Yahoo has decided to scrap FareChase , effective March 25.
Say what? The decision comes as travel metasearch, or comparative shopping, seems to be kicking into high gear. TripAdvisor, bent on international expansion, recently launched its new metasearch air solution, and a few weeks earlier Travelzoo debuted Fly.com. .
There are a number of things going on that at first glance make it appear that Yahoo’s shuttering of FareChase, acquired by Yahoo in 2004 for $20 million and change, might be a unique situation.
First, Carol Bartz, occupying Yahoo’s CEO position since January, has the company focusing on all-things strategic and FareChase obviously wasn’t in the plans. And, second, Travelocity, which just renewed its agreement to be the air, car and hotel provider on Yahoo Travel, has sparred with Yahoo for years over the prominence that Yahoo gave FareChase on Travelocity turf….meaning Yahoo Travel http://travel.yahoo.com.
The thinking here is that Travelocity, which spurned participating in FareChase but now participates in TripAdvisor’s air metasearch tool alongside Expedia, may have played a key financial role in helping Bartz decide to give FareChase the boot.
However, along comes Yen Lee, the former general manager of Yahoo Travel and the current President of UpTake.com , who tells me that metasearch is “done.”
Say what (again)?
Yen was around when Yahoo bought FareChase and at the helm of the travel unit when the thing was launched. I was one of the people he tapped for the Yahoo Travel Search advisory council when Yahoo was looking for some input and feedback on FareChase’s development.
But, now Yen believes that metasearch is finished, largely because price differentiation for air, and hotel, too, is fairly miniscule. Especially when you consider that Expedia just dropped its booking fee, at least for now. (Expedia, by the way, has been experimenting with varying booking fees in divergent channels, including Hotwire, which doesn’t have one, either, for some time.)
So, if you search for a flight around two weeks from now from Expedia land (Seattle) to Yahoo land (San Francisco) using the TripAdvisor metasearch engine, you come up with a Virgin America fare ($139), an Expedia fare ($139) and a Travelocity fare ($146). Not much differentiation except for Travelocity, which is still charging a booking fee (as of this writing).
Not to mention -- which Yen did -- all of the price guarantees in the hotel industry, which make price diffentiation (metasearch’s bread and butter) a fleeting kind of thing.
So, are Travelzoo and TripAdvisor too late to the game? Is Kayak cooked?
What about a flurry of new metasearch announcements that one vendor tells me are in the pipeline?
I think Yen may be overstating the case. Despite the lack of price differentiation, the various metasearch solutions, including the predictive ones from Farecast http://farecast.live.com/? and Farecompare www.farecompare.com, still have a lot of value as aggregators and they are poised to cash in on the burgeoning media biz. Anyone who recently has spent a few hours trying to sort out flight options when trying to book a trip can attest to their worth.
And, the online travel agencies, with their allegedly broken business models, were supposed to be dead by now, too.