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.


Douglas Quinby said...

Oh flip, Dennis, you're gonna create a flap.

Joe Buhler said...

Who knows what will happen. Just wait for an indicator, usually in the form of a strong denial that the company is not for sale etc. etc. followed shortly after with the announcement of a deal.

This would make Barney a flipper of a totally different kind than the one associated with the minimum wage. Hardly what he would collect were Orbitz actually flipped.

Dennis Schaal said...

Joe: Yup, a denial would be par for the course. With its stock still bobbing around in the $2 range, buying Orbitz would be relatively cheap. With all that's been going on recently -- the air and hotel booking-fee wars, total price on hotels, price assurances and OTAs building out their media businesses -- the second half of the year should be a humdinger.

And Douglas, oh flip, I love a good flap. It sells newspapers, virtual or otherwise.