See you later, Orbitz
With The Wall Street Journal last night breaking the story that Cendant
I guess one can say that I was never all that excited about Orbitz. When it came public last year I was pretty skeptical. Here was a company that had posted annual losses while more established rivals like InterActiveCorp's
Most of the shares being offered in the IPO came from insiders looking to cash out. While a cynical contrarian could have seen that as a positive sign -- the company was born as a collection of money-burning air carriers like UAL and Delta
But Orbitz did it. It proved me wrong and joined the ranks of the profitable earlier this year. While the company wasn't growing as quickly as mystery discounter Priceline.com
The fact that Orbitz has spent most of its young public life trading in the $20s makes it odd that it would cash itself out for a meager markup just as it's starting to get this online travel site thing down. I may have disliked Orbitz in the past, but I can't think of one good reason to sell at this juncture at this price.
Cendant has 6,000 big reasons to want Orbitz. It has 6,000 franchised hotel properties under the Howard Johnson's, Super 8, Ramada, and Travelodge banners. Cendant is already in marketing relationships with most online sites -- including Orbitz -- to feature its properties prominently. In this crowded lodging industry it can't afford not to. That's why owning a traffic magnet like Orbitz would be a great way for Cendant to fill its rooms on its own terms, as it does with its own hotel sites and CheapTickets.com.
That's why I'm wondering if Cendant can keep in the chuckles. Because if it pulls this off, it will be laughing its way to the bank.
Which travel sites do you turn to when you need to book a trip? Where have you found the best rates? All this and more -- in the Cheap Air Fares discussion board. Only on Fool.com.
Longtime Fool contributor Rick Munarriz loves to travel and has been booking his travel online since the 1990s. He has a favorable outlook on the industry, but does not own shares in any of the companies mentioned in this story.