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 Voyij.com engage in screen-scraping lite.
There is a cost associated with each one of the 1,900 searches required to bring home a booking.