Orbitz Engages in Media-Network Building with Lodging.com Rebirth

Orbitz Worldwide recently brought Lodging.com out of mothballs and is engaging in some nation-building.

Or, should I more aptly say, some media-network building.

To understand what Orbitz is attempting, think the TripAdvisor Media Network, which has been clicking its way to success on a global scale for its Expedia Inc. parent.

Lodging.com, founded in 1995, acquired by Orbitz ancestor Cendant in 2002, and all but retired as a URL until recently, is part of the OWW Away Network. That network is part of Orbitz's hoped-for answer to TripAdvisor's gains in the media business.

"The relaunch [of Lodging.com] reflects Orbitz Worldwide’s focus on monetizing under-utilized assets in its portfolio of travel brands and better monetization of its non-transacting traffic," said OWW spokesman Brian Hoyt.

That "non-transacting traffic" element is key as Orbitz, like other online travel companies, is hoping to monetize the legions of lookers who don't book. The solution, as the OTCs see it, is facilitated search or even metasearch.

The soft relaunch of Lodging.com, which uses facilitated search to promote the booking engines of Travelocity, hotels.com, Expedia.com, Kayak, Mobissimo, Priceline, OWW brands and others, follows the relaunch of another retired OWW brand, Trip.com.

Also part of the Away Network, Trip.com is a travel search/media site for flights, hotels, cars, vacation packages and cruises.

While Trip.com offers the full gamut of travel inventory, sister brand Lodging.com has a hotel focus.

In addition to providing facilitated search for hotels through partnerships using the booking engines of all the aforementioned OTCs and metasearch companies, Lodging.com partnered with Vast.com, a vertical search company, to offer vacation rentals, bed and breakfasts, inns and campgrounds, Hoyt said.

"The relaunch of Lodging.com will test how consumers respond to various travel search offerings, and its user interface is likely to change over time," Hoyt said. "The site will remain in beta until its functionality has been thoroughly tested among consumers."

Asked whether OWW was considering a metasearch launch, in addition to the one-booking-engine-at-a-time approach inherent in facilitated search, Hoyt replied: "For now, we are focused on beta testing a facilitated search platform blended with Vast.com's listings for vacation rentals, campgrounds and B and Bs."

The "for now" part is important. Certainly the strategic thinkers at Orbitz have pondered the launch of metasearch, as Expedia has done through TripAdvisor flights and Travelzoo has done with Fly.com.

Orbitz has a long way to go to compete with TripAdvisor. Other than the Orbitz brand itself, OWW doesn't have a brand, in its Away Network or elsewhere, that can compete at the moment with the TripAdvisor brand.

But, the resurrection of Lodging.com and Trip.com are huge steps in the right direction for OWW. Together with OWW's emphasis on building its hotel business, the Away Network initiative is another signal that Orbitz, under CEO Barney Harford, is beginning to get its act together.

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Tuesday's Travel InsideOut

PhoCusWright analyst Norm Rose takes on Forrester’s Henry Harteveldt and notions that online travel agencies are not performing well. It's great to see some dialogue among competitors.

Travel Technology: Innovation in Online Travel: The general media is a buzz with stories about the lack of innovation of the major OTAs. A recent Forrester Report which shows consumers' frustration with online travel planning and booking is cited. The report stated that many consumers are fed up with the complicated process of planning and booking travel online. Part of this frustration concerns added fees, what we like to label in the travel industry as ancillary revenue. The article points to a resurgence of bookings through traditional travel agents. Read more

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What will Air Canada’s decision to drop its ITA Software-built reservations system project mean to ITA and its customers? And, what’s up with Air Canada making new approaches to the travel agency channel?

Dennis Schaal Blog: ITA Software's Lollipop: ITA Software, the king of online air search and pricing, undoubtedly took a big hit when Air Canada cancelled the bulk of the reservations system that ITA had been working on for four years. Read more

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Perhaps Continental Connection Flight 2816 and its stranding of 48 passengers for hour upon hour at Minneapolis-St. Paul airport last Friday will get a Passenger Bill of Rights bill moving without delay.

PeterGreenberg.com: Express Jet Tarmac Nightmare Prompts Renewed Calls for Passenger Bill of Rights: Passenger rights advocates are renewing their push for legislation to protect fliers from excessive airport delays, after an incident last Friday in which 48 people were stranded on a plane for more than five hours. Read more

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Travel Weekly packages a sector-by-sector analysis of what the Winter might yield.

Travel Weekly: Disappointing summer could make for a very long winter: This is the time of year when many travel companies, particularly airlines, generate their peak revenue. They make hay.

But not this year. Read more

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More bullishness here about Priceline as the online travel company, with its Name Your Own Price business in the U.S. and Booking.com in Europe, beat analysts’ expectations for the 13th consecutive quarter.

