diesen bericht habe ich eben von www.tcmag.de/research.htm gezogen.
dort sind auch die grafiken zu sehen.
Travelbyus.com Ltd.
Common (TBU - TSE C$3.10)
(TVB – FRANKFURT EURO$2.20)
Coming Soon to a Mouse Near You
· Travelbyus.com Ltd. (“Travelbyus.com”) is a new Internet-based alliance of North American travel businesses that is the first vertically integrated Internet travel company. The company covers all facets of the rapidly expanding travel industry, including discounted airfares, hotels, car rentals and cruises.
· Travel and tourism is emerging as the world’s largest single industry. It generated US$3.4 trillion in sales in 1994, and by 2005 the travel industry will more than double sales to US$7.4 trillion (World Trade Organization). The Internet, with its ability to provide large amounts of information (including visual images) on an individual basis, is a logical application for travel related services. The Travel Industry Association of America (“TIA”) reported that in 1996 Internet users booked US$276 million in travel on-line and TIA forecasts US$8.9 billion in 2002.
· Travelbyus.com is a “clicks and mortar” business. With completed and pending acquisitions, the company will have a complementary set of travel businesses that from the outset will have combined revenues of US$46 million and an EBIT of US$5 million. The travel agents included in these acquisitions had gross bookings of approximately US$3.5 billion last year. This established cash flow should allow Travelbyus.com to be profitable within its first full year of operations and gives the company good downside protection.
· The business model is based on four fundamentals: (1) Large inventories of uniquely priced product that cover virtually the entire spectrum of travel needs. (2) A distribution system that combines travel agents with 1-800 call centres and the Internet. Unlike other Internet travel companies, Travelbyus.com does not compete against travel agents but integrates them into its distribution system, enabling the company to more rapidly expand its market share and increase revenues. (3) A marketing philosophy that converts existing clients into Internet customers. Travelbyus.com has its own weekly television travel program that forms part of its multi-media, nation-wide marketing campaign. This campaign capitalizes on brand recognition of the acquired businesses while simultaneously building customer awareness and loyalty toward Travelbyus.com. (4) An interactive state-of-the-art website, expected to be fully operational in early 2000, that will allow for seamless integration of all aspects of this model.
· Travelbyus.com recently announced an agreement with Amadeus Global Travel Distribution, the world’s largest airline Computer Reservation System (“CRS”). This agreement will serve as a significant source of additional revenue for Travelbyus.com.
· Travelbyus.com’s management team is comprised of officers and directors with extensive experience in both the travel and high technology industries.
· The company is in the process of applying for a NASDAQ listing which we expect to occur in the second quarter of 2000.
· We recommend Travelbyus.com Common as a SPECULATIVE BUY with a 6-month price target of C$10.00, which is 4.7x our calendar 2000 forecast of C$2.15 sales per share (basic). Three major assumptions underlie our forecast: (1) successful integration of all the acquisitions, (2) a fully functional website in early 2000 and (3) Travelbyus.com securing a NASDAQ listing.
Anna Beukes, M. Comm December 3, 1999
(780) 917-7956 e-mail: abeukes@rochesecurities.com
Ticker Symbol 1
52 Week
High - Low
Price
03/12/99
Market Cap ($million) 2,3
Sales per Share (12/31 FYE) 41999F 2000F 2001F
P/S Ratio
2000F 2001F
D/E
Ratio
Current
P/Bk
TBU
$3.70 - 0.05
$3.10
$170
nmf
$2.15
$3.49
1.4
0.9
0.46
6.6
1) Shares trade on The Toronto Stock Exchange (TBU) and Frankfurt Stock Exchange (TVB.F).
2) Directors, officers and insiders control approximately 28% basic (26% fully diluted) of the common shares.
3) Based on 55 million basic common shares outstanding (68 million fully diluted).
4) Basic sales per share.
