Orbitz on new track under Harford
FAA eases rule on
NYC airport slots
By Dennis Schaal
set to open Oct. 1
Airlines that cut back on Mexico
flights from New York’s Newark
and Kennedy airports due to H1N1
swine flu concerns will not be subject to the “use it or lose it” rule
for their slots, said the FAA. The
agency had initially set a July 15
deadline for carriers to come up
with other uses for those slots,
but it extended the date to Sept. 12
after the Air Transport Association
requested more time.
Ritz-Carlton set Oct. 1 as the opening date for the 146-room Ritz-Carlton in Charlotte, N.C., the firm’s
first new hotel to meet Leadership
in Energy and Environmental Design certification standards. Features include enhanced water puri-fication and bicycles for guests to
use in the hotel’s Uptown neighborhood.
Work begins on
the Brando Resort
attracts no bids
Construction began on the Brando
Resort on Tetiaroa, the Pacific atoll
once owned by the late actor Marlon Brando. Completion is expected in late 2011.
The Brando will have 47 bungalow villas with private plunge
pools, plus a spa and fitness center.
Washington’s Watergate Hotel
failed to attract any bids at an
auction last week. Several bidders showed up but none met the
opening bid of $25 million. The
hotel, shuttered since 2004, was
taken back by the lender, PB Capital Corp., which held the $40 million note on it.
reopens on Waikiki
puts plans on hold
Honolulu’s Ilikai Hotel was set to
reopen on July 24. The 203-room
hotel closed on July 9 after iStar acquired it in a foreclosure auction.
Later, iStar reached a deal with the
union representing hotel workers.
A unit of Aqua Hotels will manage the Ilikai.
A unit of Aqua Hotels & Resorts
will manage the hotel. The Ilikai
complex also includes 806 condos
and timeshares, which were not affected by the hotel shutdown.
travel data center
The Caribbean Hotel & Tourism
Association launched a new mem-ber-only online data center at www
offering destination-specific data
on arrivals, occupancy and other
key metrics from Smith Travel Research and the Caribbean Tourism
• It became “very aggressive” in the advertising/
media business with its recent relaunch of Trip
.com as a multibooking-engine search business,
and increased advertising through paid links on
Orbitz.com and on its sister company Cheap Tickets.
• Orbitz Worldwide scaled back its spending on
marketing for subsidiary e-bookers in Europe “to
let the top line run at a lower level and narrow the
“I think they survive if they don’t run afoul of
their debt covenants,” Fuller said, referring to loan
agreements that Orbitz Worldwide is required to
meet in September and March.
“The bottom line is that the hotel business has
been the failure of Orbitz,” Fuller said. He noted
that in both the
public offering in
2003 and the Orbitz Worldwide public offering in 2007,
when it was spun-off from Travelport, the companies pledged that
growth would come
the hotel side of the
“But you can’t
go to market with a subpar or me-too product,”
In interviews with three analysts, all agreed that
Harford is a dynamic force behind the scenes at
Orbitz and that he has the skills and drive to make
something out of Orbitz’s hotel business.
“Clearly, Barney is stirring things up,” said Tom
Botts, a partner at the Hudson Crossing travel-consulting firm. “I would argue that he has made
more changes in the six months he’s been there
than they’ve made in a long time.”
However, one financial analyst, who declined to
be identified, said that while Harford “has played
the hand he’s been dealt as well as anyone,” his
moves will have a relatively minor impact given
the state of the economy, lackluster travel demand
and Orbitz’s lack of ample cash flow to pay down
debt more rapidly.
“It’s a little bit like rolling a rock up a hill,” the
analyst said. Oh the other hand, he conceded that
if some of Orbitz’s moves gain traction, the company could rebound within two or three years.
Soleil Securities’ Fuller said, “We’ll see if it
works,” but added: “I would argue
that the steps taken to improve the
hotel product are in no way small.
Orbitz spokesman Brian Hoyt
tried to place the company’s current status in context, pointing
out that Orbitz pioneered electronic flight-delay
or gate-change alerts on customers’ mobile devices in its TLC program. But he said that henceforth the bulk of the development effort would be
in the higher-margin hotel and vacation package
Orbitz, which was formed by major U.S. airlines in 1999, has “had an historical focus on air,
air, air,” Hoyt said. “Barney has come and put that
goal [improving the hotel business] in overdrive.”
Barney Harford, who had helped craft Expedia’s
Asia-Pacific hotel business and served as a consultant to Kayak, walked into the perfect storm in
early January when he signed on to replace Steve
Barnhart as president and CEO of Orbitz Worldwide.
The global economy was already reeling, and
travel demand and pricing were slack. Then, two
months later, on March 11, Expedia.com dropped
a competitive bomb by eliminating booking fees
for airline tickets.
Orbitz was not Expedia’s only target. It was also
seeking to regain ground it had lost to Priceline,
which had eliminated air fees in 2008. But the
move came as an
especially devastating blow to the
Orbitz, where air
sales accounted for
a majority of revenue and profit.
was positioned to
withstand the loss
of booking-fee revenues thanks to its
large hotel business, Wall Street
recognized the damage to Orbitz, and within two
weeks, on March 24, its stock price had fallen to a
low of $1.20.
But by May 6, when Orbitz announced a Q1
loss of $336 million loss (all but $4 million of
which was tied to an impairment charge), it appeared to have managed to gain some momentum
and to differentiate itself to consumers in its hotel
First, Orbitz nixed its own air-booking fees
and introduced a form of price protection in a
program called Hotel Price Assurance. It also
launched Total Price search results, which reduced
Orbitz’s hotel-booking fees, putting it at parity
with hotel websites, and began displaying a hotel’s
base rate, plus taxes and fees in the initial search
results, a first for an online travel company.
As of July 22, Orbitz’s stock price, though still
weighed down by fears of bank-covenant breaches
and insolvency, had increased 79.2% from the
March 24 low, to $2.15. Orbitz Worldwide is expected to release its financial results for the second
quarter in early August, which will offer investors
the first real insight into whether
its product differentiation and
all-out effort to focus on the hotel
side of the business have helped
the bottom line.
In the interim, Soleil Securities
analyst Jake Fuller said last week that he was seeing some daylight for Orbitz, a public company
majority-owned by Travelport, even though Orbitz had a whopping $652 million in debt through
the first quarter.
Fuller pointed to these positive developments:
• Orbitz’s air-ticket volume increased 15% since
April, when it eliminated air-booking fees.
• Orbitz has implemented some $40 million in
annualized cost savings.
Barney Harford, pictured mountain climbing, stepped into a perfect storm when he took the helm of Orbitz.
JetAmerica, the public charter
operator that planned an extensive pattern of flights in various
domestic markets, suspended
all sales and started to process
about $900,000 in refunds to all
customers who booked seats on
its flights. CEO John Weikle said
the company was unable to obtain
slots to support its plan for service
to Newark and “decided to suspend our flights in order to refocus on different markets.”
A Wyndham brand
arrives in Hawaii
Wyndham marked a double milestone with the opening of the 87-
room Days Inn Maui Oceanfront
on Maui’s Keawakapu Beach. The
property is Wyndham’s first Days
Inn in Hawaii; it puts the Days Inn
brand in all 50 states. Days Inn is
Wyndham’s largest chain in terms
of number of rooms and operates
in 14 countries.