Saturday, May 30, 2009

The Bing Travel Experience: So Far, So Good

In advance of Microsoft releasing its new search engine, Bing, I took Bing out for a brief test drive.

Bing has some features that are very cool, but I didn't see anything that makes me believe that Bing will significantly rain on Google's parade. (Although the impact of Microsoft's planned $80 to $100 million marketing campaign for Bing can't be dismissed.)

But, one area where Bing really sets itself apart is in the travel user experience (or UX, for you geeks out there) because Bing, unlike Google and Yahoo, has a travel innovator, Farecast, in its portfolio.

To be more precise and newsy, Microsoft has Bing Travel, a melding and rebranding of Farecast and MSN Travel (including Farecast for flights and hotels, and Orbitz for vacation packages, cars and cruises), at its disposal.

By the way, a side note to Yahoo: You decided to kill metasearch engine FareChase, but think how you might have leveraged it to enhance the travel-search experience within Yahoo search had you not been beholden to Travelocity and given the FareChase team some resources and clout in this post-Yahoo Travel, AOL Travel and MSN Travel era.

About Bing generally, one of its most appealing features is that when you move your cursor to the right of a search result, a box opens summarizing that search result.

This feature is huge because users can avoid all of those unproductive, back-and- forth clicks and decide up-front on an informed basis about whether they should click on a result.

However, I don't see this mouse-over feature as something that Google or Yahoo couldn't quickly emulate if they choose.

And, Bing has nifty Images, Videos, Related Searches and Search History features running down a left-hand column alongside the search-results page in an easily accessible, very clean-looking manner.

And, like Twitter's Trending Topics, the Bing homepage offers Popular Now links, which today featured French Open Tennis, Desmond Hatchett, Christina Aguilera and Jay Leno. (Meanwhile, Twitter's top two Trending Topics were #myweakness and, ahem, Google Wave.)

OK, so here's the travel angle.

The Bing preview version lists travel as one of only six categories or verticals (Images, Videos, Shopping, News, Maps and Travel) on the Bing homepage in a bow to the primacy of travel as a key Web category.

And, at least for flight search for now, Bing's deft use of Bing Travel, including Farecast's predictive technology, sets it apart from flight searches on Google and Yahoo.

For example, a Google search of EWR to LAX retrieves a Google flight-search box as the top result with a link to Flights from Newark, NJ to Los Angeles, CA, which defaults to an Expedia search. However, users can input their departing and returning dates and also conduct traditional, if unexciting searches of CheapTickets, Expedia, Hotwire, Kayak, Orbitz, Priceline and Travelocity in separate windows.


A Yahoo search of EWR to LAX offers no such shortcut at all. Kudos to Yahoo for its agnosticism, but users would have to scroll down to the relative boondocks of the seventh organic search result to access any reference to Yahoo Travel, powered by Travelocity.

And, now, Bada-Bing. (For international readers -- ha -- James Gleick defines the term as "American slang “suggesting something happening suddenly, emphatically, or easily and predictably; ’Just like that!’, ’Presto!’"

OK then, Presto.

A Bing search of EWR to LAX produces a much richer and more informational experience than do the Google and Yahoo searches.

The first result in the Bing search is what Bing Travel General Manager Hugh Crean refers to as an "instant answer." It comes with a link to "Cheap tickets from Newark to Los Angeles" and a "Fares Predicted to Rise or Hold Steady" graphic, both of which take the user to a wealth of tools from Farecast, I mean, Bing Travel.

Other links within the Bing instant answer resulting from an EWR to LAX search include:

$239 EWR>LAX
All deals from New York
All deals to Los Angeles
30-Day Outlook for EWR>LAX

Clicking on the graphic or main link in the instant answer brings the Bing searcher to an integrated Bing Travel page where the prospective traveler quickly finds out that Farecast predicts with 80 percent confidence that the fares will rise or be steady over the next seven days.

Users can then get details about Farecast's fare predictions, view fare trends on a calendar, search for flights (while filtering in or out their preferences) using Bing Travel metasearch or conduct one-window-at-a-time searches using booking engines from Hotwire, Expedia and Priceline.

There is just much more meat on the bone in travel searches using Bing in contrast to Google and Yahoo, largely because of Microsoft's acquisition of Farecast in April 2008.

Bing's introduction is an important development for the travel industry.

Big bad Microsoft (and it almost pains me to say this, given its legacy of Windows and Internet Explorer bullying) paved a new path when it put a travel search engine, Farecast, as the lead of MSN Travel.

And, now, Microsoft has given added weight to travel as a key vertical and has integrated it into part of its overall search strategy and not, to borrow a phrase, albeit out of context, from AOL, as some sort of "walled garden."

In the Bing preview version at least, travel has primacy on the Bing homepage. Consider that it has that prime real estate while the following are absent as standalone verticals: autos, real estate, movies, music and finance etc.

"Now we are part of an overall search strategy that will be in front of all consumers, coming through Bing and Bing Travel," Crean told me.

In fact, Crean is now part of the Bing search team, helping to develop overall search strategy, and he reports to a vice president of search.

Although Google is too, well, big and bad to admit it, I expect Bing's on-time arrival will hasten efforts in Google land to improve the travel-search experience.

And, that increased attention can't be bad for travel.


Saturday, May 23, 2009

Taking You Inside Expedia's Hotel Merchant Model

The South Carolina Administrative Law Court in February ruled that Expedia owes the state almost $6.4 million (actually $6,376,454.71) in accommodations tax for its merchant model hotel bookings from July 2001 to June 2006.

As I wrote, Expedia and the other major online travel agencies face these sorts of administrative tax proceedings by states and municipalities across the country.

For example, in addition to South Carolina, Expedia has received tax assessments or notices of audit from the states of Texas, Pennsylvania, Florida, Georgia, Indiana, New Mexico, New York, West Virginia, Wisconsin and Kansas.

And, as Expedia fends off and fights for its position in these state proceedings, the above list doesn't even take into account all of the counties and cities that independently are going after Expedia and other online travel agencies on similar grounds.

Although many of aspects of the OTA merchant model are generally known to industry peeps, the South Carolina decision puts it all together in a way that I found very informative.

The South Carolina court said that Expedia, which fully cooperated with the audit, contracted with 364 South Carolina hotels on a merchant-model basis during the five-year period under review.

Both the state and Expedia stipulated that the merchant model works like this:

• The Expedia-hotel contracts assign pre-negotiated net rates for rooms;

• The hotel makes available to Expedia a base number of rooms;

• But "the hotel retains the right to book the reservations itself through channels other than" Expedia's;

• Expedia faces no liability if it doesn't sell the number of base rooms available;

• Expedia's retail rate to consumers includes a mark-up of the net rate, an additional margin in the form of service fees, other fees including resort fees, and tax recovery charges based on the net rate;

• Expedia is the merchant of record in the consumer transactions;

• The hotel invoices Expedia for the net rate and the accommodations tax, which is based on the net rate.

• Expedia pays the invoice to the hotel for the net rate plus a tax recovery charge based on that net rate.

• Expedia has not filed accommodations-tax returns and has not paid accommodations tax to the South Carolina Dept. of Revenue;

• And, the hotel pays accommodations tax to the state based on the net rate it gave Expedia.

Hence the gap and the issue because South Carolina -- and others of the thousands of taxing jurisdictions in the U.S. -- want Expedia and other online travel agencies to pay tax on Expedia's margin, including service fees.

The South Carolina administrative court found that Expedia "was liable for sales tax on its entire gross proceeds of sale, including not only the net room rate, but also Petitioner's [Expedia's] margin and service fees."

Expedia and other online travel agencies have won a handful of the court decisions that were decided on the merits, but they have faced setbacks in Columbus, Ga., and adverse administrative proceedings in locales including Anaheim, Calif., and the states of South Carolina and Indiana.

In addition, a U.S. District Court in San Antonio, Texas, last year certified the City of San Antonio's hotel tax suit against the major OTAs as a class action on behalf of all the state's municipalities that collect occupancy taxes.

It is easy to see why, facing the pressure from thousands of tax authorities, Expedia,, Travelocity, Priceline and Orbitz have adopted what I referred to in a podcast as a Google Earth strategy, placing pins on a map and removing their hotel sales from cities where tax rulings have gone the wrong way.

The OTAs, engaged in this game of hardball, may find new allies in local hotels.

David Cassell, general manager of the Columbus Marriott in Columbus, Ga., told me that the city's hotels are down hundreds of thousands of dollars in revenue since the OTAs pulled out of the city and the properties have been unable to recoup the sales through discounting and other promotions.

Cassell believes that the city is shooting itself in the foot. "In my opinion, the taxes lost on the revenue that would have been generated could have far outweighed the money they [the city] would have received in back taxes," Cassell said.

The Google Earth hotel-tax battle continues.

Thursday, May 21, 2009

Holy Pegasus! Ratio of Travel Lookers To Bookers Is Off-the-Charts

Do you want to know why online travel agencies are doing everything they can to enter the media/advertising business?

Do you want to understand a key reason why Expedia eliminated consumer fees on airline bookings?

Do you want to comprehend in a concrete way why airline, hotel, car rental and OTA websites don't appreciated metasearch screen-scraping?

Then consider these statistics from hotel-room distributor Pegasus Solutions, with 86,000 hotel properties in its global portfolio:

• As of March 2009, the average number of looks per reservation on each website in the Pegasus network was 1,900 to 1. That's a 26.7 percent increase in the past year.