1. Recommendation: SPECULATIVE BUY.
We recommend Travelbyus.com Ltd. Common as a Speculative Buy. Travelbyus.com combines the world’s largest industry, travel, with the world’s fastest growing industry, the Internet. The Internet travel industry is forecasted to grow at a cumulative annual growth rate of 41% from 1999-2002 and the company is poised to take advantage of this growth through its unique business model.
Given the volatile nature of Internet stocks in general, we recommend the company’s shares as primarily suitable for investors with significant risk tolerance.
Our 6-month price target for Travelbyus.com Ltd. is C$10, which is 4.7x our calendar 2000 forecast of $2.15 sales per share (basic). If we had applied the current industry multiple of 11.9x forecasted 2000 sales, our price target for Travelbyus.com would have been $25 per share. Our lower multiple reflects the company’s early stage of development and takes into account the magnitude of the challenges it faces. If the company is successful in closing the remaining acquisition, making its website fully functional, successfully integrating its acquired companies and securing a NASDAQ listing, we would be prepared to revisit our forecast.
2. Industry Analysis
The travel and tourism industry is emerging as the world’s largest single industry and generated US$3.4 trillion in sales in 1994, according to The World Trade Organization (“WTO”). The WTO estimates that tourism and travel currently account for 10.1% of global investment and 10.9% of worldwide consumer spending and that by 2005 the travel industry will more than double sales to US$7.4 trillion.
The industry structure has traditionally consisted of travel agents and brokers that operate on a high volume, low margin basis. Growth in the travel industry, combined with consumers becoming increasingly price conscious, have resulted in demand for direct travel product that bypasses the chain of agents. Call centres and the Internet have met this demand and, as a result, local travel agents who enjoyed location and convenience advantages have seen their margins diminish. There has recently been a consolidation trend in the industry as agencies try to retain their market share by increasing size, resulting in fewer “mom and pop” travel agencies.
The Internet is a direct threat to the traditional travel agent who cannot hope to match the volume capabilities of an Internet travel firm. The Travel Industry Association of America (“TIA”) reported that in 1996 Internet users booked US$276 million in travel on-line, tripling to US$879 million in 1997. With approximately 28.7 million US households on-line in 1998 and 60.4 million US households expected to be Internet users by 2000, TIA forecasts that on-line travel bookings will rise to US$8.9 billion in 2002. Hotel and car rental reservations are the most important non-airline revenue generators for on-line travel agents and are expected to grow from US$31 million in 1996 to US$2.2 billion in 2002. On-line advertising on travel websites is expected to grow from US$2 million in 1996 to US$282 million in 2002, and will be the third leading revenue source for travel websites, following airline tickets and hotel/car reservations.
Source: Travel Industry Association of America
The Internet opens the travel market considerably as an Internet travel website allows consumers to access an array of options and prices often not available through traditional travel agencies. Additionally, the Internet can supply large amounts of information, including visual content, while simultaneously serving as a storefront. For airlines, targeting the consumer directly eliminates commissions paid to travel agents.
There is, however, one serious drawback for the typical Internet-based travel company – “the-look-not-book syndrome”. A survey done by International Communications Research found that only 18% of Americans who use the Internet for travel information do bookings on-line. The Internet has changed the way consumers survey their travel plans, using the Net as a source of information, without making the reservation on-line. In addition to concerns about credit card security and personal privacy, Internet travel service “browsers” are reluctant to buy on-line because they would rather speak with a knowledgeable salesperson, or they have a travel agent they know and trust.
While there is explosive growth forecasted for Internet travel-related services, we do not anticipate a complete shift towards purchasing travel products on-line, even once most consumers have become more educated and comfortable with e-commerce. In our view, there will continue to be a demand for knowledgeable and cost- efficient travel agents that offer high quality service. Retaining travel agents as a traditional distribution option will allow Travelbyus.com to capture a greater share of the travel industry’s volume.
