Question-and-Answer Session
Operator
Indeed, we thank you very much for your time in that presentation today gentlemen. We do appreciate that. (Operator Instructions). Representing Bear Stearns, for our first question, we go to the line of Robert Peck, please go ahead.
Robert Peck - Bear Stearns
Hi everybody. Congratulations. I have a couple of quick questions, probably more for Michelle. Michele, could you tell us a little bit about the last-minute integration and maybe give us any sort of insight, any hiccups you've had so far through the year of things that were unexpected? Number two, could you also talk a little bit about the pressure from the tour operators and how you saw that during the quarter and where that's trending. And lastly, could you give us a little bit of color of your competition versus the other agencies, say Expedia, and what you think the VIP program can do for you? Thanks.
Michelle Peluso
Absolutely Robert; okay, so, first on lastminute integration. I think the integration is proceeding well. The areas where I think it's taking us a bit longer and have been a bit more challenging maybe are particularly in the financial integration. As we've mentioned, Sarbanes-Oxley compliance will cost us more than we had anticipated. And the plus side of it is of course we are doing some things ahead of schedule; for instance moving air bookings to Sabre ahead of the deal model. But overall I think proceeding nicely. Jeff mentioned this, but we expect about $25 million in integration costs to fall off as we get through 2007, so that will be a nice benefit to the P&L.
In terms of competition from core operators, our business in Europe does have -- we actually do sell tour operator products on our site through our holiday pass. And we have certainly seen that business be flat to declining over the course of the year. I think that's consistent with what the overall tour operator business looks like in Europe. For us the key imperative is to continue to grow our dynamic packaging product which is really our own home-grown packaging solution; to grow that faster. We have seen strong evidence of fast growth in dynamic packaging over the course of the year.
Our fundamental value proposition to consumers is quite different than tour operators. We're certainly full-service in terms of stand-alone air and hotel. In Europe we have a lifestyle business as well and we have to continue that path of differentiation.
- To read the full transcript on Seeking Alpha, click here »