• A Pegasus spokeswoman explained that "we have some sites whose ratio is in excess of 10,000 to 1 or more. The trend is certainly indicating substantial growth in shopping activity."

• Pegasus stated that the look-to-book ratio was 1,100 to 1 in March 2007 and 1,500 to 1 in March 2008.

What this means is that increasingly few consumer-shopping inquiries lead to actual bookings. One can only speculate on the reasons: Increased bargain-hunting given the current economic woes; increased Internet adoption by travelers; heightened competition; and perhaps the complexity of the travel-planning and travel-booking process.

So, when you see Expedia allocating huge sums of money into TripAdvisor's media business and its global expansion, you can better understand why an OTA would pursue a high-margin media business given the increasingly fruitless quest to close a hotel transaction.

In fact, TripAdvisor's strategic value was apparent in Expedia Inc.'s first quarter results. TripAdvisor's operating income before amortization of $48 million accounted for 36.9 percent of Expedia Inc.'s OIBA. And TripAdvisor's $48 million contribution represented a 37 percent jump over the $35 million it produced a year earlier.

Orbitz Worldwide, too, sees building a media/advertising business as an imperative.

And, after Expedia eliminated -- at least temporarily -- booking fees on flights in March, officials explained that it was losing too many lookers to airline websites so it erased the fees to stem the tide. With pricing parity on flights with airline websites, Expedia hopes to diminish its look-to-book ratio.

And, with look-to-book ratios soaring, it is understandable why supplier and OTA websites would be angered by screen-scraping, even if new metasearch entrants like engage in screen-scraping lite.

There is a cost associated with each one of the 1,900 searches required to bring home a booking.

Holy Pegasus!

Wednesday, May 20, 2009

Legacy Carrier American Airlines Gets Downright Inspirational -- Who Knew?

In recent weeks, this blog has fielded some pretty great discussions on innovation -- or lack thereof -- in the planning, or the inspirational phase, of the travel-booking continuum.

In a recent post , "Travel's Best and Brightest on 'Legacy OTAs' and State of Online Travel 2009," and several related posts, the following execs and analysts, among others, commented on inspiration and other issues in the travel-planning lifecycle: Kevin Fliess, Henry Harteveldt, Gregg Brockway, Joe Buhler, Lorraine Sileo, Valyn Perini, Elliott Ng, Robert K. Cole, Rick Seaney, Tom Lewis Katie Deines, Douglas Quinby, Jeff DeKorte, Josh Steinitz ,and Sarah Kennedy.

So, it took me by surprise when an American Airlines AAdvantage Program e-mail, with this video link, featuring travel to Madrid, popped into my in-box.

An image of Madrid, with the video link embedded, was prominently displayed on the top of the e-mail, running across its entire width. The image highlighted "New DFW to Madrid" service, and "Destination Madrid. Tapas, Flamenco, The Prado -- come see what makes Spain's capital city such an intriguing destination."

I have received plenty of AAdvantage promotional e-mails before and many of them have touted various destinations, but I don't recall such effective use of video in them.

When you follow the link to the American Airlines AAdvantage Milestones page, you can access additional Madrid videos on nightlife and off-the-beaten path locales, as well as videos about American Airlines' new One-Way Flex Awards in English and Spanish.

The Milestones page has social-media features, too, including a link to view and share your photos, and some forums, which look a little old-school for my tastes.

I am not a great fan of American Airlines' service and would much rather fly Continental or JetBlue out of my home airport, Newark.

But, I have to give American Airlines credit for going beyond an all-consuming transaction focus, and getting out there and trying to inspire some travel for AAdvantage members, who may have some miles to burn, but may not know up-front what destination they'd like to visit.

Speaking of 'Legacy OTAs,' it's a great sign for the travel industry that a legacy airline puts some energy into the inspiration phase of travel planning.

You can even say it is stimulating.

Tuesday, May 19, 2009

Hotel Taxes: Travelocity Makes the Thickened Plot Even Thicker

Not talking baseball here, but Travelocity has executed a Baltimore chop.

As I reported in Travel Weekly today, earlier this year ceased selling merchant inventory from 14,000-room Baltimore, Md., because the city enacted a law to tax online travel agencies' service fees in 2007 and sued the major OTAs late last year.

This follows the news that Expedia, Travelocity, Orbitz and Priceline nixed merchant offerings from Columbus, Ga., after a judge in November ordered Expedia to begin paying hotel taxes.

Travelocity's decision to go solo on Baltimore, with Expedia, Priceline and Orbitz so far not following its lead, produces an interesting competitive scenario.

You can find offering rooms at the Baltimore Hilton on a merchant basis, but at Travelocity there is no pre-paid option for the Baltimore Hilton.

So, Expedia earns its hefty fees for the property and Travelocity merely collects a commission.

Perhaps some of the other OTAs soon will adopt Travelocity's stance on Baltimore, too.

At any rate, as I noted yesterday in a post, the major OTAs increasingly will choose which hotel markets to embrace and which to drop if tax decisions hit the OTAs adversely.

With the Baltimore and Columbus, Ga., chops, the OTAs are playing hardball.

I wonder if they soon will turn their attention to Annaheim, Calif., where a hearing officer tagged them for $21 million in back taxes. The case is being appealed.

What they are saying, in essence is: If you seek to tax us on the merchant model, which is the heart of our businesses, let's see who will suffer the most.

Will it be municipal tax coffers and local hotels if we don't market your properties, or will it be the OTAs?

That is the taxing question.

Monday, May 18, 2009

Online Travel Agencies and Hotel Tax: The Plot Thickens

With the news that Expedia, Orbitz, Priceline and Travelocity have removed from their hotel pages merchant-hotel offerings from properties in Columbus, Ga., the plot thickens.

It is easy for the online travel agencies to erase room offerings from a relatively small municipality like Columbus, Ga., with its 3,200 hotel rooms, when a court rules that the OTAs need to pay occupancy taxes on the retail rate.

But, what happens if things don't go the OTAs' way on the hotel-tax front in a few large cities?

Although it is under appeal, a hearing officer in Anaheim, Calif., ruled that the OTAs owe the city around $21 million in back taxes.

So far, the OTAs are still booking merchant-hotel rooms in Anaheim.

Boycotting large cities in terms of no longer offering their rooms on OTA sites could be a bit more painful for the OTAs than erasing Columbus, Ga., from the OTA map.

Meanwhile, given their current strategy, the OTAs hope that Columbus, Ga., feels some hurt for dogging the OTAs' about room taxes.

Other than Columbus, Ga., and Anaheim, Calif., the OTAs have won the handful of hotel tax cases that have been decided on the merits, even as hundreds of states and municipalities pursue administrative tax remedies against the OTAs.

The OTAs are trying to minimize their tax exposure and are sending a message to other cities around the country that if they pursue lawsuits against the OTAs and prevail, it will come with a price.

The underlying message is: Go after us for taxes, then see what it's like to try to put those heads in beds on your own.

For now, the OTAs would rather lose some business around the edges than change their merchant-business model.

Sunday, May 17, 2009

The Deal About a New Metasearch Site's Scraping Ways is putting its claim down on a metasearch niche as it focuses on aggregating "deals" from users' home airports.

But, as I wrote in my post, "SideStep Dream Team Launches Voyij, but Parts of the Voyage Appear Shaky," the self-funded start-up, which launched last week, risks earning the wrath of online travel agencies and suppliers by its Web-scraping tactics.

A Voyij spokeswoman conceded that the metasearch site is not using ITA Software, as do several other metasearch sites, for aggregating airline information directly from the carriers' reservations systems because it would be relatively expensive. And, using ITA for these purposes also might not be especially helpful because Voyij primarily is interested in deals inventory and is not conducting more comprehensive, real-time searches of airline fares.

And indeed, the spokeswoman said, Voyij has yet to form relationships with the wide array of sites -- including most of the major OTAs, major airlines and hotel chains -- that it is collecting data from.

For example, Voyij gets data from Travelocity, which told me that it has no partnership with the new site.

On the screen-scraping issue, the Voyij spokeswoman said: "Yes, old-fashioned, but based on the content we are going after, specifically 'deals' and 'sales,' this is currently the best, if not the only, way to get it."

"The main point here," the Voyij spokeswoman continued, "is that we're doing something new and unique in the industry by focusing on this specific content and, as hopefully you can appreciate, we'll certainly have some of the growing pains associated with any start-up doing something new."

Indeed, despite some of the search glitches on Voyij that I referenced the other day, a tech guy at another online travel company told me he likes the clean look of the Voyij GUI, especially the way the search for deals from the departure city takes place on the home page and further decisions are pushed off to the next page. The techie also likes the way Voyij integrates Twitter.

Regarding partnerships, the Voyij spokeswoman said: "We needed to launch to get credibility and to get someone to pick up the phone at an OTA. We will be looking to formalize our relationships with the OTAs as well as other suppliers now that we are live."

It is shocking to me that Voyij management, with all of its experience at SideStep, can't get OTAs to answer their calls.

But, I have the feeling that the OTAs now will be answering Voyij's calls -- or will be making their own calls or writing formal letters to complain about the scraping.

Speaking of SideStep, Kayak bought the company in 2007 for around $200 million.

The SideStep expatriots who now are running Voyij feel "bitter sweet" about SideStep's imprint in Kayak because you'd be hardpressed to see any trace of it other than in the Kayak Deals section these days, the Voyij spokeswoman said.