3. Company Analysis
Overview Travelbyus.com is an Internet-based travel company that has developed a unique business model that, along with targeting the actual traveler, embraces traditional travel agents instead of “cannibalizing” them. Travelbyus.com came into being in January 1999 when a TSE listed company, LatinGold Inc., changed its name and business focus. In September 1999, the company completed a C$12 million debenture and warrant financing. Upon exercise, the warrants will result in an additional C$7 million in proceeds. To cover all facets of the rapidly expanding travel industry, the company announced nine proposed acquisitions, seven of which are now complete. Travelbyus.com is currently consolidating its recently acquired business operations and senior management in Reno, Nevada, USA. This consolidation will result in substantial cost savings, given Nevada’s low wage rates, low telecommunication costs and low taxes.
Travelbyus.com trades on The Toronto Stock Exchange under the symbol TBU and the Frankfurt Stock Exchange as TVB.F. Daily trading volume recently has been approximately 600,000 shares on the TSE (though there have been several million plus days) and 500,000 on Frankfurt. The company is in the process of applying for a listing on NASDAQ, which we expect to occur in the second quarter of 2000. With a US listing, most key senior management people located in the US and all major operations in the US, we believe that Travelbyus.com will increasingly be viewed by the marketplace as an American company.
Travelbyus.com has not only aligned itself with travel agents at the grassroots level, the company has also entered into an agreement with Amadeus, the world’s largest Computerized Reservation System (“CRS”) company, to share segment fees. Amadeus is headquartered in Spain, and is owned by Iberia, Lufthansa and Air France. This CRS system is used by more travel agencies than any other travel distribution system. It serves 47,000 travel agency locations in over 130 countries, has reservations with 469 airlines, 52 car rental companies and over 51,000 hotels. Traditionally, CRSs are paid for every reservation made on their system and this revenue is paid wholly to the CRS owner. According to its agreement with Amadeus, Travelbyus.com will share part of the revenues generated by its reservations. Through the companies it has acquired, Travelbyus.com has immediate access to 14 million reservation segments. The company has not disclosed its share of each segment fee negotiated with Amadeus, but we estimate the additional revenue (at low incremental cost) to be a minimum of US$1 per segment. The Amadeus agreement does not preclude Travelbyus.com from aligning itself with other CRSs.
Travelbyus.com has created a business model that integrates product and distribution channels through a unique and proprietary technological link with the Internet.
PRODUCT
Cheap Seats
Express Vacations
Galaxsea
International Tours
Mr. Cheap$
Mr. Cheap$
MARKETING
Gotham
Travel Magazine
DISTRIBUTION
Express Vacations
Galaxsea
International Tours
800-i-Travel
TECHNOLOGY
Rogue
3. Company Analysis (continued)
The company has submitted an application for a multi-level patent on its business model, which is based on four fundamental aspects of the travel business:
1. Large inventories of uniquely priced product. Through the programs and packages of each acquired travel company, Travelbyus.com offers an extremely broad range of products and services that cover virtually the entire spectrum of travel needs. Preferred supplier agreements with major airlines, hotel groups, cruise lines and rental car companies give Travelbyus.com access to products, without the risk of carrying huge inventory. As part of a preferred supplier agreement, American Airlines is using Travelbyus.com’s distribution network to sell its “0” class products. These exclusive privileges to distribute “low fare” or “discounted fare” products gives the company an advantage over competitors that distribute “published fare” tickets. The potential exists for these agreements to be expanded in the future.
2. A distribution system that merges old style distribution with 1-800 call centres and the Internet. Customers will be able to switch from the Internet to the 1-800 phone service to an agent at any time.
A major difference between Travelbyus.com and other travel distribution systems is that the websites of virtually all other travel companies are designed to compete with and eventually eliminate travel agents. Travelbyus.com actually enhances the ability of travel agents to meet customer needs and sell additional products, by offering participating travel agents the following benefits:
· Access to updated low-cost airfares, accommodations and tour packages
· Sales tools, such as virtual reality tours of favourite destinations via the company website
· After business hour calls to offices of participating agents will automatically be forwarded to Travelbyus.com’s 24-hour call centre, ensuring that no calls are lost
· Agents receive a fee, similar to an initial finder’s fee, for directing clients to the company’s website
· An additional fee will be earned anytime a client, registered by the agent, makes a purchase on the system, regardless of whether the client purchases on-line or books through the agent (similar in concept to trailer fees for mutual funds).
