Live from the Masters Conference in DC- G2 Switchworks
February 16, 2005
Live From the Masters – The True Cost of Distribution
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Live from the Masters – Sam Katz

“Owning the Value Chain” – having the most value to you. Sam began by emphasizing the global aspect of travel echoing Trip’s initial comments. He mentioned that one focus must be on the stability of provider (an obvious reference to the GNE startups) Goal is to take best practice from all Cendant entities. Strategy for Travelport / Orbitz, travelport serves more than 500 companies , Orbitz for Business . (so far this is stategy has not changed). The focus is on content (stressed importance of merchant hotels). Sam said “this is a economic discussion”. Point to point $7.50 – $10.00. 40-60% of that is revenue share. The GDs retains $3 to $4 is kept for distribution. Unclear issues range of content, reporting, integration… Schedule based searching verses leisure type of searching not consistent in new GNE models. Cendant believes that they are best positioned to get LCCs.

My take is that Sam’s had a clear message. The financial incentives are going away. The GDS will lower fees to compete by eliminating the financial assistance.