"We are very happy with the sale, but do wish we could point to a site and say, 'see that's what I spent so many years of my life building,' the Voyij spokeswoman said. "Given the choice between the two, I think everyone at SideStep would pick 'exit.'"

Kayak CEO and co-founder Steve Hafner had no comment.

Saturday, May 16, 2009

The Overhead-Bin Wars

The Overhead-Bin Wars are coming as airlines intend to squeeze revenue out of this storage area for passengers' carry-on bags.

In The Middle Seat Terminal blog, Matt Phillips outlines how US Airways recently altered its boarding procedures to give priority boarding to travelers who purchased Choice Seats.

US Airways says that these passengers, who purchased aisle and window seats in the first few rows of coach, will get to board in Zone 2. Of course, Dividend Miles Preferred customers get first dibs on free access to Choice Seats and exit-rows seats.

So, this is what the new boarding roll-call looks like at US Airways, and aren't most airlines' boarding procedures beginning to look like a caste system?

The order, according to Phillips, is first-class passengers, pre-boarding for passengers with kiddies or who need assistance, elite-status passengers, travelers with US Airways-branded credit cards, and then Choice Seat buyers.

Oh, yeah, I almost forgot. The last group of passengers to board are the rabble -- you and me -- who just booked an ordinary coach seat.

Of course, with US Airways charging $15 for a first-checked bag and $25 for the second, the boarding priority that gives star treatment to what I'll refer to as the new elite, means they will get first crack at storing their luggage, laptops, strollers and jackets in the overhead bins.

And, that leaves Joe and Susie Traveler battling the new elite for any leftover space in overhead bins by the time their seat is finally called for boarding.

Oh, it's going to get ugly. There will be plenty of scrunched up jackets, crushed souvenir packages, and carry-on luggage bound for baggage check-in because of the overhead-bin squeeze.

And, with airlines, Amadeus and ITA Software testing optional services feeds , one of the things on some airlines' agenda is to charge for such premier access to overhead bins.

You know, pay $10 and reserve your overhead bin. That's coming, for sure.

If there is a revenue opportunity out there, count on the airlines to try to exploit it.

Friday, May 15, 2009

SideStep Dream Team Launches Voyij, but Parts of the Voyage Appear Shaky

Well, I guess flight metasearch really, really isn't dead.

Case in point is that a few of the key players in SideStep, which was sold to Kayak for around $200 million in 2007, this week debuted travel-metasearch site

They even baked a cake, or ordered one, to mark the occasion.

Among the SideStep alum taking the Voyij are Brent Stewart, Nick Atkins, Paul Kim and Brian Barth. And Voyij even recruited Rob Solomon, ex-SideStep CEO and formerly head of Yahoo Travel, for the kickoff press release.

The team of ex-SideSteppers now playing for Voyij reminded me of the Kayak "Dream Team" press release of October 2004. (Has it been almost five years? Sheesh! Time flies in metasearch.)

Voyij has some interesting twists.

But, some warning flags were flying high for me this morning.

Voyij has a dazzling array of suppliers and online travel agencies appearing in its search results, but I wonder how many of them have agreed to be there, and whether Voyij is engaged in some old-fashioned -- yes -- screen-scraping.

I know ITA Software, which helps Kayak, TripAdvisor, Farecast and FareCompare avoid scraping because of ITA's direct airline tie-ins, has no relationship with Voyij.

And, one of the travel companies that appears in Voyij's airfare results told me this morning that it did not authorize Voyij to use its inventory, and that the newbie metasearch site isn't even displaying the intermediary's correct logo.

I reached out to Voyij's public relations firm about this and other questions, but haven't heard back yet.

After a cursory look, I found the following cast of characters appearing in Voyij: Travelocity, TripRes,, Hotwire, Expedia, Farecast,,, Orbitz, US Airways, Perfect Escapes, JetBlue, Continental Airlines, American Airlines, Virgin America, United Vacations, Cheap Caribbean, Funjet Vacations, Southwest Vacations, TravelWorm and Apple Vacations.

It is very unusual to see Orbitz, Travelocity and Expedia appearing together in one metasearch engine. Again, it points possibly to some scraping, which leads to all kinds of problems, from earning the wrath of suppliers to availability weaknesses.

You would think that Voyij's team, with all its experience, wouldn't go down the scraping road. Tell me it ain't so, Voyij.

Voyij's search-results displays have a supplier-friendly -- but not necessarily consumer-friendly -- feature, in one respect. It appears that each fare or room rate appears in its own box. In other words, although a JetBlue fare may appear higher in the display grid than an American Airlines fare, they don't compete side-by-side for consumer attention in the same box.

This is the kind of treatment that American Airlines has insisted upon in other metasearch engines.

Also, concerning the displays, I don't like the way icons from suppliers and OTAs appear in the search results. For example, an American flag icon appears in some search results, but you wouldn't know it is supposed to signify US Airways unless you clicked on it or looked elsewhere in the display grid to identify it. I found it confusing.

The Voyij Price Challenge may be another feature that might give suppliers pause.

Here's how it works: I searched for a flight and found a $75 base fare for New York-Boston on US Airways. When you opt to select the Voyij Price Challenge connected to that display, it tells you that the US Airways fare saves you $96, or 56 percent, off another unidentified "airfare."

And, in this example, when I selected "airfare" to see which fare the US Airways flight beat by 56 percent, it directed me to for the more expensive -- are you ready -- US Airways fare.

And part of the discrepancy was that Voyij was comparing the base fare on to a US Airways fare through that included the taxes and fees.

Actually, there are a lot of confusing and not-ready-for-prime time aspects to Voyij -- it's almost as if the company launched the site prematurely.

For example, when I selected "the best sales and offers from your city," and I selected Newark Airport, and then clicked on hotel deals, the hotel that appeared first in the display was the Orleans Hotel and Casino in Las Vegas.

Yes, I can get to Las Vegas or, in fact, any hotel in the world from Newark Airport, but I was expecting to see deals from local hotels.

So, Voyij is off to a shaky and apparently scrapey (it's a new word) start.

The capable Dream Team of SideStep expatriots that Voyij drafted needs to huddle and get its act together.

Thursday, May 14, 2009

Me to Ryanair: Don't Print This or I Will Bill You

If it were another joke or public relations buzz-attempt from European low-cost carrier Ryanair, it might be amusing.

But, Ryanair's decision to scrap airport check-in counters and to charge passengers exorbitant fees for -- are you ready? -- boarding passes, is ridiculous.

Among the highlights, or lowlights from my perspective, Ryanair will be charging their customers about $14 for online check-ins, and if would-be passengers -- i.e. people who bought airline tickets -- show up at the airport without boarding passes, the airline will charge them $55 each for "reissuing" the boarding pass.

And, of course, the idea of customer service is so yesterday. Ryanair won't have airport check-in counters, and will opt merely for bag-drop-off areas.

This, of course, is all in the name of reducing distribution costs and upping revenue from what used to be known as optional services. However, boarding passes somehow don't fall into the "optional" category.

Let's remember: Ryanair is the airline that recently floated the idea of charging passengers to use the toilet, in what the Travolution blog termed a Pay-to-Pee policy.

The Web-check-in fee amounts to a booking fee, and Ryanair now counts itself as one of the few airlines that tack on booking fees.

The policy is outrageous. What about some elderly people and even the younger set, who might not be computer-literate?

Has your printer ever run out of ink, making it impossible for you to print a boarding pass?

Or, what if you are traveling or booking at the last minute and can't get to a printer?

All of these scenarios might make you susceptible to the $54 per person boarding-pass reissue fee at the airport.

Let's see, for a family of four, that's $216 for boarding passes.

I have this to say to Ryanair: Don't you dare print this blog. I just happen to be in the cantankerous mood to charge you a $70 fee for that privilege.

Of course, discussion about Ryanair's plans to deep-six airport-ticket counters takes place as airline executives huddled up in Miami over the last few days for the Airline Sales Channel and A-La-Carte Pricing conference, where you can bet Ryanair's policies were watched closely.

I previously came up with a very reasonable idea for this conference, but reliable sources tell me that conference organizers failed to heed my advice.

Ryanair is going about creating new revenue streams in all the wrong ways. Instead, the airline should treat its passengers as customers, and not try to gouge them with fees for services that previously were free.

I hope there is a public outcry about Ryanair's policies and that the airline is forced to flush them down their dreamed-of paid toilets.

Sunday, May 10, 2009

In Block-ade-Buster Move, Orbitz Launches 'Open Cuba' Campaign

Orbitz is offering a $100 coupon toward a four-night vacation package to Cuba and the online travel agency's brand is featuring a Cuba Travel Guide, with tips about exploring Old Havana and the Afro-Cuban heritage in Santiago de Cuba.

Imagine that.

It's all part of a petition campaign and website that Orbitz is officially launching tomorrow that calls on Congress and the Obama administration to end the 50-year-old Cuba travel ban. The petition reads:

"We call on you to reverse our failed policy of isolation and end the 50-year ban on travel to Cuba in the United States. We believe that every American should have the freedom to travel to any country in the world, including Cuba, because the interaction between peoples from different countries is the single most powerful way to advance the causes of peace and prosperity."

In light of the Obama administration's steps to loosen travel to Cuba by Cuban families, I heartily endorse the effort.

Americans should have the right to travel anywhere, and I give credit to Orbitz for taking the bold step to take a leadership position in the travel industry on this issue.

