Is the online travel market big enough to comfortably feed three of its giants — Expedia (Nasdaq: EXPE),Travelocity (Nasdaq: TVLY) and Orbitz — at the same time?
According to Forrester Research, 18.9 million households will make their travel purchases on the Web this year, netting US$16.7 billion in leisure travel revenues. That’ll buy a lot of peanuts, but the question is: from whom?
The answer may lie in the lacework of consumer features and technology on each site, because it is ultimately the value of the different services offered to the consumers that will pave the way for the winner of the online travel wars.
“If you don’t add value (to either the user or the supplier) you are toast,” Forrester analyst Henry Harteveldt told the E-Commerce Times. “All three are successful and legitimate. It’s really a case for the consumer of what they prefer.”
At first glance, the differences between Expedia, Travelocity and Orbitz might appear minimal. After all, each offers its own proprietary pricing engine, each offers airfare, hotel and car rental deals, and all three offer weary travelers some form of mobile capability.
In addition, Harteveldt said, all three sites are “better than theairlines’ own sites in terms of finding low fares.”
Pick a Flavor
However, the Internet travel sites are not carbon copies of each other. In fact, Harteveldt said that Expedia, Travelocity and Orbitz are working overtime to establish separate identities.
“Each has a slightly different flavor,” said Harteveldt. “At the base levelthey are all ice cream, but above the surface, they are more like chocolate,strawberry and vanilla.”
Leaving Orbitz aside for the moment, a quick glance across the services and content offerings of Travelocity and Expedia reveals some fairly significant differences.
Take airfares, for example. Expedia offers consumers a wide array of blind airline fares where consumers can see the fare, but not the details of the airline. Travelocity uses “good buy” fares, in which the airline information is available to the consumer but, according to Harteveldt, the fares might not be as low as those found on Expedia.
Additionally, although Expedia now has its own direct contracts with hotels — thanks to the acquisition of Travelscape.com — to create its own travel packages, Travelocity works with the Hotel Reservations Network, which limits its flexibility, but increases its selection, Harteveldt said.
According to Harteveldt, Expedia has “become the leader in dynamic packaging, where purchasing the sum of two separate travel pieces together, i.e. airfare and hotel, is less than buying them separately.”
Even the basic content choices of each site have their particularities.Expedia excels at family travel, and was the first major travel site toinclude content for the gay and lesbian community. Travelocity, meanwhile,has an extensive member forum, and a Dream Maps feature that shows Internet shoppers how far their dollars will take them for the weekend.
The Orbitz Factor
While so far, Expedia and Travelocity have a leg up on Orbitz in the customer service department, according to Harteveldt, Orbitz is able to offer consumers weekly Web-only specials for approximately 22 different airlines.
In addition, hotel and car rental agencies provide Orbitz with the bestpromo rates from their own Web sites, Harteveldt said.
“The reason Orbitz was created was to reduce the cost of selling for theairlines, whereas Expedia and Travelocity were created to make things moreconvenient for consumers,” said Harteveldt.
Ding Ding Ding
That does not mean Orbitz is a stranger to bells and whistles meant to lure Internet surfers to its door. For example, the site provides free voicemail boxes that consumers can call to receive their particular flight info updates, which may be more convenientfor those without a mobile device.
Also, the company’s “Care Alert” system provides travel alerts via voice, pager, e-mail and fax.
“Orbitz certainly has a very good domestic fare interface,” said Harteveldt. “It’s very easy to use. However, their international airline and hotel services are much less convenient to use. I view Orbitz as a work in progress.”
So which Internet travel site offers consumers the most appealing services? In the end,Harteveldt says it really depends on the particular consumer’s profile.
“Orbitz is clearly making leeway with brand-new online travel buyers,”Harteveldt said. “Travelocity may be more popular with more casual travelerswho know less about travel — they have the strongest brand name.”
Expedia, with its heritage of integrating the latest technology, and the ability it gives consumers to build their itineraries leg by leg, appeals to tech-heads who like a little more control over their travel plans, Harteveldt said.
“Clearly, the market is big enough to sustain all three (sites),” Harteveldt said. “The ones who are really losing out are the traditional agencies, like American Express and Carson Wagonlit Travel.”
When grandparents wish to travel to see grandkids
they do not go to the PC to do the net. A travel
agent helps them in their plans and does not discriminate by limiting their travel options.
These companies certainly offer a wide variety of attractive travel products at competitive prices; however, to move the online travel industry to the next level the customer will increasingly demand to research and book online more complex vacation products to multiple destinations. So far none of these sites offer this functionality. I would not call the combination of an airfare with a hotel and maybe car rental dynamic packaging. True dynamic packaging is again not offered by any of these major sites and it will be interesting to see how they approach this key issue to maximize revenue.
I’m confused about counting travel revenue.
For a $100 ticket a normal commission is
about $8 (8%). Therefore the gross revenue
that I would count is $8 not $100,
(1/12th of gross). Therefore I don’t
think gross sales is a very good number
to discuss in the case of travel sales.