Motley Fool: Fly, Priceline. Fly!: You can't keep a good portal down. After priceline.com (Nasdaq: PCLN) delivered another better-than-expected quarterly report yesterday, its stock soared 14% higher on an otherwise down day. Read more

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Some breaking news here about how Orbitz Worldwide is poised to modify its modified retail business model for hotels in certain Asia-Pacific markets.

Dennis Schaal: Where in the World is the Orbitz Hotel Business Model?: Orbitz Worldwide is about to change its hotel business model and go-to branding in Asia-Pacific. Read more

Traffic Jam

The following posts of recent -- and not so recent -- vintage still are ratcheting up this blog’s traffic numbers:

Twitter Travel Search: the Start of Something Big

Google: We Won't Be a Copycat in Travel

Kayak's Hafner Awaits Google Hotels

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

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Travel InsideOut is a Dennis Schaal Blog daily feature. Get a thorough-going look at the day's travel industry top and tangentially interesting stories. Feel free to comment on them below.

Travel InsideOut is Copyright (c) 2009 by Dennis Schaal. All rights reserved.

Where in the World is the Orbitz Hotel Business Model?

Orbitz Worldwide is about to change its hotel business model and go-to branding in Asia-Pacific.

It's an evolution of OWW's global, multi-brand strategy, where its core hotel business model varies from region to region.

In North America, where full-service online travel companies Orbitz.com and CheapTickets.com prevail and vacation packages are vital, and in Europe on ebookers' turf, OWW sees the merchant model remaining its dominant practice.

But, in parts of Asia-Pacific, Orbitz will tweak the RatesTogo.com modified retail model by expanding the booking window from 28 to 365 days, and in many markets OWW will designate HotelClub as the lead brand.

RatesToGo is a unit of OWW's HotelClub, a hotel-only site that is strong in Asia-Pacific and Europe. Today, HotelClub uses the merchant model for gateway and other major destination cities, and RatesToGo uses the modified retail model, where consumers prepay the RatesToGo commission and booking fee in the form of a deposit and pay the balance to the hotel upon checkout.

The commission generally is 10 percent to 15 percent.

Mike Nelson, president of the Orbitz Worldwide Partner Services Group, said the strategy soon will change so that HotelClub will be the lead brand in emerging markets and in "secondary cities" in Asia-Pacific, and HotelClub will offer both the merchant and modified retail model with the longer 365-day booking window.

However, the strategy will vary market to market, Nelson said, with RatesToGo and HotelClub coexisting in the current status quo in Australia, for instance, where RatesToGo is strong.

OWW's initial focus for expanding the modified retail model from last-minute inventory to bookings 365 days' out, and pairing it with merchant model rooms on HotelClub is in Asia-Pacific, Nelson said, but he doesn't rule out a broader rollout.

Asia-Pacific is fertile ground for the modified retail model because, among other advantages, it eliminates the need for the hotel to set up a commission-payment system, Nelson said.

And, that makes it easier for HotelClub to sign new hotel partners, especially among smaller or independent hotels.

And, in focusing on a niche of emerging markets and secondary cities, OWW may be able to avoid head-to-head competition with some of the region's strongest hotel players like Ctrip in China and Rakuten in Japan.

At least, that's the hope.

Oh, by the way, HotelClub's new modified retail model will have it's own catchy branding.

At least, that's the hope, too.

Related Post

As the Online Travel Companies Turn

Does Orbitz Ratestogo.com Mean Merchant Model To Go.com?

Orbitz Worldwide CEO Barney Harford is bullish on subsidiary ratestogo.com, the Sydney, Australia, hotel business primarily selling last-minute rooms in Europe and Asia.

Harford said during the OWW Q2 conference call yesterday that he "loves" the ratestogo.com business model, which offers a twist on the traditional agency model.

Harford, who pledges to go gang-busters in building the Orbitz hotel business, said ratestogo.com's "modified retail model" is much simpler than the merchant model, which requires tons of nurturing and work.

And, besides, ratestogo.com immediately receives its pre-paid commissions, ranging from 10 percent to 15 percent, in the form of deposits as soon as consumers book the rooms.

Some 15,000 properties have signed up for the ratestogo.com approach, Harford said.

Here's how the ratestogo.com model works.

To book the Palms Hotel and Spa Miami, the consumer pays ratestogo.com up-front a $47.40 "deposit," including a $3 nonrefundable booking fee.

So, ratestogo.com collects its compensation immediately and doesn't have to wait weeks or months for finicky hotel chains and independent properties to send commissions.

And, from a consumer perspective -- and here's a HEADLINE -- the booking fee is transparent -- $3.

After the room is booked, ratestogo.com e-mails the customer a voucher, which states that consumer must pay the $251.60 balance, plus applicable city, state and other taxes, to the hotel upon checkout.

In this way, the hotel gets its money immediately upon the completion of the stay.

In turn, with online travel companies being tracked by tax-deprived cities, counties and states across the country, ratestogo.com bows out of the whole tax mess, and pays diminished credit card fees because it is merely processing the deposit and not the full retail rate for the room.