Orbitz and market-research firm Ipsos released a poll in tandem with the campaign launch that shows that 67 percent of respondents would back a plan to allow travel agents to book Cuba travel and 63 percent supported allowing online travel agencies to do so, as well.

I believe this was a bold move by Orbitz because the OTA risks a boycott and a backlash.

And, it's also curious that the Interactive Travel Services Association, the trade group that represents major OTAs and global distribution systems (GDSs) like Sabre, Galileo, Worldspan and Amadeus, didn't lead or at least join in the effort.

Perhaps there is some dissension in ITSA about the move.

As much as I applaud Orbitz's Open Cuba campaign, I have to say that offering the $100 coupon for Cuba travel cheapens the effort.

Signers of the petition get emailed a promotion code, which is good toward a four-night Cuba air-hotel vacation package if you register on and once the federal government approves travel to Cuba for the general public.

Orbitz officials plan on presenting the petition to U.S. officials in Washington, D.C., later this year, but the coupon offering opens Orbitz to charges that the petition signers may have been swayed by the discount.

At any rate, I hope other major travel companies and nontravel companies join the campaign.

It is not only a travel issue, but a human rights issue.

There is growing momentum toward lifting the Cuba travel ban and travel companies, including some airlines, are getting excited. AirTran Airways and Allegiant Air already are dusting off plans.

In the Orbitz-Ipsos poll, 72 percent of respondents said they believe restarting U.S.-to-Cuba travel would benefit the daily lives of the Cuban people.

Clearly, the boycott hasn't worked and only has served to cause greater suffering for the Cuban people.

Let's take this opportunity to push travel to Cuba and to put pressure on Raoul Castro to open up the society.

Friday, May 8, 2009

Orbitz M.I.A. in Travelzoo Top 20

Orbitz's advertisements haven't appeared in Travelzoo's Top 20 deals newsletter, which gets e-mailed to some 15 million subscribers, since late March.

At least not in the ones that pop weekly into my in-box.

Orbitz's M.I.A. status in the Travelzoo Top 20 ain't no accident.

It's part of Orbitz's new strategy, as articulated by CEO Barney Harford to analysts this week, to play hardball with e-marketers that Orbitz perceives as too expensive.

Marketing is Orbitz's single largest expense, and Harford said Orbitz henceforth will use advertising vehicles that contribute not only to top-line growth, but deliver results that show up on the bottom line, too.

As contracts come up for review, expect Orbitz to put on its game-face.

Well, Travelzoo is no pushover on these things by any means, so I guess push came to shove regarding the Top 20.

Up until late March, Orbitz would offer advertisements in the weekly Travelzoo Top 20 deals newsletter with links like this.

But, I haven't seen an Orbitz advertisement in the newsletter in the past six weeks.

However, Orbitz continues to advertise in Travelzoo's SuperSearch, which may return a better ROI with its cost-per-click model than the flat-rate-based Top 20.

Orbitz's MIA status in the Travelzoo Top 20 may not be a permanent thing. Perhaps cooler heads will prevail eventually.

But, at a minimum, Harford has set a tone about the kinds of e-marketing deals he is looking for.

Meanwhile, Orbitz continues to participate as the exclusive online travel agency in the Kayak metasearch engine, and Orbitz's advertisements continue to appear in Kayak's Top Travel Deals newsletter.

I guess, at this juncture, Kayak is a sort of a very-preferred relationship.

Thursday, May 7, 2009

Dara and Barney: Gamesmanship and the Orbitz Zero-to-Hero Hotel Plan

In a post, Expedia's Booking Fees: The Trigger Point in late March, and in the finest traditions of New York Post Page Six and TMZ, I recounted a rumor making the rounds that Expedia CEO Dara Khosrowshahi had supposedly gone after Orbitz and eliminated flight-booking fees because he was angered at Orbitz for hiring Barney Harford, an ex-Expedia exec, as the Orbitz Worldwide CEO.

Actually, the flight- and hotel-fee wars, which Expedia kicked off March 11, had nothing to do with personalities and much to do with Expedia losing bookings to airline sites, as well as to Priceline, which nixed air-booking fees last year.

And, the timing of Expedia's booking-fee deletion also coincided nicely with subsidiary TripAdvisor's launch of its flight metasearch product. With the air-fees gone, Expedia could compete nicely on flights with airline websites.

But, if Dara wasn't miffed at Barney's hiring in January, Khosrowshahi should be upset about it now.

That's because Harford is hellbent on putting some muscle into OWW's relatively small hotel business, and in the process he's taking on Expedia's sweetspot.

In the process, some of Harford's actions have caught Expedia flat-footed.

Since late April, Orbitz has reduced its hotel-booking fees, a development that impacts Expedia at a rate of around $3 million per month because Expedia matched Orbitz's trims.

And, Orbitz also began displaying the total cost of a room in initial display results, and this week introduced its Hotel Price Assurance program, both of which were industry firsts.

And, Harford, who helped build Expedia's hotel business in Asia-Pacific a few years back, promises much more to come on the hotel front.

"We believe that the hotel business is the long-term area of focus for us and we are committed to making the appropriate investments behind that," Harford told financial analysts yesterday.

The company that was founded by major U.S. airlines almost a decade ago, before being bought by Cendant/Travelport and then spun off into an IPO, now is refocusing its tech teams and hoping to transform its hotel infrastructure and clout.

Harford characterized the global hotel business as "huge, yet the online hotel distribution landscape is still very immature."

"We have scale at the level of customer demand and have the opportunity to close the gap by focusing on initiatives that make it easier for those customers to book hotel(s)," Harford said.

Meanwhile, Harford claims that Orbitz has been able to weather Expedia's booking-fee attack and will be able to offset its own loss of those fees.

Factors in recouping the lost fees, Harford said, include increased air-ticket volumes because of the fee elimination; incremental bookings of vacation packages; the renegotiation and rationalization of e-marketing agreements; an increased focus on SEO (Search Engine Optimization) and CRM; $40 to $45 million in expense reductions since November; and a year-over-year jump of 12 percent in Orbitz’s advertising and media business to $14 million in the first quarter.

Considering these offsetting factors, Harford added, Orbitz has “the flexibility” to “sustain” its actions on air- and hotel-booking fees.

Translation? This could be Barney's smoke-signal to Dara that if Expedia intends to drive the online travel agency business into the ground by making permanent the now-temporary implementation of flights-without-booking fees past the end of May, then Orbitz can survive the pressure and will maintain its own reduction in hotel-booking fees, which causes Expedia great pain.

On Harford's part, this could be gamesmanship or it could be resolve.

Legacy OTAs: The Sequel -- Expedia Empire Strikes Back

Expedia, in essence, kicked off the remarkable commentary on this blog from Travel's Best and Brightest, when the company mentioned in an SEC filing that "legacy online travel agency companies" face a hardball competitive environment and are hard-pressed to differentiate.

In blog comments, luminaries in the online travel business criticized the OTAs for just that -- lack of differentiation and innovation. They hit the OTAs for going after the "low-hanging fruit," picking off consumers where the most money is, and neglecting the inspiration phase of the trip lifecycle.

And, yesterday on the Dennis Schaal Blog, near the bottom of the comment thread, Expedia spokeswoman Katie Deines left a comment on the debate.

I republished it here because it is newsy, given the fact that Expedia unwittingly touched off the debate because of its "legacy" statement, which I initially cited here on May 1.

Deines commented: "This discussion suggests that tangible developments to the consumer shopping paradigm are the only form of innovation, but that's only one side (albeit critical) of the travel distribution equation."

"As Expedia builds the most intelligent online travel marketplace in the world, we're certainly hard at work developing new tools and resources to aid travelers in finding the right trips at the best value," Deines continued. "Underlying that are our efforts behind the scenes innovating how we match our partners' supply with complementary consumer demand and vice versa."

Deines added: "(And for the record, does offer the ability to shop by theme in prominent places all over the site, including home page ["Explore by Trip Type"], and Vacation Packages and Hotels tabs ["Vacations by theme," "Hotels by theme"] ...)"

It is true that Expedia has been an innovator in some regards through its deft acquisition of TripAdvisor and the building of Expedia's advertising and media business.

In addition, Expedia indeed has been a leader in creating new types of business models for hotel partners, which I wrote about in Travel Weekly.

Still, those are very valuable and vital business-model innovations, but their behind-the-scenes nature makes these twists fairly impenetrable to consumer consciousness.

And, how soon will it be before Expedia's peers catch up in the media and hotel-model spheres?

The following comments in the Travel's Best and Brightest post reflected some of the common suppositions about the OTAs and Expedia.

Scott of TripIt said: "Yet you go to Expedia and you can't just search for air to 'Hawaii' and you can't even search for hotel that way. Why do we make it so hard for the consumer? I don't really care if it's the big island, Oaho, Maui... I just want warm and tropical with pineapple drinks and ocean waves."

Elliott Ng of the Up Take Travel Industry Blog criticized the OTAs' channel mentality, but supported Expedia's acquisition tear.

Ng said: "This difficulty of Web segmentation is then further reinforced by OTAs embracing a "channel" or "distribution" mentality. Developed in part through being successful and selling seats and rooms to people that most want them, it becomes extremely difficult to think more broadly about providing "content" to people who are not decided on their destination, for example. Take Expedia or Travelocity. I would contend that the skills sets (and technology platforms) at TripAdvisor or IgoUgo are very different from those at the OTAs themselves."

Ng added: "If I were an OTA, I would try to imitate Expedia's strategy -- buy up a bunch of content businesses, run them separately, and use them as a strategic asset to drive traffic to my booking businesses."

