Travelport is to offload its hotel and ground travel services business GTA to long haul tour operator Kuoni for $720 million.
The decision to sell, according to Travelport, is in line with the company's strategy to "focus on maximising the potential of its core business".
GTA secured net revenue of $294 million and adjusted EBIDTA of $84 million during 2010, operating on the back of total transaction value of $1.9 billion. Travelport says its intends to use the proceeds of the sale to pay off bank debts.
The division distributes around 35,000 hotel properties in over 130 countries around the world. It also handles sightseeing tours, attractions, private transfers and rail services through agents, tour operators.
Travelport insists the sale of GTA will not see it dispose of other assets such as its 48% share of online travel agency Orbitz. An official says:
"There is no link between this proposed sale and any other interests we have in other companies."
GTA has often been seen as a slightly awkward cog in the Travelport machine after the creation of the business from the old Cendant empire, so perhaps the sale will, as the announcement says, allow Travelport to concentrate on its cash cow, the GDS business and IT services.
Travelport, of course, is not the only GDS to offload a division in order to focus on its core business in recent months - Amadeus sold the online travel agency Opodo business to Permira and AXA in early-February 2011.
While much of the attention will be on Travelport's decision to sell, equal consideration should be given to the buyer, Kuoni.
The Switzerland-based company says the acquisition is part of its own strategy to move in on "one of the fastest-growing business segments" in the industry: online destination management services.
Kuoni says the new combination of its existing tour operating business and GTA positions it as an important consumer and B2B supplier of services.
Executive senior vice president for destinations at Kuoni, Rolf Schafroth, says:
"In Kuoni Connect, we already operate a successful online hotel booking platform. With the acquisition of Gullivers Travel Associates, we will achieve one of the leading positions in the global internet-based business-to-business travel services and leisure group travel markets that will help us and our service providers to generate growth.
"At the same time, the successful GTA brands will benefit from all the existing expertise and the services offered by the other destination management units within the Kuoni Group."
GTA was created in the UK in 1975 and grew quickly through the 1980s and 1990s around the world through the opening of regional offices. As well as providing the distribution switch, GTA maintains booking portals for operators, offline and online agents and other wholesalers. It also has the Octopus Travel consumer-facing brand.
Travelport CEO and president, Jeff Clarke, says:
"Our strategy is to focus our energies on maximising the potential of our core proposition and, while GTA is a leader in its field with a strong proposition, this is a positive opportunity for us to accelerate our plans.
"Additionally, Kuoni is a well known and long-term customer of Travelport and our aim will be to work in partnership with them to improve further the distribution and sale of the combined Kuoni/GTA inventory across the Travelport subscriber network."