3. Multimedia marketing and advertising. The company’s marketing philosophy is to convert existing clients into Internet customers while simultaneously saving the traditional travel agent from extinction. With the use of “on-line collaboration”, clients and their travel agents can view the same webpage and communicate as if sitting at the same desk. This technology enhances the agents’ ability to answer questions and explore options while educating customers in Internet use.
The company’s website will cater to the different needs of both travel agents and final consumers. By having specialized sites, Travelbyus.com will be able to give both agents and consumers access to large quantities of uniquely priced travel products.
The company intends to capitalize on brand recognition of its acquired businesses while simultaneously building customer awareness and loyalty towards Travelbyus.com. Numerous opportunities for multimedia exposure exist via the website, TV shows, billboards, 1-800 service (each providing support to the other service) along with advertising links at each of the product and distribution organizations.
One of the cornerstones of the company’s marketing strategy is the 1-800-i-Travel program. Pooling agents’ advertising budgets, Travelbyus.com will launch nation-wide marketing campaigns that continuously refer to the 1-800 toll free number. When consumers dial this number, they will be prompted to enter their zip code; using switching technology, the consumer’s call is automatically routed to the member agent serving that specific area. Combining resources in this way ensures extensive marketing exposure at a low unit cost.
4. Website. The acquisition of Rogue Technologies provides the company with the ability to develop the appropriate technology to consolidate and link these different segments through a sophisticated website (discussed in more detail later in this report).
3. Company Analysis (continued)
Products and Services The company’s travel service acquisitions, combined with the acquisition of a technology company, allows Travelbyus.com to offer an extremely broad range of travel products and services. Every acquired company was carefully selected to add to the product mix and ensure that services available to consumers are comprehensive and complementary.
Acquisitions Completed:
1. Bonaventure Travel Productions (“Bonaventure”) was founded 20 years ago to produce “Travel Magazine”, a television program that now has an audience of 10 million viewers in 26 countries. Travelbyus.com purchased all assets and rights for the Travel Magazine from Bonaventure.
Contribution to Travelbyus.com:
· Gives Travelbyus.com the opportunity to develop and distribute tour packages featured on the program.
· Programs are translated into French, German, Spanish, Portuguese and Cantonese, ensuring an extensive market for the company’s products.
· An extensive 20-year video library that can be incorporated into the website.
· The TV programs will also feature the website address and the 1-800 travel phone number and become an important part of the company’s marketing strategy.
2. Mr. Cheap$ Travel (“Mr. Cheap$”), based in Portland, Oregon, was established in 1980 as a “discount airfare business” that distributes travel inventory, including discounted airfare, hotel and resort accommodations, car rentals and ground packages.
Contribution to Travelbyus.com:
· Preferred supplier agreements with more than 15 airline carriers to market “non-published” discounted fares, representing excess airline capacity. As domestic airlines traditionally average 30% excess capacity, this agreement with Mr. Cheap$ is a “win-win” situation, as airline fare structures are not compromised and consumer demand for the lowest possible price is met.
· The company typically carries US$3-4 million of airline inventory at any given time, having purchased this inventory at a 50-75% discount.
· The company has a fully functional website and a 1-800 call centre with 35 employees. In 1998, the company received 6,000 hits per day on its website and over half a million calls to its call centre.
3. Company Analysis (continued)
3. Express Vacations is a major West Coast vacation package wholesaler based in Reno, Nevada that markets tour packages to wholesalers and retailers.
Contribution to Travelbyus.com:
· Offers vacation packages to Las Vegas and Lake Tahoe, and develops tours for Western US, Mexico, Europe and Hawaii.
· Holds contracts with various airlines, hotel chains and car rental services.
· Has a state-of-the-art call centre operation in Reno with 80 call stations, from where Travelbyus.com will service after-hour and weekend calls for its retail travel network.
