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Rating Action:

Moody's raises TravelCLICK's bank facility rating to Ba2

14 Dec 2010

Approximately $93 million of rated debt affected

New York, December 14, 2010 -- Moody's Investors Service today upgraded to Ba2 from Ba3 the rating on TravelCLICK Inc.'s ("TravelCLICK") senior secured credit facility. This rating action reflects a revised estimate of expected loss, consistent with Moody's Loss Given Default methodology, resulting from $12 million in permanent repayment of the term loan's balance. At September 30, 2010, TravelCLICK has reduced the term loan to $78 million from an original face amount of $90 million.

RATINGS RATIONALE

Concurrently, Moody's affirmed the B1 Corporate Family Rating ("CFR") and Probability of Default Rating. Contrary to fluctuating trends in the lodging industry, TravelCLICK has reported fairly stable consolidated revenues and earnings over the past couple years. An industry-wide trend towards a greater percentage of bookings made directly on hotel websites benefited TravelCLICK's overall reservation system volumes and partially offset the negative impact of customers' lower average occupancy and Average Daily Room ("ADR") rates. Additionally, the company has reduced debt and continues to maintain a good liquidity profile. Financial leverage of about 3.7 times at September 30, 2010 is considered strong for the rating category and Moody's expects interest coverage and free cash flow to remain solid. However, the B1 CFR continues to be constrained by the company's relatively modest revenue size, reliance on strategic partners, and the vulnerability of revenues to highly cyclical demand within the luxury and upper upscale hotel industry.

The stable outlook reflects Moody's expectations that TravelCLICK will experience modest revenue growth in the near-term as customer occupancy and ADR rates continue to rebound, particularly within the business traveler segment. While scheduled step-downs in the maximum leverage covenant in 2011 may cause covenant tightness, Moody's anticipates that the company will use its cash balance, if necessary, to further reduce the outstanding balance on the term loan and maintain compliance with its covenants.

Due to TravelCLICK's relatively modest size and vulnerability to end-market demand cyclicality, it is unlikely the CFR will be upgraded in the near term. However, the ratings or outlook could be raised if TravelCLICK significantly expands its revenue base and permanently reduces indebtedness such that financial leverage and free cash flow to debt can be sustained at about 3 times and above 10%, respectively. The outlook or ratings could be pressured if there is a material change in TravelCLICK's capital structure or strategic alliances, or if the company's profitability or liquidity profile deteriorates. Specifically, financial leverage and free cash flow to debt approaching 5 times and below 4%, respectively, could lead to negative ratings pressure.

Moody's upgraded the following ratings:

$15 million senior secured revolver due December 2012, to Ba2 (LGD2, 29%) from Ba3 (LGD2, 29%)

$78 (formerly $90) million senior secured term loan due December 2013, to Ba2 (LGD2, 29%) from Ba3 (LGD2, 29%)

Moody's affirmed the below ratings:

Corporate Family Rating, B1

Probability of Default Rating, B1

For further information, refer to the Credit Opinion to be published on moodys.com.

The principal methodologies used in this rating were Global Business & Consumer Service Industry published in October 2010, and Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009.

TravelCLICK Holdings, Inc. is a leading provider of marketing and reservation services to independent and chain hotels worldwide. Headquartered in Schaumburg, Illinois, TravelCLICK reported revenue of $185 million in the twelve months ended September 30, 2010.

REGULATORY DISCLOSURES

Information sources used to prepare the credit rating are the following: parties involved in the ratings, parties not involved in the ratings, public information, and confidential and proprietary Moody's Investors Service information.

Moody's Investors Service considers the quality of information available on the issuer or obligation satisfactory for the purposes of maintaining a credit rating.

Moody's adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.

New York
Suzanne Wingo
Asst Vice President - Analyst
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Kendra M. Smith
MD - Corporate Finance
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Investors Service
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's raises TravelCLICK's bank facility rating to Ba2
No Related Data.
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