Summary
-Travelocity matches Expedia's booking fee reduction -Orbitz will be forced to match -Limited to no effect on Priceline
Analysis
Today's Wall Street Journal is reporting that Travelocity will announce they are matching Expedia in removing booking fees for published airline tickets until May 31st.
As
we previously posted, we don't think the removal of booking fees at
Expedia (or Travelocity) is a temporary promotion anymore than it was
for Priceline and Hotwire. Adding fees back in is hard - really hard.
It
has taken Travelocity a week to digest this dramatic change in the
landscape that has occurred and now they have gotten on board. And now
Travelocity has matched Expedia - reminds us a little of how the
airlines all miraculously match fares and add-on fees. This is a
seismic change for the OTA industry - Expedia has put all of their
chips "in."
Orbitz
will be forced to match the fee reduction as well - the customer
overlap is now just too large to ignore. According to Nielson/Net
ratings data from 2007, well over 50% of visitors to Expedia also visit
Orbitz or vice-versa. We doubt that some of the airline product
innovations that Orbitz has developed (Orbitz TLC, Orbitz Pricematch)
will be enough to convince finicky customers (just look at those
retention rates!) to book with Orbitz vs. Travelocity or Expedia. If
only Orbitz had spent as much time working on hotels as they have on
air......
