Barnhart has travel plan for Orbitz rise to the top

December 18, 2006, BY BRAD SPIRRISON Sun-Times Columnist

 

Technological efficiency will help Chicago-based Orbitz Worldwide rise to the top of the competitive online travel industry, new President Steve Barnhart believes. Already chief financial officer, Barnhart, 45, recently was promoted to pilot the second largest online travel agency in the United States. Before obtaining undergraduate and business degrees from the University of Chicago, Barnhart grew up just outside of West Branch, Iowa, home of Herbert Hoover, 31st president of the United States and prominent advocate of the Efficiency Movement. Borrowing a page from his fellow Hawkeye, one of Barnhart's first tasks is to integrate the 10 brands of Orbitz Worldwide, which include CheapTickets, Away.com, and a number of niche and foreign properties, into one back-end management system.

"There will be cost savings in the back office and development platform," said Barnhart, who three years ago was recruited from the Pepsi Bottling Group. "We have a long history of innovation that drives the consumer experience online."

Airlines are in Orbitz' DNA

Orbitz was conceived seven years ago with DNA from United and four other major airlines. Serial entrepreneur Alex Zoghlin, who worked on the original Mosaic browser, was the company's first employee, and served as chief technology officer until 2003. Later that year, Orbitz went public, largely off the merits of one online domestic brand, and helped to trigger what is perhaps a second wave of the Internet boom.

After being acquired by Cendant Corp. in 2004, Orbitz was part of a $4.3 billion buyout in June by private equity firm Blackstone Group. Orbitz Worldwide is now a 700-employee unit of Travelport Ltd., and operates from its new headquarters at 500 W. Madison.

Ealier this month, Travelport acquired Worldspan, an electronic ticketing company it will merge with its Galileo unit.

Last week, Travelocity, a unit of Sabre Holdings that closely trails Orbitz in domestic bookings, was acquired for nearly $5 billion by private equity investors Silver Lake Partners and Texas Pacific Group.

Further, a venture capital affiliate of Texas Pacific Group is an investor in G2 SwitchWorks, a competitor to Galileo and Worldspan that Zoghlin founded in 2004.

Barnhart said Orbitz "severed ties" with Zoghlin after he started the company, which partially competes with Orbitz and has hired a number of its employees. In 2005, Orbitz sued Zoghlin, claiming he violated a non-compete agreement. A representative for Orbitz said the companies recently ended litigation.

Online travel leader Expedia is a unit of media mogul Barry Diller's InterActiveCorp and corporate cousin to brands like Hotels.com and Tripadvisor. "Name your own price" standalone Priceline.com also remains among industry leaders.

As online bookings threaten to surpass traditional services for the first time in 2007, Barnhart is smelling blood. In addition to streamlining multiple brands and reviving the career of game show host Wink Martindale in an entertaining advertising campaign, the 300-plus programmers and technical staffers employed by Orbitz in Chicago and offshore development centers in India and Israel are assigned to balance technological innovation with consumer convenience.

Keeping it simple

"The challenge is not to make it too complicated," Barnhart said. "We always ask 'What is the right level of technology to solve the problem without making it too difficult?'"

When flights were grounded after terrorist concerns in London last August, Orbitz sent more than 320,000 alerts with travel and itinerary information to customers via e-mail, voice mail and text messages. A year ago during the New York City transit strike, travelers were sent information regarding alternate commuting methods from the airport to the city after their flights arrived.

"Innovation and making travel work for our customers is critical to being a winner in this space," Barnhart said.

State offers technology grants

Illinois-based technology companies seeking to obtain federal grant money might be in line for two bites at the government apple. Gov. Blagojevich will announce today that the state is allocating more than $1.3 million to qualifying companies via the Innovation Challenge Matching Grant and Technical Assistance programs.

The programs are designed to increase the number of Small Business Innovation and Research and Small Business Technology Transfer grants by assisting entrepreneurs with the grant-writing process and providing up to $50,000 in matching grants per company.

Brad Spirrison is a local technology reporter and president of MidwestBusiness.com.