4. Galaxsea Cruises & Tours was established in 1986 to market cruise products nation-wide in the US as a franchise retail agency system. Cruises are currently the fastest growing sector of the travel industry, with anticipated growth rates of 60% per annum over the next three years.
Contribution to Travelbyus.com:
· Has 70 locations across the US with an expansion target of 250 locations by December 2001, making it the largest cruise group in North America.
· Allows the company to negotiate low cost cruise packages.
· Complements Travelbyus.com’s airline business, as most travellers must fly to a port city before they can begin their cruise.
5. Gotham Media Group Limited (“Gotham”) based in Portland, Oregon, operates a full-service advertising and public relations agency.
Contribution to Travelbyus.com:
· A unique media bank.
· The design and production of billboards, radio, TV and print advertising.
· Travel packages on a contract basis, in exchange for advertising spots. It has developed a media exchange program whereby it offers its services and available advertising space in exchange for airline, hotel and car rental inventory.
· As the handler for International Tours’ agencies, it will coordinate advertising programs for the company while earning the customary 15% advertising agency fee.
6. International Tours was established in 1968, making it one of the oldest travel franchisers in the US. It is currently among the top five in the US in terms of total volume and number of locations.
Contribution to Travelbyus.com:
· Marketing corporate and leisure travel products through 1,100 agency locations across North America.
· Preferred supplier agreements for hotel, airline, cruise, car, ground and leisure packages, ensuring access to specific products.
· This acquisition complements Mr. Cheap$ and Cheap Seats, as these agencies provide Travelbyus.com with a distribution channel for its discounted airfare products.
3. Company Analysis (continued)
7. Rogue Technologies Inc. (“Rogue”), a newly formed division of Legacy Storage Systems Corp., is responsible for developing and maintaining Travelbyus.com’s website. Rogue is a technology company founded in 1983 by John Whyte. It is based in Ontario, Canada, and has an office in Florida.
Contribution to Travelbyus.com:
· Creating an interactive website that allows the different acquired websites (of Mr. Cheap$ and Cheap Seats) to be seamlessly integrated into Travelbyus.com’s website.
· Constructing the major multimedia portal for the Travelbyus.com website.
· Designing high performance data solutions, virtual reality touring and video conferencing.
· Integrating Travel Magazine’s film library into the website.
· Developing personal travel profiles, bulletin boards and chat rooms.
· Creating links to relevant websites.
· Designing innovative information storage systems.
Acquisitions Pending:
The company is expected to close the remaining two acquisitions announced this summer before the end of 1999.
8. Cheap Seats was founded in 1987 as a US superstore for discount fares. Since its inception, Cheap Seats has shown exceptional growth in both revenue and profits. For the 12 months ended October 31, 1999, the company generated revenue of US$20 million, with a 10% net profit margin.
Contribution to Travelbyus.com:
· A wide range of net fare ticket contracts with several major US airlines, such as American Airlines, United, Delta and America West.
· Cheap Seats can offer last minute travellers a reduction on published fares that may well exceed 50%.
· Through its unique agreement with airlines, Cheap Seats has access to large inventory pools of deeply discounted products.
9. 1-800-i-TRAVEL 1-800-i-Travel is a co-operative marketing company that utilizes sophisticated telephone switching technology to offer small and independent travel agents a vehicle to compete against the superior advertising budgets of large agencies.
Contribution to Travelbyus.com:
· An easy to remember and identifiable telephone number for the travel industry.
· This user-friendly 1-800 service provides a marketing channel for customers who are not connected to the Internet and a distribution channel for those uncomfortable with ordering products on-line.
· Customers can switch back and forth between the website and this 1-800 service to fulfill their travel needs.
