Rang7 - the Opodo and Orbitz launch model comes to India or is it a fake marketing trick

One of the disadvantages of being a blogger is that I do not have the time to call around to confirm a story. This is one where I would love to have the time to do some Kevin May style investigative work. But I am a working blogger so it is time to pass on a rumour that it interesting either way

Two versions of this story floating around.

Version 1 - Airlines are coming together in India to fight back against makemytrip, yatra, cleartrip and travelguru.

Intial report from Pluggd.in that Indian carriers Spicejet, IndiGo and Kingfisher were to combine with $3mm in funding to launch a full online travel agent (OTA) called Rang7. The source was a press release picked up on IndiaPRwire. I saw it on twitter via a RT from @santoshmaharshi. Was a great story because it immediately brought to mind more parallels between the emerging online travel market in India and the history of the industry's development in the US and Europe. It mirrored the launch of Orbitz in 1999 in the US (backed by American, Continental, Delta, Northwest and United) and Opodo's launch in 2000 in Europe (backed by Aer Lingus, Air France, Alitalia, Austrian Airlines, British Airways, Finnair, Iberia, KLM, Lufthansa and Amadeus). Orbtiz has since shed it's ties to the airlines (NYSE:OWW) and Amadeus has taken majority control of Opodo.

The Economic Times of India has picked up this version of the story.

Version 2 - Whole thing is a possible PR scam

Pluggd.in then did an update to the story and quote "industry sources" as saying that the the airlines have not participated and they can't get an independent verification of the business being owned by the airlines. The About Us section of their Rang7 site is not very helpful (or maybe it is) as the founders link points to a completely blank page.

If this version is true then an OTA has kicked off its business by misusing the names of three key suppliers - not a great launch strategy despite the buzz it might generate. That said, nothing has been heard directly from the founders (though they do have a blog other here).

My guess the airline JV spin is a fake (or has gotten ahead of the deals being signed). Anyone out there heard anything?

note - Orbitz disclosure in the form of my linkedin profile.
General disclaimer and disclosure

What role did the Karavel sale play in Opodo's recent profit announcement?

At the beginning of Feb we heard the good news that Opodo was in the black for the first time with Euro 6.6mm in net profits on the back of Euro 1.3 billion in gross bookings.

Just today I spotted that Travolution are carrying a brief interview with Opodo CEO Ignacio Martos. It was published just after the announcement and Ignacio was talking about the results. He admitted that the sale of Karavel to Barclays "contributed to the net profit number". Does not say how much it contributed.

The leak that hit the internet was that the Karavel sale would net Amadeus (who control Opodo) Euro 40mm. So what does this mean. One reading is that maybe taking away the costs of operating Karavel helped contribute to the Opodo bottom line, dropping costs and contributing to profiability. Another (more dangerous reading) is that it was the profits from the sale that pushed Opodo into the black, not general trading activity. No way of telling which until we see broken out numbers but is very interesting to speculate about. If this is true (and I am not saying it is) then would mean that Opodo is still losing money at an operational level. hmmm....

Kevin or anyone out there from Travolution world know any more?

UPDATE - a source has told me that people inside Amadeus were surprised to hear that Opodo was profitable. That as far as they (these people inside Amadeus) knew Opodo was losing money in 2007. Could add credence to the notion that it was non-operational matters (ie once off) that generated the profit. I repeat myself - this is all innuendo and conjecture at this point.

Opodo looks good in black - banks Euro 6.6mm in profits

The owners and staff at pan Euro OTA Opodo must be walking around with big fat smiles on their faces (or sitting slumped in their chairs with a look of absolute relief) after having recorded and announced their very first profit. Reports are of a EURO 6.6mm net profit in 2007 off the back of Euro 1.3bb in TTV (well they say sales but presume that is gross bookings). Other stats from the story are 3 mm customers and "double digit growth" 07 over 06.

Results came despite or because of (you choose):

• abandoning their in-house hotel program and returning to the use of helpers such as Hotel.de.;
• a huge shift in management after the departure of almost all of the central senior executive team a year ago; and
• shedding offline business Karavel to Barclay's.

