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Originally published April 4, 2012 at 6:44 PM | Page modified April 4, 2012 at 11:01 PM

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Travelocity works to get its magic back

Since CEO Carl Sparks took the top job a year ago, he and his executive team have refocused Travelocity on hotel products, build-your-own-vacation packages and mobile devices.

Fort Worth Star Telegram

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FORT WORTH, Texas — With pointy-red gnome hats, a cruise giveaway and plenty of balloons, Travelocity turned sweet 16 last month.

But it hasn't been all cupcakes and champagne for the Southlake, Texas-based travel website.

Once considered a trailblazer, Travelocity has struggled for the past few years to keep up with competitors such as Expedia or Priceline.

"We weren't moving as fast as we needed to," CEO Carl Sparks said about newer, nimbler competitors. "We're 16 and so sometimes we think of ourselves as one of the elderly companies in the space because we were around since its inception. ... Yet 16 is quite young for a multibillion-dollar company."

Since Sparks took the top job a year ago, he and his executive team have refocused the company on hotel products, build-your-own-vacation packages and mobile devices.

In February, the company launched its first iPad app, which allows users to book airline tickets, hotels and rental cars from their tablets and offers hotel deals exclusive to its mobile apps.

While industry analysts are encouraged by Sparks' initiatives and the disciplined approach he has brought to the company.

"He is refining the team and they are working on platform solutions now," Atmos Group analyst Henry Harteveldt said. "There is a lot they can do, and they have matured into a compelling company."

Created in 1996 by the Sabre Group, then part of American Airlines' parent, AMR Corp., Travelocity first offered travel content to consumers browsing the Web. Within a year, they could buy airline tickets, book hotels and reserve rental cars on the site.

Increasing competition

As dot-coms hit Wall Street with soaring initial public offerings, Travelocity became publicly traded in 2000 through its acquisition of Preview Travel. But it faced increasing competition from Expedia, which was adding to its hotel offerings, and Orbitz, a new site founded by a group of U.S. airlines.

As Travelocity slipped out of first place, Sabre Holdings brought the company back into the fold and combined it with Lastminute.com, a European travel site. In 2007, Sabre was taken private by Texas Pacific Group and Silver Lake Partners in a $5 billion deal.

Selling airline tickets

Harteveldt said Travelocity was a pioneer in the online-travel industry and the first major website to sell airline tickets.

In a survey that he conducted late last year, 13 percent of consumers said they used Travelocity to book their leisure/personal travel within the previous 12 months, as many as Priceline, Orbitz and Hotels.com. Expedia ranked first, with 21 percent.

"They outlasted some of their competitors, but I think it shows just because you're first doesn't mean you end up on top," said Harteveldt, adding that Priceline has vaulted over Travelocity into the industry's No. 2 spot.

"While I don't think Travelocity was complacent, I don't think they were able to push the meter as well as they would have liked to and certainly not as much as they needed."

When Sparks came in as CEO last April, he recognized that having staff spread among three offices hurt the company by slowing down business decisions. Sparks, who was previously president of Gilt Groupe, an online-fashion retailer, and had worked at Expedia and Hotels.com, closed Travelocity's offices in New York and San Francisco, consolidating employees at its headquarters in Southlake.

He also added more executives with experience in e-commerce and continues to hire developers to create products and apps.

And instead of trying to make Travelocity all things to consumers, Sparks decided to focus on three areas: hotels, vacation packages and mobile platforms.

"Our biggest markets — the U.S., the U.K. and France — we are now growing in all three of those markets. We are taking share, we think, in a number of those markets across multiple product categories," Sparks said.

Top travel site

The company was recently named the top travel site by the American Consumer Satisfaction Index and received solid reviews for its iPad app.

But after seven years of providing the content for the American Express travel site, Travelocity was left behind when AmEx chose Orbitz as its private-label travel provider. It also lost its portal deal with AOL to Orbitz this year.

Shifting from portals

Sparks said Travelocity is shifting away from portals, like AOL and American Express, to focus on providing customized solutions for businesses and their customers.

With more travelers using smartphones or taking their tablets on vacation, Travelocity executives said they know that they need to improve their mobile products.

In addition to the new iPad app, Travelocity continually upgrades its iPhone and Android phone apps. About half of the bookings on Travelocity's mobile platforms are for airline tickets, while 25 percent are for hotel rooms. The rest are car rentals, vacation packages and cruises.

Steve Dumaine, senior vice president of global strategy and product innovation, said the next three to five years, mobile transactions will likely be 30 to 40 percent of Travelocity's overall bookings.

"We really want to be anywhere the customer is at any time, at their fingertips, so it's really at their convenience," Dumaine said, adding that mobile customers often use their purchases sooner than customers using Travelocity's desktop website.

Travelocity is also playing catch-up in Europe and is competing against new online travel agencies in Asia. And as the economy improves, hotel chains are regaining their pricing power, giving them more leverage when cutting deals with online travel agencies.

But after one year, Sparks said the company is meeting its financial goals and starting to innovate in the e-commerce travel market instead of following competitors.

"We're getting employees saying it feels like we're playing to win again," he said. "We've got our mojo back. I feel like it's back. Absolutely."

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