And, Douglas Quinby of PhoCusWright put an historical perspective on the debate.

Quinby said: "When it comes to innovation, travel intermediaries have a pretty mixed (that's being generous) track record, especially when they are under threat -- think travel agents, tour operators and wholesalers, GDSs. Some have done well, most have not."

Quinby added: It is hard "to remember those days when OTAs were thought of as young, nimble, innovative companies, more tech than travel... Now barely 10 years old and they're already supposedly the lumbering giants in travel distribution.

Quinby concluded, regarding the Travel's Best and Brightest comments: "This is truly an amazing thread with input from some amazing people. It highlights that online travel distribution will continue to be no less riveting in 2009."

Hey, Douglas. It's only the beginning of May.

Wednesday, May 6, 2009

Barney Harford and the Orbitz Flip

There has been much speculation this year that Orbitz is in play, that online travel agency consolidation will take place this year. Various analysts have talked about the possibility of Expedia acquiring Orbitz or perhaps Orbitz and Travelocity buddying up in a merger.

One industry analyst, who playfully describes himself as "one unusually brilliant and insightful industry analyst," even recounted speculation that Orbitz CEO Barney Harford, who was hired for the top post at the beginning of the year, was brought in with the express purpose of "flipping" Orbitz to a prospective buyer.

Actually, another possibility that is not getting much air time is a scenario where Travelport would reacquire Orbitz, and there are plenty of clauses in Harford's employment agreement that relate to that possibility.

Meanwhile, as the industry speculates about Orbitz's fate in 2009, Harford, who previously helped Expedia Inc. build its hotel business in Asia-Pacific, has been busy attempting to turn around the company and is looking like a pretty smooth operator.

And, indeed he has executed a "flip" of sorts, repositioning Orbitz with a marketing message that points to its consumer advocacy.

That is a helluva transition from its less-than-humble beginnings as what the trade press often referred to as "the controversial airline-owned website."

This blog has been buzzing as of late about "legacy OTAs" and their difficulties in differentiating. For more on that see, Travel's Best and Brightest on 'Legacy OTAs' and State of Online Travel 2009.

Although we'll have to see how long it lasts, Orbitz certainly has stepped out from the OTA pack with its Orbitz Hotel Price Assurance , and its moves to trim hotel booking fees and to display the total price of hotels up-front. Last year, Orbitz also led the OTAs in offering price assurance for flights.

Travelocity had carved out a marketing niche as a "customer champion," but it appears that Orbitz is stealing some of Travelocity's thunder.

Travelocity, Expedia and Priceline are sitting tight for now, waiting to see if Orbitz's price assurances actually reassure consumers and translate into bookings.

The predominate opinion among analysts is that Orbitz has come up with a nifty marketing message, and that the Hotel Price Assurance won't hurt the Orbitz bottom line too much because of the restrictive nature of its terms.

But, for now, it appears that consumers actually have a reason to book flights and hotels on Orbitz -- Harford's assurances are in place.

And, I'm not being flip about it.

Tuesday, May 5, 2009

Travel's Best and Brightest on 'Legacy OTAs' and State of Online Travel 2009

The comments below from travel company founders, CEOs and presidents; industry analysts; and veterans initially appeared under my post, GDS Full-Content, Twitter Metasearch, Southwest, Expedia, TripAdvisor.

They largely came in in response to an Expedia statement that I cited about the tough competitive environment for "legacy online travel agency companies."

You'll find comments below from top execs like Gregg Brockway (Hotwire, Classic Vacations, TripIt), Kevin Fliess (TravelMuse), and Valyn Perini (OpenTravel); analysts Henry Harteveldt (Forrester) and Lorraine Sileo (PhoCusWright); and a slew of industry veterans from Joe Buhler to Robert Cole.

These comments are noteworthy not merely for the fancy resumes attached to their authors, but for their often-mind-blowing insights. Many of the comments could stand as blog posts in their own right.

Feel free to add to the thread, which amounts to a State of the Online Travel Industry 2009.

Kevin Fliess said ...

I do think that the OTAs suffer from what Clayton Christianson termed "the innovator's dilemma" whereby incumbent, market leaders struggle to innovate out of fear of disenfranchising their installed base. Translations: People are comfortable with the OTA experience, which makes it very hard for the OTAs to change their experience.

Yet the reality is that there are an array of vexing problems in the online travel space that are yet to be addressed:
- helping consumers discover their ideal travel experiences based on their individual preferences and needs
- helping consumers more easily organize and plan travel (the 95% of effort that comes before booking)
- providing more relevant content based on web history (think Amazon's Gold Box)

Consumers are frustrated with the booking myopia and sameness of content and UI of the "legacy online travel providers."

I came from the Enterprise Software space and there are some very interesting parallels emerging in consumer online travel. In Enterprise Software the established players (SAP, Oracle, IBM) continue to wield great power, however a whole host of new players have emerged that have created composite applications that consume data and services from the giants.

TravelMuse and and other emerging travel 2.0 leaders are leveraging the web in new ways and innovating on top of existing systems to deliver value to the market in new ways.

The new models coming to market today (focusing on discovery and planning) will, over time, become the established models of tomorrow.
May 1, 2009 11:53 PM

Henry Harteveldt said...

I agree with Kevin. I also think this issue of innovation in the online travel planning and booking process goes even further.

I don't think that it's the traveler who's holding back the OTAs or, for that matter, any online travel seller. It's the travel sellers themselves.

For whatever reason(s), travel sellers are generally unwilling to truly innovate their planning and purchase processes. Few mainstream travel Web sites offer something as basic as theme-based search (e.g., search by interest or activity such as beach, ski, etc.). Yet we see this on travel search sites, such as Mobissimo and Kayak. offers this as well, though it's buried. Travelocity's Experience Finder and the visually-based booking engine on UK's site are two more examples of effective innovation.

Travel is an industry with thousands of Web sites that sell travel services and products, and yet innovation is as rare as a free package of pretzels in Economy Class. Most of the innovation we see comes from start-ups like TravelMuse,, Ruba, and others. In a way, that's good -- they're part of the continuum of change. Look at how Preview Travel,, Travelocity, and Expedia revolutionized the travel agency business more than a decade ago. It would be encouraging to see established travel sellers, both suppliers and intermediaries, be more willing to innovate. I suspect the firms that pushed the innovation envelope would benefit from, higher traffic, improved conversion rates, more loyal customers and increased revenue.
May 2, 2009 1:58 AM

Dennis Schaal said...

Kevin and Henry: A few thoughts...Why do you see theme-based travel search as so important? Are there huge numbers of arm-chair travelers who are remaining home because the travel-research process hasn't met their needs?

Also, the OTAs seem to be in a box. Expedia's TripAdvisor came out with its Fees Estimator, a nifty, yet still-rudimentary tool. How long do you think it will be before the other OTAs copy it? A couple of months?

As you both note, the ability of smaller companies to give the established players a run for their money always has driven innovation. That's why I hate to see a huge company like Sabre use its market dominance to try to stamp out the innovative moves of Farelogix.
May 2, 2009 7:53 AM

Gregg Brockway said...

Having been in both the OTA and the start-up seats, I’m a little more sympathetic as to why the OTAs are all so similar. (disclaimer: I'm president of I think it has more to do with their singular focus on the same core problem than an inability to innovate. We start-ups will do well to beware the elephants. Here a long-ish elaboration...

The typical trip life cycle goes something like this: inspiration > planning > booking > pre-trip > trip > post-trip. The OTAs (and suppliers) own the booking phase, which not surprisingly is where the most money has been historically. The problem in this phase might be summed up “I know where I’m going, how can I find the lowest price?” Given that price is by far the dominant criteria in the travel purchase decision, it's understandable why the OTAs have stayed focused on it. I’m not saying the OTA experience can’t be improved, but the OTAs are not dummies. They have optimized the bajeezus out of the low price search purchase path.

Fortunately, as we all agree there are lots of other problems to solve in travel beyond price and this leaves the door open for new solutions. While it’s not yet proven is that these are hugely PROFITABLE, I believe some will be truly disruptive and change the landscape.

Many of the new travel entrants are focused on doing a better job of solving the “inspiration” problem at the beginning of the trip lifecycle. This problem is basically “I’m looking for a [insert family friendly, romantic, golf, etc.] experience, where should I go?” While this is not nearly as big a problem as “low price” (most trips are not discretionary), it is an opportunity to create differentiation. The hope is that doing a good job answering this problem when you need it will create loyalty and provide a platform for extending into other phases of travel. It may well work.

TripIt’s approach was to start by focusing on the “pre-trip” and “trip” phases of travel. At TripIt, we don’t care where you choose to book your travel. We want to help you organize and share your travel plans so that everyone gets the right information at the right time. We think this is a really big problem and relevant to all travelers and all trip occasions. Further, by giving people a booking solution agnostic “home base” for their travel information, we’re well positioned to develop unique answers to a whole range of travel problems.

To me, the most interesting question will be whether the incumbents decide that the problems we new entrants are trying to solve are relevant to them. How will the OTAs respond if the new services start to encroach on their core business or make a lot of money? While the OTAs have been slow to innovate, it’s a whole lot easier to “emulate” success, particularly for companies like Expedia and Priceline that have hundreds of millions of dollars cash to play with.

Net, online travel may be over a dozen years old, but it’s not a “mature category” by a long shot. It’s going to stay a very interesting place.
May 2, 2009 7:54 PM

Henry Harteveldt said...