Tom Botts, a partner in Hudson Crossing, notes that collecting commissions from hotels can be "a horror show" so speedier payments are advantageous to the intermediaries.

However, a downside for the OTCs is that they wouldn't get to hang onto the hotels' money for as long as they do now under the current merchant model.

Harford said the ratestogo.com business faced challenges in the second quarter, largely because it does a lot of business in Europe, where the downturn is acute.

He offered some tantalizing hints about the future utility of the ratestogo.com model as he praised its advantages over the merchant model.

For example, Harford said it is easier to acquire hotel partners using the ratestogo.com model relative to the merchant model, which requires a protracted effort.

So, could the modified agency model be rolled out on a broader basis internationally and in the U.S?

I don't believe that Orbitz is about to chuck the merchant model -- although it has less at stake than Priceline and Expedia. For example, Harford said Orbitz estimates it only has about a $1 million annual tax exposure for its merchant model hotel business in New York City.

And, whether the ratestogo.com model would win broad consumer acceptance, given its complexity, is another issue, Botts pointed out.

Ratestogo.com currently offers "last-minute" inventory for bookings up to 28 days' out.

In response to an analyst's question about whether OWW was considering expanding ratestogo.com's 4-week window, Harford coyly replied: "Stay tuned."

If the OTCs are forced to abandon more U.S. cities because of adverse rulings on the merchant model tax question, perhaps the ratestogo.com model could get some increasing attention.

We're "staying tuned."

Tuesday's Travel InsideOut

Months after pitched allegations surfaced that it manipulated reviews on TripAdvisor's Cruise Critic by wooing frequent cruisers, Royal Caribbean has chucked its Royal Champions program in favor of blogs, Facebook and Twitter.

Travel Weekly: Royal Caribbean disbands Royal Champions: Royal Caribbean International ended its Royal Champions program, saying that it has supplanted the program with new social networking outlets. Read more

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When Google bobs, the travel industry weaves. The betting here is that Google is not about to launch another Expedia any time soon, but Steve Hafner of Kayak believes that Google is poised to build out its content to cache-in on hotel pricing.

Dennis Schaal Blog: Kayak's Hafner Awaits Google Hotels: Kayak CEO Steve Hafner thinks "it's only a question of time" before Google begins displaying hotel pricing, a move that could change the online-travel ecosystem. Read more

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Online travel companies, from Travelzoo and Expedia to Priceline and Orbitz Worldwide, are the darlings of the stock market...this week. In down economic times, goes the thinking, these babies can find travelers deals and get some revenue and profits going.

Seeking Alpha: Online Travel Companies: Good Places to Book Some Profits: Online travel booking companies have been taking off lately especially in the wake of Travelzoo (TZOO) and Expedia (EXPE) both posting solid revenues last week. Wall Street analysts yesterday decided to hop aboard the online travel express by upgrading both Orbitz Worldwide (OWW) and Priceline.com (PCLN) probably so they don’t look like idiots when those companies beat their upcoming earnings estimates. Read more

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Expedia’s affiliate network replaced metasearch company travelsupermarket.com in powering travel offerings for The Guardian. The travel pages on the newspaper’s website attract a few eyeballs….around 2 million or, conventionally speaking, some 1 million unique visitors. Score one for the OTCs over the metas.

Travolution: Expedia to expand white label scheme as meta sites pull out: Expedia Affiliate Network president Henrik Kjellberg says there is “no technical limit” to how many websites the business can work with, and that cannibalization of customers from the core Expedia Inc. brands is not an issue. Read more

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HRG is downsizing with a twist. Through its Options for Change program, the travel management company is giving employees a measure of customization in the concessions and cutbacks they accept. No reports yet about whether the staff is, well, hog-wild about the idea.

e-tid.com: HRG seeks concessions from staff: Hogg Robinson Group chief executive David Radcliffe has agreed a 5% pay cut as part of a move to protect the business in the current economic climate. The rest of the HRG board will take the same pay cut, which is effective from 1 September. Read more

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Hawaiian Airlines arrived with the top on-time performance in June while American Airlines, JetBlue and regional carrier Comair were unfashionably late, according to the Dept. of Transportation. Overall,on-time performance improved from a year ago, but slid compared with May.

Dow Jones Newswires: US Airlines' On-Time Performance Improves In June From Year Ago: U.S. airlines' on-time and baggage-handling performance improved from a year earlier in June but worsened from May, the U.S. Department of Transportation said Tuesday.

Air traffic has been easing in recent months as carriers continue to cut back capacity amid slack demand. Read more

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Travel InsideOut is a Dennis Schaal Blog daily feature. Get a thorough-going look at the day's travel industry top and tangentially interesting stories. Feel free to comment on them below.

Travel InsideOut is Copyright (c) 2009 by Dennis Schaal. All rights reserved.