From Travelmole via HotelMarketing.com

UPDATE - Travolution are carrying a brief interview with Opodo CEO Ignacio Martos where admitted that the sale of Karavel to Barclays contributed to the net profit number. Does not say how much it contributed. The leak that hit the internet was that the Karavel sale would net Amadeus (who control Opodo) Euro 40mm. So what does this mean. One reading is that maybe taking away the costs of operating Karavel help contribute to the Opodo bottom line. Another (more dangerous reading) is that it was the profits from the sale that pushed Opodo into the black, not general trading activity. No way of telling which until we see broken out numbers but is very interesting to speculate about.

401 not out

Time for my "not out series" - a regular summary of the last 100 posts that I first started with 101 not out and continued with 201 and 301.

Without a doubt this recent period of posts on the BOOT have been dominated by consolidation and deals:

• Lonely Planet admitted that it could not meet the challenges of the Internet on its own and sold out a majority stake to the enterprise division of the BBC;
• Opodo shed Karavel with the story being broken by an blogger from the inside;
• TUI made a bad decision in buying asiarooms and once again search traffic predicted a deal;
• the battle for Travel.com.au (who now own the lastminute.com brand outright in AU/NZ) is not yet over with Webjet and Wotif at each others throats and AOT sitting not so quietly on the sidelines;
  
• Rakuten made some healthy profits and set itself for further expansion by selling out of Ctrip;
• the Flight Centre privatisation fell in a heap in an embarrassing way for the Flighties board;
  
• rumours flew that Priceline want Travelzoo and the comments section filled up with a debate on the merits of this idea; and
  
• we have the as yet to be confirmed rumour that TravelCLICK are about to be bought.
  

In other general news

• every media outlet there is ran a story about how bad the US air industry is prompting me to run my own series of the Airline Industry brought to you by BusinessWeek, the Legal Fraternity, Wharton, NPR, the Economist and Pizza Hut. Conclusions were that the US air traveller is stuffed and no-one is taking responsibility. In fact Marion Blakely quit as head of the Federal Aviation Authority to join the peak airline lobby group the Aerospace Industries Association;
• the T-List is soon to be a book. The BOOT submitted three stories:
• UGC vs Editorial. What's better? What's the balance? What's more 2.0?;
• Helping Airlines Stay on top; and
• the fourth phase of online travel - "too much information"; and
• it looks like Dead Herring for Red Herring.
  

and in quirky news

• one muppet shouted at two others;
  
• a lion, a crocodile and a buffalo tried to sort out their differences the old fashioned way; and
• the BOOT saved the world by defusing a jar of olives.

I hope you're enjoying reading because I am enjoying writing.

Rumour confirmed - Opodo no longer owns Karavel

As predicted by Opodo staff member Mario Gavira (and reported here by me) , Barclays Private Equity has been confirmed as the new owner of Karavel.

UPDATE - Onelinetravelcrunch that first broke the story has been shut down. Kevin May carries more of the story here.

Rumour of the Week - Amadeus/Opodo to sell off Karavel to Barclay's Private Equity

Mario Gavira at onlinetraveltravelcrunch is reporting that Amadeus/Opodo is going to get rid of French tour operator Karavel with Barclays Private Equity the likely buyer. Mario reports the price at around Euro 100, giving Amadeus at raw Euro 40 million profit on its original purchase price. He has heard of a possible formal announcement today at the French trade fair TopResa. There is some good analysis in Mario's post on the business and rationale for the sale. My (possibly over simplified view) is that Opodo needs to focus on the simple online things - selling air, selling hotels (which they have made harder for themselves but abandoning an in-house program), selling car and capturing customers. Karavel is much more offline than on, so makes sense to pass it to someone else.

UPDATE - Onelinetravelcrunch that first broke the story has been shut down. Kevin May carries more of the story here.

Opodo are back in the online hotel game - with a little help from Hotel.de

After a well known, expensive and subsequently abandoned effort to enter the online hotel game, a question has hung over what would Opodo do to increase its product mix. Now we have part of the answer with an announcement that online and corporate booker Hotel.de is going to provide inventory for Opodo in Germany, the UK, France and Italy. Nothing replaces having your own inventory and engine but it was/is critical for Opodo to move quickly an find hotel options.

Here is the Hotelmarketing.com story.

UPDATE - thanks to Kevin of the Travolution blog who in the comments section passes on that this deal does not actually include FR and IT inventory.