Dennis, our research shows that roughly 18% of travelers do not have a destination in mind when they start to plan their trip. Our research also shows that 46% of travelers allow their budgets to dictate the destination -- in other words, if they have $500 pp to spend, and destination A is too expensive, they'll search for an alternate. So I'd say that there's a sizeable market out there of travelers who are either indecisive or budget-focused -- and I'm sure there are some travelers who are both.

Travel sellers -- again, intermediaries and suppliers alike -- can profitably capitalize on this. Theme-based search -- beach, ski, etc. -- is one solution (UpTake offers this). Budget-based search is another. The greater the utility of a company and its eBusiness offerings, the more likely it will be able to earn customer loyalty and generate the kind of revenues - and profits - it seeks.

It won't be easy, it won't be quick, and it won't be cheap, but we'll see innovative companies continue to enter the market with new, relevant, and disruptive ideas. These ideas will benefit the consumer. As Gregg said, the incumbent companies that choose to respond can then decide whether they should emulate or buy the new entrants. We've seen this happen before, we'll see it happen again.
May 3, 2009 11:08 AM

Joe Buhler said...

I totally agree with Gregg's excellent observations and the valid reasons he gives for the position the OTAs are in today. They have for quite some time been able to pick the low hanging fruit and make a success of it by offering the best deals to online travelers who consistently have given the lowest price the highest priority. For the past few years now those travelers also started expecting more in terms of overall trip planning experience and feeling increasingly frustrated at not being better served by the established players.

Having worked for two decades in the "pre-trip" sequence of the travel process of Dream - Learn - Plan - Go - and now with social media Share I have since my first involvement with online travel a dozen years ago paid more attention to that 95% of activity preceding the 5% of the actual booking.

This is the world where DMOs have traditionally been active and have tried to influence destination choice. Like TripIt, they don't care how a visitor gets to their destination, as long as he visits them and not a competitor.

The recent shift in focus on that part of the travel process has opened new opportunities for DMOs but as it isn't in their DNA to be pioneers and innovators, new start-up players have appeared on the scene to take advantage. It remains to be seen how the incumbents will react to these new entrants and whether DMOs themselves will wake up and start working together with the new innovators and offer travelers an integrated and improved trip planning experience.

It would certainly be a development benefiting travelers in their quest for a better way to find the ideal trip that best matches their personal preferences.
May 3, 2009 5:17 PM

Lorraine said...

Yes, OTAs are not nearly as innovative as they should be because of their prioritization and focus on air/car/hotel transactions and yes - DMOs are popular in the "dream" phase. But PhoCusWright's research shows that OTAs are actually MOST popular in the dream phase despite their lamer efforts. And while there are terrific innovative niche sites for trip itinerary building and personalized recommendations - the traveler seems to prefer the "all you can eat - and we'll feed you too" methods of the OTAs. So again, PhoCusWright's research points to OTAs building through acquisition rather than being taken over. We'll see.
May 3, 2009 7:35 PM

Dennis Schaal said...

Gregg: I wonder what signs you see that the new services have any potential to encroach on the OTAs' business. I guess we'd at least be a couple of years away from seeing anything like that, no?

And, Lorraine: I guess your research shows that consumers want simplicity -- a one-stop shop -- even though the OTAs are doing a lame job on the inspiration front. I guess the likely scenario is that the OTAs will acquire some of the start-ups if the OTAs see the money in it. I wonder how you view Travelocity's ExperienceFinder in terms of its contributions on the pre-trip inspiration front.
May 3, 2009 8:08 PM

Valyn Perini said...

The discussion about ‘legacy OTAs’ (I love that term!) gives me flashbacks to the days when OTAs and GNEs were ascendant and the GDS’ were smeared with the ‘legacy’ and ‘non-innovative’ descriptions (I remember panels at industry events with the term ‘smackdown’ in the titles). The argument then was that the GDS’ had lots of content but no good way to present it, much less shop for comparison pricing. The OTAs stepped into the breach, offering content and a way to much more easily shop for pricing, and to buy.

It seems to me we’ve just moved into the next stage, and not because we can now apply the non-innovative and legacy terms to a new group of companies, but because the OTAs have shown the consumer what’s possible, and the natives have become restless.

At OpenTravel, we recently published schema in a series of projects led by companies in the adventure travel space, and that segment is a microcosm of this discussion. Buyers of adventure travel tend to be sophisticated internet users and are well-traveled, so they are used to buying travel online for their non-adventure trips. They are no longer content to look at a brochure with a photo of someone kayaking down the Colorado River; they want to see a video, they want to see the kayak’s specifications, see which operators are offering what kind of trip, see if there was any availability over spring break, and possibly actually book the trip.

The OTAs have not so far presented this type of complex product so several small start-up companies stepped into this new breach to offer consumers a full range of shopping, comparison and buying. In that space, some M&A is now going on amongst these segment-specific companies, but none of it involves the OTAs because they either think the market is too small, or it’s too much work to re-tool their technology, or it’s not within their scope.

These small companies in this niche market are doing what the OTAs can’t or won’t do. Gregg might be right; perhaps the OTAs are just waiting for the dust to settle in this market then they’ll scoop up the winning company, but that’s not a particularly innovative response to an obvious consumer need.
May 4, 2009 8:23 AM

Dennis Schaal said...

Valyn: I agree with you that some OTAs "either think the market is too small, or it's too much work to re-tool their technology, or it's not within their scope."

In fact, one OTA CEO told me the other day that pre-trip inspiration is not his priority right now because the "inspiration" issue doesn't impact enough customers. Understandably, the OTAs have bigger fish to fry at times, but it will be their loss if others move in.
May 4, 2009 9:02 AM

Scott said...

Let's not forget that technology limitations are still very real in our industry, particularly around air search. When I was at Hotwire, we were very well aware of the stats Henry mentioned above -- travelers, especially price-sensitive ones, are often flexible with regard to their destination. So we wanted to show them alternative destinations that had lower pricing, but the costs of doing air searches for many different O&D pairs was prohibitive given low conversion rates.

Take the simple example of Hawaii. I bet most Americans (especially those in states that don't border the Pacific) think of Hawaii as just a single place -- they aren't really aware of Oahu versus Kauai, and so on. And they certainly don't have a clue what the airports are on each island. Yet you go to Expedia and you can't just search for air to "Hawaii" and you can't even search for hotel that way. Why do we make it so hard for the consumer? I don't really care if it's the big island, Oaho, Maui... I just want warm and tropical with pineapple drinks and ocean waves.

Until we can solve even those simple problems, I think it's premature to talk about offering *real* travel advisory and planning tools that offer an array of alternatives and appeal to the inherent flexibility in many travelers. And to get there, I think we need to figure out a way to make air search just like a Google search: fast and free.
May 4, 2009 1:51 PM

Elliott Ng said...

I wanted to give some thought to this post and the questions that both Dennis and the commenters have raised. The core question is: why aren't the OTAs innovating as rapidly as they could? It seems like a more difficult question to answer than "they just don't get it"--people are rational and these companies are smart. I want to understand the underlying causes to see how the "mice" like UpTake can survive in an industry filled with "elephants" like the OTAs.

Henry's been issuing the call for greater innovation in travel and that "innovation is as rare as a free package of pretzels in Economy Class." But what are reasons why this is the case?

1. Difficulty of segmentation on the Web.
What have the "legacy OTAs" built? They have built a highly-efficient site experience to monetize the richest, most ready-to-convert traffic available on the Web. Everything they have done is optimized on the customer that is furthest through the purchase decision funnel and closest to buying.

Lorraine's point about the OTA's being heavily utilized by people in the inspiration phase just show how locked in they are. If they cater to their "inspiration" customers, isn't it quite possible that their more motivated "price-shopping" customers would leak away and reduce the overall conversion rate on their site?

This highlights what is very counter-intuitive - that customer segmentation is much harder on the Web than in other channels: whether that be direct mail, email, contact center, or at any other customer touchpoint. The Web must handle *all* user segments and the needs of these segments are much broader than what you find in other touchpoints (e.g. at the front desk, via call center).

2. resultant "channel" mentality vs. a "content" mentality.
This difficulty of Web segmentation is then further reinforced by OTAs embracing a "channel" or "distribution" mentality. Developed in part through being successful and selling seats and rooms to people that most want them, it becomes extremely difficult to think more broadly about providing "content" to people who are not decided on their destination, for example. Take Expedia or Travelocity. I would contend that the skills sets (and technology platforms) at TripAdvisor or IgoUgo are very different from those at the OTAs themselves.

Separating the "content" businesses from the "distribution" businesses seem like one way to create space for innovation that serves customers that are earlier in the purchase decision cycle and not currently being helped by the dominant OTA booking model.

3. inspiration and the early stages of travel planning are harder to monetize

Finally, I think the dirty little secret is that inspiration (and content) is just much more difficult to monetize. Part of that is the need to retain visitors through a longer decision making period, and part of it is that people have different preferences for ways to be inspired...hence the long tail of travel sites that receive a massive 10 billion search queries/year in Google and Yahoo!

Where is the future going?
Not mentioned by anyone is the extreme power of the search engines, both as a source of paid leads and also of organic search traffic. At UpTake, we've been extremely sensitive to the fact that we expect a large majority of our traffic to come through hundreds of thousands of "side doors"--pages that are optimized for a specific set of what the customer is looking for as expressed through their search intent at Google or Yahoo! In this way, we are accepting Google and Yahoo!s role in segmenting customers by need, theme, destination, and intent.