3. Company Analysis (continued)
Travelbyus.com’s website At the heart of any large-scale e-commerce business is the website. Travelbyus.com intends to have a state-of-the-art website that is both easy to use and highly informative. The site is designed to provide superior service to customers by enhancing their travel experience and assisting them in their travel planning. The target date for the opening of the site is January 2000. From day one, Travelbyus.com will have more than 10,000 pages describing the top 40 travel destinations. When fully operational, it will be an extremely comprehensive site with 35,000 to 50,000 web pages covering over 400 locations. Advanced profiling systems will allow Travelbyus.com to retain a complete catalogue of each site visitor and change the viewing scenario to suit each individual accordingly.
The site will allow travelers to:
· Plan trips. A substantial editorial content and access to an extensive database allows individuals to do their own travel planning.
· Explore “site seeing” possibilities. A rich destination content, including video presentations of Travel Magazine’s library, allows travelers to explore a wide range of travel destinations and activities before leaving home.
· Obtain advice from fellow travelers. Customers can participate in the “web community” through bulletin boards and chatrooms.
· Store personal profiles. Through “travel vaults”, information such as medical contacts, passport images or pictures, copies of entry visas and other emergency information will be stored and accessible from anywhere in the world that has Internet access.
· Obtain schedules and make reservations. Bus and train schedules along with hotel, airline and car rental reservations provide a one-stop shopping approach.
The website has been extensively tested and numerous modifications made over the past several months as additional acquisitions become integrated into the Travelbyus.com model.
WEBSITE DEVELOPMENT SCHEDULE
June 1999 October 1999 December 1999 January 2000 February 2000
Corporate Site
Agent Reservation System
Consumer Internet Reservation System
Video Touring
Personal Vault
Site Completion with all functionality
3. Company Analysis (continued)
Risks Any investor in Travelbyus.com should consider the following business risks:
· An extremely competitive environment. Travelbyus.com plans to conduct most of its business in the US, where there are a number of larger public and private competitors in the industry.
· The Website is not yet fully functional. The Travelbyus.com website is the key integration factor under the company’s business model. The website is scheduled to be fully functional and open to the public in early 2000. The challenge is to integrate all the affiliates’ products and services under the Travelbyus.com umbrella in a manner that is appealing to both travel agents and consumers.
· The company must successfully integrate the various travel businesses they have acquired. Travelbyus.com has announced nine acquisitions, seven of which have been completed. The challenge now is to effectively consolidate these operations.
· No historical operating performance. Past historical performance of the component companies may no longer be valid under the new organizational structure.
· Sensitivity to economic cycles and extreme market volatility Travel is a cyclical industry because vacations are one of the first discretionary spending items to be reduced in times of economic restraint. In addition, Internet stocks in general have shown extreme volatility within short periods of time.
Key Management The company has a strong board and management team with travel and technology company experience.
Michael A. Farrugia, Chairman of the Board has extensive experience in business and public markets. He is currently Chairman and President of MB Capital Investment Ltd., a merchant bank based in Bermuda. Before forming MB Capital Investments, Mr. Farrugia was Chairman and President of MB Capital Corp., a securities dealer and merchant bank based in Toronto.
Bill Kerby, CEO and Vice-Chairman of the Board was President and CEO of Leisure Canada Inc., a publicly traded company specializing in hotel development in Cuba. During his tenure with Leisure Canada, he introduced 800-4-TRAVEL call systems to the Canadian marketplace. He graduated from York University in Toronto and worked as a financial advisor in the securities industry for 10 years. He is the principal architect of Travelbyus.com.
Jon Snyder, President has been involved in the travel industry for over 30 years. He was one of the principals in creating American Airlines FlyAAway Vacations program, where he served as President. His management and leadership skills are valuable assets to Travelbyus.com.
John Fenyes, Executive Vice-President and Chief Operating Officer has been involved in the travel business for over 25 years, holding key positions, including Vice President, Product Development with American Airlines’ FlyAAway Vacations. Most recently, Mr Fenyes was Director of Marketing Programs for ITT Sheraton.
John Whyte, Vice-President of Technology is President and co-founder of Rogue Technologies Inc. Mr. Whyte has established himself in the technology industry as an innovative designer, and industry leaders such as IBM and Microsoft have recognized many of the solutions created by Rogue as key platforms.
