Tuesday, March 17, 2009
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......