We also think content businesses (including DMO sites) will continue to be rewarded by the increasing power of search.

UpTake's point of view is to be a channel to hard-to-discover content and aggregate information in one place so people can move through the decision process faster. If we do a good job, we can take difficult-to-monetize inspiration traffic and turn it into monetizable leads that get sent to OTAs. While OTAs have this challenge of web segmentation, "channel mentality", and fear of losing good traffic chasing after "bad" traffic, this opens opportunities for all players in the marketplace without these constraints (including UpTake, other travel planning startups like TravelMuse, DMOs) to be complementary to the core OTA offering.

If I were an OTA, I would try to imitate Expedia's strategy -- buy up a bunch of content businesses, run them separately, and use them as a strategic asset to drive traffic to my booking businesses.
May 4, 2009 5:13 PM

Joe Buhler said...

Interesting thread here with good insights into what will be major shifts in the industry. What's pretty clear to me is how early we still are in the process of offering travelers a seamless experience to complete the various task related to how travel is researched, planned and bought using the web. Despite the seemingly dominant position of the major OTAs due to their high brand recognition, bought at great expense over the past ten years or so, it's not a given that they will be the ultimate winners.

They will need to move fast to capture that still undecided traveler or risk being left out of the loop as non-brand keyword search directs those people to different sites that in future might not longer just pass them on to a third party site for the actual booking but decide to get involved in the transaction themselves. Sure, some might be acquired but others will survive and develop supplier relationships of their own to satisfy the demand they create.

Exciting times ahead, it seems.
May 4, 2009 8:28 PM

RobertKCole said...

I agree with many of the previous comments, but there are some additional forces at play.

First, the size and investment profile of the OTA's applies pressure on the organizations to chase quarterly profits and defer innovative projects that require greater development effort or longer time horizons. As a result, product and development teams are driven to find the proverbial "low hanging fruit" and progress becomes evolutionary instead of revolutionary.

A dozen years ago, when running the hotel line of business at Sabre, I had the pleasure of working closely with a Terry Jones funded team headed by Bob Offutt called Sabre Labs. The group did exceptional work, developed a number of great prototypes and secured several patents.

Despite what I recall as ongoing calls by Sabre's development establishment to kill the unit, significant consumer facing solutions like parallel search, drive pathing, dynamic packaging, budget based flexible date search, collaborative filtering, mobile apps and destination resolution were researched and prototyped.

There was true innovation taking place - I recall the CEO of MapQuest (pre-merger w/AOL) enviously asking "How did you do that?" after a demo of a mapping application.

Much of the innovative work was well ahead of its time, and as a result, was eventually shelved due to extended payback periods or development resource prioritization. Some products, like the flexible air search and Dream Maps were ultimately released, but what I see on Travelocity today still looks a lot like the proofs of concept a decade ago.

These days, it looks like Sabre Innovation Labs has been focusing on internal expense reduction initiatives as opposed to customer facing revenue generating applications.

One should remember these firms often look at cutting $1.00 in expense as adding $1.00 to the bottom line, where adding $1.00 of revenue drops only $0.15 (if they are lucky) to the bottom line.

The squeeze on development resources has also made build v. buy decisions more straightforward. Building from scratch presents business risk and resource scheduling challenges, where buying an existing technology limits risk to the cost of integration - normally a lower risk scenario if the purchase price works.

In short, the OTA's have been "innovating" through acquisition for over a decade and list is impressive (and I am sure I missed a few…)

For Travelocity (Sabre), the list includes: Preview Travel, GetThere, site59, IgoUgo,, World Choice Travel, SynXis, nexion, Virtually There and moneydirect. On the back-end Sabre has also acquired , TRAMS, Gradient, Flight Explorer, E-site Marketing.

Orbitz,itself an acquisition and subsequent spinoff from Travelport (the successor of Cendant Travel Distribution Services), has an acquisition portfolio that includes CheapTickets, Neat Group,, travelwire, , Flairview Travel (HotelClub and RatestoGo), asia-hotels, ebookers,, GORP, OutsideOnline and On the Travelport side, Wizcom, THOR, Shepherd Systems, Galileo, Worldspan, Gullivers Travel (gta), Octopus Travel,, and Travelbound were also acquired. This list excludes assets that were acquired and later divested by Travelport such as Travel 2/Travel 4, TRUST, Wizcom, and Travelbag. It should also be noted that the Orbitz fare matrix is based on technology externally developed and licensed from ITA Software.

Expedia, since being spun off from Microsoft has acquired Hotel Reservations Network (now, Travelscape, Hotwire, TripAdvisor, Classic Vacations, TravelNow, VacationSpot, Metropolitan Travel, Newtrade, CruiseCritic, SeatGuru, IndependentTraveler, smartertravel, bookingbuddy, Travel-Library,, VirtualTourist, Venere, and eLong (investment).’s pace of acquisitions has been slower than the others, perhaps because all other travel transaction models were not wiped out by the reverse auction method as originally predicted by founder Jay Walker. Once they diversified into mainstream booking processes, priceline also acquired other travel assets –, TravelWeb,, BreezeNet, and

There are a lot of innovative companies and technologies covered in the list above. It seems the majority of the companies were purchased post-launch after establishing some degree of market awareness and/or commercial success. It appears OTA investment activity has been predominantly M&A based and it does not seem that there has been any material degree of angel, early or late stage venture capital participation by the OTA's.

Based on the large number of acquisitions, a considerable amount of development effort would be required to integrate the technologies and business processes from these operating businesses into the parent. One could also conclude that these integration efforts, with pressure to quickly gain synergies and eliminate operational redundancy, would gain access to resources that might have otherwise been dedicated to organic development projects.

With recent competitive fee cuts designed to gain share from competitors and supplier sites putting pressure on OTA earnings, the environment for allocating R&D funding to organic development or seed investment are likely to remain constrained. Strategic acquisitions able of drive increased traffic, retain existing customers, reduce costs or eliminate competition will inevitably be continued by the OTA’s.

The more interesting question is if the challenges presented by the global financial crisis will constrain access to sufficient capital for small, innovative travel technology companies to launch and gain enough attention or volume to attract the attention of the OTA’s.

Private capital will determine if innovation continues in the travel industry. Based on the global nature and fragmentation of the travel business, I bet it does.

As a matter of fact, if any angels out there have $3-$5 Million in seed money available, I would be happy to discuss a couple ideas I have...
May 5, 2009 2:50 AM

Monday, May 4, 2009

A Mea Culpa to United Airlines Because I Didn't Know Squat

I blogged a few days ago and chastised United Airlines for its lack of tweets on, well, Twitter.

I had looked at United Airlines' Twitter account and at the time saw only 14 tweets since the account was opened March 18.

Not a very robust showing in this hot, social-media forum. Some people and companies post more tweets in a single day.

Now, it turns out, I was a bit off the mark.

United Airlines spokeswoman Robin Urbanski Janikowski informed me today that someone had improperly registered the United Airlines user name on Twitter and the airline had been working with Twitter to wrest control of the account, which it successfully did last week.

"Therefore, any tweets -- or lack thereof -- prior to last week were because we didn’t have the rights to our name," Urbanski Janikowski said. "Just wanted to make sure you knew the facts, which Twitter can confirm."

Apparently this kind of problem is not uncommon. Twitter indeed has a policy against name squatting for just this kind of situation that United Airlines found itself in.

The United Airlines spokeswoman said the airline doesn't know the identity of the squatter.

In the interim, United Airlines indeed has started to tweet, and so far I like the tone because the airline is getting conversational, cracking jokes, and engaging its customers.

For example, a passenger named Mark Peacock tweeted the following to United Airlines today: "Thought the lie-flat beds were a bit narrow compared to BA (British Airways), etc. Wish I saw them on more than just the ORD-LHR route."

United replied to Peacock: "Did you put armrests down? Makes it a few inches wider. New seats are scheduled on 7 flights from ORD."

So, United at least is being a bit helpful, and informative, letting the traveler know that new seats are in the works on seven flights from Chicago. United's response wasn't an infomercial, but part of a conversation.

And, Peacock, seemingly satisfied, answered United: "Didn't let down the armrests -- wasn't an obvious option. Been flying 777s most recently so haven't seen too many UA lie-flats."

At another point, United apparently erroneously addressed a female traveler by her road-warrior father's name, John. The airline quickly recovered, showing a lighter side in a tweet: "Just thought we could reach out to our niche market -- people named John :) Also, 'enter' button is a little slippery :)"

In between the conversation, there also are some opportunities for United Airlines to drive some traffic and to up its Twitter ROI through fare sales like this one that it tweeted this afternoon.

Nice going, United. It looks like you are finding your voice.

And, I am glad that you are understanding the space and aren't trying to spam and utter corporate-speak 24/7.

This kind of dialogue can't hurt, and can only benefit your brand.

The Travel Blogosphere: Give Us Bonus Points

I love the travel blogosphere because collectively we have so much to offer, given the number of brainiacs, analysts and muckrakers out there who are contributing to our travel industry knowledge base.

In perusing some recent posts and tweets, I see that Tom Botts of the Hudson Crossing Travel Industry Insight blog points out that Delta and Northwest brought back 500 bonus miles for online bookings, and Botts puts the move in the context of these airlines trying to restore some juice now that the online travel agencies have eliminated booking fees on flights.