Joanne Smith, Vice-President Marketing and Sales has 20 years of marketing experience in the travel industry. Her past positions include Vice President of American Eagle and Senior Vice President of Midway Airlines. Most recently she served as Senior Vice President, Marketing of Reno Air.
Grant Kuramoto, CA, CFO has served as corporate controller for Manex Services, a company that provides management services to publicly traded junior resource companies. Before joining Manex, Mr. Kuramoto was a business assurance manager with Coopers and Lybrand.
4. Financial Analysis
On a pro forma consolidated annualized basis, all the companies acquired (completed and pending) had total net revenues of approximately US$46 million for 1999, with gross bookings by associated travel agents of approximately US$3.5 billion. On November 30, 1999, the company announced the change of its financial year-end to September 30th in order to facilitate the NASDAQ application. In this report, however, we continue to use December 31, as the company’s year-end to allow greater ease of comparison with Travelbyus.com’s peer group.
5. Comparable Company Valuation
Comparable companies in the Internet travel industry include:
(Note: all $ amounts in this section of our report are in US$.)
1. Cheap Tickets (NASDAQ: “CTIX”, US$18.31) is a leading domestic retailer of discounted tickets for leisure travelers. It provides airline tickets, cruise tickets, auto rentals and hotel reservations through the company’s website and call centre. This company is a direct competitor of Cheap Seats because it also negotiates directly with airlines for blocks of excess seating at significant discounts. For the nine months ended September 30, 1999, the company reported total revenue of $273 million, with a net income of $6.7 million.
2. Preview Travel (NASDAQ: “PTVL”, US$52.00) is a leading branded on-line travel service for leisure and small business travelers. It offers a one-stop travel destination site where consumers can search, shop and buy airline tickets, vacation packages, car rentals, hotels and cruises, as well as integrated access to travel information, news and resources. For the nine months ended September 30, 1999, the company reported revenue of $21.9 million and a net loss of $24.3 million.
3. Priceline.com (NASDAQ: “PCLN”, US$61.88) pioneered the buyer-driven “name your own price” e-commerce model, a unique consumer-to-business transaction model. We believe this model has limited application to the travel industry because of the user fees required and the nature of Priceline.com’s bidding process. For the nine months ended September 30, 1999, the company reported revenues of $313 million, with a net loss of $133.6 million.
4. Travel Services International (NASDAQ: “TRVL”, US$10.31) is a specialized distributor of cruise vacations, domestic and international airline tickets and European auto rentals. It provides electronic hotel reservation services to both consumers and travel agents. For the nine months ended September 30, 1999, the company reported net revenues of $146 million, with net income of $6.4 million.
5. Expedia (NASDAQ: “EXPE”, US$54.94) is a provider of on-line travel services for leisure and small business travelers, offering one-stop shopping and reservation services with access to schedules, pricing and availability. Formerly part of Microsoft Corporation (NASDAQ: “MSFT”, US$90.19), Expedia became the first Microsoft spin-off on November 10, 1999, with the completion of its initial public offering. It offered 5.2 million shares at $14 a share. For the year ended June 30, 1999, the company had net revenue of $38 million and a net loss of $19 million. For the three months ended September 30, 1999, revenue totaled $15.3 million, with a net loss of $5 million.
In our view, Expedia and Preview Travel (soon to be called Travelocity.com upon merging with Sabre Holdings’ Travelocity), are the most similar to Travelbyus.com. Both competing companies offer a wide range of travel products and services on-line and both formed an alliance with a major CRS. For the first half of 1999, gross bookings for Travelocity were $301 million and $167 million for Preview Travel, for a combined total of $468 million. Though Preview Travel and Travelocity may be “first out the gate”, the Internet travel sector will continue to be a substantial market and have room for more than one player. Travelbyus.com’s website may prove to be more popular because of its greater selection of products and special features. In addition, unlike Preview Travel and Travelocity, Travelbyus.com should be able to attract additional customers because of its extensive in-house travel agent network.
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