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Fortnightly No 2000/4 - Paris, Wednesday, August 2, 2000

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  First big setback in eTourism: Leisureplanet.com forced to change its business model  

This significant piece of news presages new alliances and failures in the e-tourism sector. Leisureplanet.com has just, in effect, abandoned its BtoC business model and will be concentrating on the BtoB market.

Although Leisureplanet claims to have worldwide coverage through a number of agreements (with CNN for example), it has never managed to acquire a large market share outside Europe, which remains its core market.

Our impression of Leisureplanet is that it is always making announcements about innovations and new sites, but that there is often no follow-up.

Last October, for instance, following the announcement that Preview Travel and Travelocity, were merging, Leisureplanet realized that a lot of new alliances were about to be formed in the eTourism industry and that the group needed to firm up its position in Europe. To do this, it was going to create dedicated sites, totally adapted to the culture of each European country.

Several months on, the French site - leisureplanet.fr - is still only a pale imitation of leisureplanet.com, whose online offer is not even its own, since it is provided by Degriftour.com. In fact, I had to remove leisureplanet.fr from my latest ratings of the Top 10 French language online agencies, since the quality of the site has gone down so much.

Was this already a sign that Leisureplanet couldn't deal with the European challenge?


The site did not, however, lack the funds it needed for development, since a few months ago it raised several amounts of $20m from investors such as Bernard Arnault (this is his second big setback following the Boo.com affair), CNN and Warburg Dillon Read.

Although the poor quality of the French site is the reason for its lack of success in this particular sector, it also seems to have had problems with its operating expenses, which were totally out of phase with its financial results.

In fact, the main reason put forward by the site to explain why it has changed its business model was that it has not been able to find the new financial partners it needs to continue its development was.

These last minute financial problems, no doubt poorly assessed, explain how it was that only a month ago, Leisureplanet was still able to announce that it had formed a strategic partnership with LibertyTV. One wonders what is going to become of all the partnerships Leisureplanet has contracted, since it no doubt no longer has the means to deliver what it has promised its various web partners.

I am, however, far from convinced that Leisureplanet's precipitated change over to the BtoB market will be successful. This sector is still fairly closed in Europe and, what's more, it has still not really switched over to the Net yet (see our Internet European Travel Monitor study). And on the US BtoB market, I think that Leisureplanet has even less chance of succeeding, given the know-how and long experience of the players already established there.

Unfortunately, it seems likely that this change of business model is just the start of even more serious difficulties.

However, this announcement leaves the European horizon a bit freer for eBookers and Travelprice.com.

eBookers has just managed to raise $45m after also going through a short period of financial uncertainty.

These two companies are still, to date, the two main online agencies to have undertaken large-scale development in Europe, covering about ten different countries.

They have, in my opinion, made the right choice, since Travelocity and Expedia are currently being a bit apathetic about tackling the European market and have only invested seriously in Great Britain, leaving the field free in the rest of Europe.

Leisureplanet's retreat from the BtoC market has, then, opened up the European eTourism battle a little.


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