Expedia drops phone booking fees

Expedia announced today that they are removing booking/service fees on all travel products sold through Expedia's call centers.

From an airline perspective, the move is interesting in that it will now be cheaper for consumers to book with an OTA then calling the carrier directly. (Except, of course, for Southwest which does not charge extra for a call center booking but they don't participate in the OTAs anyway.) The move is another example of how the OTAs have continued to differentiate themselves from the suppliers in terms of service, functionality and price. The list of enhancements the OTAs have made this year is long and compelling and great for consumers. Just to tick off a few: Orbitz TLC, Orbitz Price Assurance, Expedia's SeatGuru reviews, Priceline's iPhone app all come to mind.

And what of the timing, by the way? Interesting that Expedia announced this change the same morning as Orbitz announced earnings - particularly when Orbitz had this say in their statement: "This net revenue decline was due primarily to the removal of most air booking fees and the significant reduction of hotel booking fees on the company's domestic websites, as well as a decline in average hotel room rates globally."

Today's move by Expedia along with the OTAs' other enhancements this year should be a wake-up call for suppliers - Airlines and hoteliers cannot continue to sit still while they are out-innovated by the distributors. Piling on more fees or other dis-incentives for booking through specific channels only further harms the supplier's brand and the overall customer experience. Suppliers, wake up!

United Actually Reduces a Fee. Yes, You Read that Correctly

Today, United Airlines announced they were dropping last-minute fees for Mileage Plus frequent-flyer award ticket redemption. Yes, this is not a misprint but a case of an airline actually dropping an irksome fee. Currently, non-elite Mileage Plus members are charged $100 to redeem within six days of travel and $75 within seven to twenty days.

These fees have long pained consumers but have been revenue generators for the airlines. After all, it costs an airline the same amount to pull miles and issue a ticket for free travel two hours before a flight leaves vs. two months.

We can think of few other fee roll-backs that once they have been widely accepted by the industry. USAirways stopped charging for sodas but only after they were not matched by any of the major airlines. Similarly, Delta was forced to back down on new international baggage fees after the industry failed to match leaving Delta uncompetitive.

Indeed, prior to Northwest's acquisition by Delta, Northwest did not charge last minute ticketing fees. However, that perk (or should we say Worldperk) went away as soon as the ink was dry on the merger.

Bravo, United.

Travelocity and Orbitz match Expedia but Differences Remain and Orbitz Adds a Twist

So, today is June 1st and not surprisingly, Orbitz and Travelocity have fallen into line and matched Expedia's air booking fee removal which was announced last week. However, as usual in this game, plenty of nuances remain between the different sites.

For one thing, Orbitz and Travelocity have not eliminated *all* booking fees - they still charge them on multi-carrier itineraries and trip which originate outside the United States, Canada, Mexico and the Caribbean. So, intrepid travelers who use Travelocity or Orbitz to book a flight from Moscow to Minsk will still get hit with a booking fee on Orbitz and Travelocity. Similarly, let Orbitz or Travelocity find a great fare using American one way and Delta returning and you'll also get hit with a booking fee. Odd, because these kinds of tickets certainly don't cost either Orbitz or Travelocity more to sell or process than a regular old domestic ticket to Chicago.

(As an aside, Priceline does not sell international point of origin tickets)

Orbitz is still charging $30 (over and above anything the airlines charge) to cancel or change a ticket they sold. Priceline has not charged these fees for years and Expedia eliminated them last week when they announced they were removing booking fees for good. Travelocity also does not charge these fees.

Orbitz is showing another new feature for air consumers - it is a little hard to find, but Orbitz is now allowing bookers to cancel a ticket without penalties until 10PM CT the day after it was booked. This feature (which has been long available to traditional agents who are able to simply void tickets before they are fully reported to the airlines via ARC) is new to the online travel agency world. While the websites have always been able to do this, none have ever used it as a marketing tool. Several airlines (Delta, United come to mind) have similar features but this is one more example of Orbitz delivering more value to consumers. As just pointed out by Travelocity, they too offer this feature. Very cool but again, pretty well hidden - and it seems like a key differentiator from supplier sites.

And, if none of the OTAs are charging fees, do all the "fee chop," "no fees," and "booking fees eliminated" marketing messages really mean anything to anyone anymore? These are starting to sound a little like "Best Rate Gurantees"

Expedia Does Away With Air Booking Fees for Good and Drops Others as Well

As we predicted, Expedia today made the removal of air booking fees permanent, matching Priceline and sister site Hotwire's no-fee consumer proposition for the long-term. No word yet from Travelocity and Orbitz but we expect they will fall in line as well. Of note, Expedia has removed all air booking fees - Orbitz is still charging them on multi-airline and international tickets with originations outside of the US/Canada/Mexico/Caribbean.

In so doing, Expedia has removed one of the major obstacles to their continued growth in the domestic US markets - a $7 price differential vs. booking direct.

In addition, Expedia has also removed the annoying "ankle-biter" fees that they used to charge for changes, cancellations etc of air tickets, hotel rooms, cruises and rental cars. Sister site Hotels.com had already removed these fees on hotel room changes and cancels some time ago and Priceline began the trend. These fees were charged by Expedia and were over and above the fees that airlines or hotels charged for making changes or cancels. Rest assured, those fees still exist regardless of booking channel. Funny that as airline continue to race to add fees for everything from redeeming frequent flyer miles to checking bags that Expedia is heading in the opposite direction.

