the company added that its earnings for the quarter should still meet expectations.
Rosemont, Ill.-based Galileo said revenue from its electronic global distribution system should come in at about $385 million for the third quarter, up 5 percent from the same three-month period last year. However, the revenue total is below earlier travel-bookings estimates set by Galileo executives.
The top cause of the bookings shortfall is a change in the way travelers buy airline tickets and make hotel reservations, according to Galileo. The company's announcement cited "a shift in bookings from traditional travel agencies to Internet travel sites, where Galileo's market share is lower."
The third-quarter slowdown also was attributed to negative effects from flight cancellations by United Air Lines Inc., which founded Galileo and retains an ownership stake of roughly 17 percent in the company. In addition, Galileo said it was affected by increased cancellations of bookings by travelers who were put on waiting lists.
Nonetheless, third-quarter earnings shouldn't suffer. "Our continued cost control [efforts] and [a] better-than-anticipated yield from bookings are expected to offset the impact of lower volumes in the third quarter," said Cheryl Ballenger, Galileo's chief financial officer. The final results are scheduled to be announced Oct. 23.
Galileo is trying to break into the online travel market through Trip.com, a ticketing Web site focused on business travelers that it acquired earlier this year. But analysts have said Trip.com lags well behind Internet travel leaders such as Expedia.com and Travelocity.com in overall bookings.
Galileo also is building a TCP/IP-based travel industry network through its Quantitude Inc. subsidiary, but work on that project began just this spring, and the company has yet to fully tie together the 40,000 travel agencies, 500 airlines and 45,000 hotels that it plans to bring into the fold.