Then there is the Susan Black Associates blog, which yesterday graded a few major travel players on their social-media responses to the swine flu. While Black handed out an A+ to Funjet Vacations, Travelocity and Expedia may have to stay after school because these two OTAs brought home grades of C.

And, Forrester Research travel analyst Henry Harteveldt added to the mix when he compared airlines' online efforts regarding the swine flu. Harteveldt tweeted yesterday: " home page lacks specific info re:airline's response to #swineflu. AA, Delta, JetBlue, US Airways do better."

All of these travel industry veterans/bloggers and microbloggers have something to add. Let 100 flowers bloom.

And, hopefully I contributed a bit to the conversation through my posts on the Dennis Schaal Blog about Priceline's hotel-coupon promotions on Twitter, a bid to ramp up its followers.

Or, at the least, hopefully I elicited from you a LOL with my post, Expedia, Priceline in Twitter Trash-Talk.

Meanwhile, totally off-topic because that's the kind of guy I am:), a shout-out to Echo Cleaners, my dry-cleaner in Springfield, N.J., for going organic. Woohoo.

I would give them the shirt off my back.

Over and out.

Friday, May 1, 2009

Expedia, Priceline in Twitter Trash-Talk

No, Expedia didn't name any names.

But, Expedia clearly took a swipe at Priceline and TheNegotiator on Twitter this afternoon with the tweet:

"Happy Friday to our 7,000+ followers! We are honored that you follow us, bribe-free :)"

Expedia's jab clearly was in reaction to Priceline's series of hotel-coupon promotions in the past week. TheNegotiator's following has gone through the roof in the past week. When I just looked it was at 8,420.

Expedia obviously has a problem with Priceline's success.

And Expedia's we're-on-high-ground and you're-not tweet assuredly could not have been tweeted without the explicit authority of Chairman Barry Diller or CEO Dara Khosrowshahi. (OK, I'm kidding on that, but I loved writing it.)

TheNegotiator indeed had an answer when Susan Black pointed to Expedia's diss.

TheNegotiator tweeted: "@Susantravels I don't know why they are jealous. They already received their $50 Hotel Coupon, oops ... I mean bribe. :)"

Meanwhile, some in the travel business, including myself, are enjoying the sparring.

As Douglas Quinby opined on Twitter: "Love competitors going at it on Twitter. EXPE vs. PCLN. TVLY, OWW, why so quiet...?"

Orbitz and Travelocity, among the other major online travel agencies, what is your strategy for getting up to the JetBlue level on Twitter?

And, we're wondering just how jealous Expedia might be about Priceline's rapid Twitter ascent.

Could this be a case of Coupon Envy?

Priceline Is At It Again on Twitter

Fresh after ramping up its Twitter followers by 400 percent in six days with a hotel-promotion that ended April 28, Priceline is at it again with a fresh $50 marketing play with the same bulking-up-on-Twitter goals.

TheNegotiator just tweeted: "Cinco De Mayo Promo! May 5th - 500 random followers will get a $50 HOTEL COUPON! More followers = better chances!!! - pls RT!"

Actually, Priceline's strategy is ratcheted up a bit with this second promotion because it is trying to strike up relationships with influential Twitterati.

The way the Cinco De Mayo promotion is structured is that a Priceline follower who might have 1,000 followers would get 1,000 chances to win one of the 500 hotel coupons. A Priceline follower with only 10 followers would only get 10 chances to get a coupon.

Playing these odds, the most influential among Priceline's followers would take home the bulk of the 500 coupons.

It's hard to believe that an influential Twitter participant would warm up to Priceline and become a substantially more loyal customer because of a $50 coupon, but this seems to be Priceline's thinking on the issue.

Then again, perhaps this Priceline promotion is only the beginning of its efforts on Twitter to build customer loyalty.

These Priceline promotions put a punctuation mark on the question of whether offering $50 per follower might be an expensive proposition.

Alas, it must be very cost-effective and, well, cheap.

Consider that:

1. To redeem the $50 hotel coupons, followers must book a minimum 3-night stay on a relatively pricey 3-star hotel or higher.

2. And, they must do so through's high-margin Name-Your-Own Price merchant-model-hotel business.

3. So, assuming that some of those people booking rooms using the coupon aren't regular Priceline customers, the online travel agency is chalking up incremental bookings.

4. And, as is par for the course with coupon promotions, a lot of people won't use them. And, that means Priceline enticed a bunch of people to follow TheNegotiator on Twitter without spending a penny.

5. Also, think of the buzz that this promotion is creating as followers re-tweet the tweet and good-for-nothing journalists like myself write about it.

And, apparently, I was the first muckraker to write about Priceline's marketing play when I broke the story in Travel Weekly.

Incidentally, Priceline, I'm told, has worked out the coupon delivery issues and now can DM (Direct Message) thousands of hotel coupons per day through Twitter.

As of this writing, @denschaal, has 426 Twitter followers.

So, the Priceline promotion makes me wish I had a few hotels to leverage.

GDS Full-Content, Twitter Metasearch, Southwest, Expedia, TripAdvisor

Some random, but hopefully logical thoughts, about travel distribution issues on a Friday morning [EST].

GDS Full-Content and Social Media: I've written in Travel Weekly how GDS full-content is a sham these days, given the airlines' full-throttle approach to introducing optional services. Although the airlines are testing filing these products with ATPCO, many of these services are still the exclusive offerings of airlines' websites.

So, it occurred to me that Twitter, too, already is further disintermediating the GDSs and travel agencies, or at least giving airlines a speedy and effective tool to go direct to their customers. The number of special fares and promotions that you can find on Twitter, with the airlines funneling consumers directly to their websites for inventory that often is unavailable in the GDSs, is numbing.

Twitter Metasearch: And that brings me to Twitter Metasearch, an application that a developer somewhere already must be fine-tuning. In the social media realm, we already have ExecTweets, a service that aggregates the tweets of CEOs and other C-Suite executives.

So, someone should create an application to aggregate all of the promotions and special offers on Twitter by industry vertical.

We might call the travel vertical on Twitter, TwitYak or KayTwit. You choose.

But, an aggregation of airline and other travel promotions like Priceline's now-ended $50 hotel-coupon offer and Connect by Hertz's one-year free membership offer for Twitter followers, would be a winning proposition.

Southwest, JetBlue, United: Speaking of airlines, some obviously understand social media and others are in the early stage and are coming up short. In her podcast on the IAG Blog, social media consultant Susan Black reminds me of an anecdote that Southwest founder Herb Kelleher recounted at the recent TravelCom conference in Atlanta. Kelleher said Southwest indeed is active on Twitter and sees it in part as a customer-service vehicle.

He said Southwest has seen a drop-off in the number of customer complaints to the Dept. of Transportation because Southwest has been able to deal with these issues directly with customers through Twitter.

Meanwhile, I took a look yesterday at JetBlue's tweets and compared the volume to those of United Airlines, which admittedly has dabbled with Twitter only since mid-March. JetBlue had 11 tweets yesterday, and United had a mere 14 in total since March 18. C'mon United. Jump in! This is an opportunity to improve the image of your brand, which could use some improving.

Expedia: Here's some interesting information about Expedia as it assesses what do about the $6 million per month impact from its eliminating or reducing, respectively, its air- and hotel-booking fees.

Expedia's booking-fee nixing terminates at the end of the month, and most people think the online travel agency will extend it.

It turns out, Expedia tells me, that its points of sale in Germany, France, New Zealand and India, as well as sister company Hotwire, also offer flights sans booking fees. in Germany eliminated its air-booking fees in April, although Expedia says the actions by its global points-of-sale did not take place in the context of a broad, coordinated initiative.

Well, according to Expedia's latest 10-Q filing, it gets 15 percent of its global revenue from airline tickets and 60 percent of its total revenue from transactions involving hotel sales. So, it is easy to see why eliminating the fees on air is less of an issue for Expedia than trimming its hotel fees, a move it made in reaction to an Orbitz initiative.

And, in the SEC filing, Expedia notes that it is trying to diversify its offerings beyond air and hotel by expanding its "car rental, destination services, cruise and other product offerings."

For years, online travel agencies have been bent on diversifying beyond air and into hotels, and now the pressures are coming to bear on the hotel business, so Expedia, at least, is looking to more fertile pastures.

It indeed would be ironic if analysts start berating the OTAs in the coming years that they are too dependent on the hotel business.

And, Expedia also concedes, in a way, a point that Forrester Research analyst Henry Harteveldt has been hammering home as of late: That the OTAs have fallen down on innovation, with each almost resembling a clone of the other.

Expedia states: "Differentiation among the various website offerings has narrowed dramatically in the past several years, and the travel landscape has grown extremely competitive, with the need for competitors to generally differentiate their offerings on features other than price. Newer competitive entrants such as “meta search” companies have in some cases been able to introduce differentiated features and content compared with the legacy online travel agency companies..."

Notice that Expedia refers to "the legacy online travel agency companies." I haven't heard that term used before in reference to the OTAs.

Are the OTAs getting to be "old school" with the metasearch engines and companies like TripIt and TravelMuse passing them by?

TripAdvisor: Part of Expedia's diversification efforts include hitching its star to TripAdvisor's global media business.

In the first quarter, the revenue of TripAdvisor, which just launched in China, grew 19 percent to $86 million. And, its OIBA (Operating Income Before Amortization) climbed 36 percent to $48 million.

With those kind of margins for TripAdvisor, this seems more like a Fat Tuesday than a random-thoughts-Friday.