The speculation speaks to the power of travel search.
I say the following only somewhat facetiously, but the travel industry is almost getting to the point where almost nobody will be selling travel anymore -- all of the travel businesses will be building platforms to enable consumers to search for travel instead as part of their ever-growing advertising/media strategies.
Think of Google, which sells huge amounts of travel advertising, but doesn't own a travel business.
Which brings me to Orbitz and Kayak, already close partners in Kayak metasearch. Orbitz is Kayak's exclusive online travel agency partner in Kayak metasearch.
Speculation has been rife that Orbitz, the weakest sister among the online travel agencies, is in play. When Expedia eliminated flight-booking fees, taking away a huge chunk of Orbitz's revenue, the prognosticators offered a scenario that perhaps Expedia would buy Orbitz or maybe Travelocity and Orbitz would join forces.
But, the Orbitz-Kayak merger theory posits that Orbitz could build a profitable search business in tandem with Kayak's metasearch platform if Orbitz downplayed its transaction business and leveraged the huge amount of air and hotel searches that consumers already are conducting on its global websites.
For Kayak, a merger of some sort with the larger and search-query-rich Orbitz brand would give Kayak even greater scale, including in markets like the U.K., where Kayak's effort have been sluggish.
I wrote in this blog recently, how Pegasus Solutions found that its system gets 1,900 hits from travel lookers for each booking conversion.
In this regard, travel businesses across the spectrum are trying to grow and monetize their advertising/media platforms as an alternative to their fickle, competition-laden transaction businesses.
From a financial standpoint, I don't know how a Kayak-Orbitz merger would work.
Orbitz, saddled with debt and struggling, has limited options. And, although Kayak acquired SideStep for around $200 million in 2007, an outright purchase of Orbitz would seemingly be cost-prohibitive, given Orbitz's huge debt load.
Still, wiser heads than mine are telling me that the financial folks can figure out a formula for getting an Orbitz-Kayak combination done.
Such a deal would speak volumes about the evolution of the travel business.
