Travelport's predecessor company, Cendant, acquired Gullivers Travel Associates for $1.1 billion in April 2005.
But Travelport says next week it intends to write-down its GTA businesses, including Gullivers Travel Associates, Octopus Travel and TravelBound, by $800 million to $900 million.
Travelport CFO Philip Emery says the company is taking this noncash impairment charge because of GTA's performance "and our expectations for the future performance of the travel wholesale industry."
For the third quarter, GTA's net revenue fell 20% to $82 million, as the company's room nights dropped 11%. Adjusted earnings for GTA fell 33% to $31 million.
And, the wholesaler's earnings margin declined 15% to 37.8%.
GTA, which operates in a few dozen countries primarily in Europe and Asia-Pacific, serves as a wholesaler of hotels and apartments, as well as for an assortment of ground services.
The former Cendant Travel Distribution Services and its Travelport successor have been beset over the years with such write-offs, having variously taken massive impairment charges on investments in ebookers and Orbitz Worldwide, for instance.
The GTA impairment charge won't affect Travelport's debt covenants or GTA's daily operations per se, but is expected to take Travelport's earnings down more than a few pegs.
And, certainly it is not a vote of confidence in the future of the GTA business.
With companies like Priceline's Booking.com and Agoda, Expedia Inc.'s Venere, and Orbitz Worldwide's RatesToGo going gangbusters in their pursuit of hotel growth in Europe and Asia-Pacific using the agency or a modified agency business model, Travelport's GTA impairment charge appears to be sticking a pin in the once-ballooning, and still important, wholesale hotel business.
Meanwhile, if Travelport indeed is taking a step back in its outlook for GTA, then Travelport views Orbitz Worldwide, of which it owns 48% of the outstanding equity, as a good investment.
In a transaction expected to close in Jan. 2010, Travelport agreed to purchase $50 million in newly issued common shares of OWW. At the same time, PAR Investment Partners agreed to trade $49.7 million of Orbitz debt for Orbitz common shares.
These dual moves reduce OWW's debt by $50 million, and provide the company with an extra $50 million in cash to give it a little flexibility and breathing room to grow its global hotel business.