A critical missing element in the press release was any mention of the go-forward plan on hotel booking fees - something Expedia has never messaged to consumers - only to Wall Street. Orbitz is still running with a July 15th cut-off date for their reduced fee promotion on hotels but given Orbitz's site changes to highlight the "all-in" price, we doubt highly that they will back off come mid-July keeping the heat on Expedia and Travelocity. Priceline, of course, hasn't had any of these fees (air or hotel) for some time.....

Next Round in the Online Travel Agency Fee Wars:: Orbitz Cuts Hotel Booking Fees

Orbitz fired off the latest salvo in the continuing war between the Online Travel Agents (OTAs) by removing the somewhat hidden booking fees that have pervaded the industry's merchant model. These booking fees have typically been included in the "second step" of the booking process after the consumer clicks on the rate at the hotel they wish to purchase. The fees have been bundled together with taxes in a single "taxes and fees" line without delineation to the consumer on which portion was/is taxes going to the government and which portion is fees going to the OTA.

This is a page right out of Priceline's play book but with a twist. PCLN eliminated the fees on non-opaque (meaning NOT name-your-own price reservations) several month ago under their "Fee Chop" moniker but only shows the "all-in" price when the consumer clicks to book. Orbitz, to their credit, is showing the full price, including taxes on the first page - something even Hilton.com does not do.

We sampled a room for tonight, Wednesday at the Hilton New York to see how the big OTAs and Hilton.com compared. As expected, every site we tested came back with the same initial price: $219. However, from there, prices diverged widely when the "all-in" price was compared:

Hilton.com $253.71
Orbitz.com $253.10
Priceline.com $253.76
Travelocity.com $262.46
Expedia.com $287.83
Hotels.com $287.83

Remember, these are the fully-loaded prices off the same $219 base room rate. Wow! Quite a difference indeed.

Obviously, Travelocity, Expedia and Hotels.com are adding some significant revenues under the guise of "taxes and fees" - often more fees than taxes!

Orbitz is clearly looking to strike Expedia and Travelocity where it hurts in their most profitable segment - hotels. The question is, will consumers notice? After all, all of the OTAs have had these "hidden" fees for years - with few complaints from consumers. All of the competition has been on the first page - ensuring that the first rate consumers see for a hotel is competitive.

And this is yet another "temporary" promotion - only for bookings made between now and July 15th. Will it last longer? Priceline's Fee Chop certainly has.

And there is still that little cancellation fee that Orbitz dings consumers for. Priceline and even Hotels.com have long removed the $25 cancellation fee they imposed above any fees the hotel itself might have charged. The $25 cancel fee lives on at Orbitz, Travelocity and Expedia. Will this be the next frontier in the race to be the most "consumer friendly OTA?"

Orbitz finally falls in line with no booking fees: OWW

This morning, Orbitz matched competitors Expedia, Travelocity and long-time forerunner Priceline in removing booking fees on airline tickets. The duel continues. Orbitz, like Expedia and Travelocity, is billing it as a "promotion" through May 31st but as we've stated before, we don't think that putting this genie back in the bottle will be easy come late May.

Wisely, Orbitz excluded tickets that utilize a combination of airlines from the fee waiver. This is laudable because these kinds of tickets are difficult, if not impossible, for the supplier sites to sell. (when was the last time you bought a Delta ticket at United.com?) Also, because of Orbitz's strong ITA Software search engine backbone, Orbitz often provides lower combinations of multiple carriers than Expedia, Travelocity or Priceline. This may enable Orbitz to preserve at least some of their fee revenue - time will tell how much.

We also like that Orbitz is weaving their innovative Price Assurance plan (which protects consumers from airfare decreases after buying a ticket) tightly into the no-fee marketing. This provides a one-two punch vs. Expedia and the supplier (airline) websites which do not have a similar program.
But, we do worry about the costs associated with both of these efforts. Consumers apparently appreciate Price Assurance, but these payments come directly from Orbitz - not the airlines. Absent much or most of the $7 per ticket fee revenue that Orbitz has enjoyed, this program may get expensive quickly.

Similarly, as previously discussed, a much larger portion of Orbitz's earnings come from booking fees. (Citi estimates nearly 60% for OWW vs ~10% for EXPE.)

Orbitz's long-time focus on air (at the expense of higher margin hotels) is finally coming home to roost - OUCH or OWW may be perfect now more than ever.

The continuing OTA drama: Priceline jumps into the "me too" promotional game

This morning Priceline announced an airfare price reduction protection promotion. Similar to Orbitz's Price Assurance (which is not a limited time promotion) Priceline's Pricedrop Protection offers consumers a rebate back on their airline tickets if another Priceline customer books the same flights, dates etc at a cheaper price prior to travel.

We'll see if this "promotion" becomes a permanent feature or not but we bet it will - we've heard it has been highly successful for Orbitz in retaining customers and improving conversion rates.

In a fairly direct slam on both Travelocity and Orbitz (the latter has yet to announce a reduction in booking fees) Priceline claims "The new promotion, which is free to consumers, is ground-breaking because it makes priceline.com the only major online travel agency to offer no booking fees and automatic Pricedrop Protection on its published-price airfares and vacation packages." This message is consistent with Priceline's value consumer positioning - it also increases the pressure on Orbitz to make a move with regard to booking fees. Someone else (who doesn't have booking fees) now offers pricing protection.... And what of Yapta?