Amazon Travels South After Expedia Tie-Up
It figures. Just as the travel industry collapses,
Amazon.com
(AMZN) - Get Report
decides it has to have a piece of the action.
The Internet retailer said Wednesday it would team with online travel agent
Expedia.com
(EXPE) - Get Report
to launch a travel store. The deal, terms of which weren't disclosed, is the latest in a string of deals in which Amazon lends its expertise to other retailers in exchange for commissions and fees. Some of those deals, such as ones with
Toys R Us
(TOY)
and
Target
(TGT) - Get Report
, have been lauded by investors and analysts.
Still, the Expedia linkup, coming just two weeks after the Sept. 11 terrorist strikes on New York and Washington, seems bizarrely ill-timed. Airline and travel agency stocks have plunged by half and more since the attacks as Americans have cut back on flying in particular and discretionary spending in general. Amazon shares fell 90 cents, or 13%, to $6.19.
The deal was in the works long before the tragedy, says Andy Stafford, a spokesman at Amazon in England. "It's a strategic partnership, and we believe the travel market will recover," he says.
"People are still traveling," says Carrie Peters, an Amazon spokeswoman in Seattle, "and we want to help them make informed decisions."
Online travel stocks were some of the top performers of 2001, as investors crowned them dot-com survivors and proclaimed their businesses as among the few that makes sense for the Internet. But that all
changed Sept. 11, with the terrorist attacks on the World Trade Center and the Pentagon.
When trading resumed on Sept. 17, shares in Expedia,
priceline.com
(PCLN)
and
Travelocity.com
(TVLY)
plunged, wiping out much of their gains on the year. A few days later, each company
put out a release saying that business had weakened, but that it was unclear how long the malaise would last.
priceline was the only one of the three to lower sales guidance for the third quarter, while Travelocity said it was reviewing guidance for the fourth quarter, and will have an update in October.
Meanwhile,
USA Networks
(USAI) - Get Report
has a pending deal to acquire 75% of Expedia. The deal, according to one analyst who has spoken at length with an Expedia executive, is still likely to be completed.
