Competition in online travel forces site upgrades
March 26, 2007：While continuing to go head-to-head on pricing via a cornucopia of deals and methods, the major online travel sites are increasingly employing value-added services to get consumers beyond the dollar signs and hooked on using a favorite site.
PRICELINE´S ANNOUNCEMENT THIS WEEK THAT it´s adding free-access Zagat hotel reviews to its site is another sign of value-added escalation in the fiercely competitive online travel bookings market.
Competitive pricing remains a given--"It´s what I call ´the ticket of entry,´" acknowledges Randy Wagner, CMO for Orbitz Worldwide. But while continuing to go head-to-head on pricing via a cornucopia of deals and methods, the major third-party/consolidator sites--plus a growing number of specialized and meta search sites, not to mention stepped-up branded hotel and airline sites--are increasingly employing value-added services to get consumers beyond the dollar signs and hooked on using a favorite site.
"Travel sites have become something of a commodity, so they´re looking to differentiate themselves by offering savings plus additional value, in the form of services like reviews by customers and third parties, travel advisories, frequent-user programs--you name it," sums up Joel Chusid, principal in the Chusid & Associates travel consultancy and chairman of the Association of Travel Marketing Executives.
Hotels´ increasing limitation of inventory available to third-party sites to boost their own direct sales is contributing to both the pricing and value-added wars. (While online travel agent and hotel reservations still account for just 30% of total booking dollars, hotel online revenue growth leapt 240%, to $14.4 billion, in 2005, and now threatens to outpace online agencies´ growth, which was up 400%, to $18.4 billion in ´05, according to Mintel.)
"Priceline is still primarily all about finding the best prices," he says. "We´ve traditionally been known as the ´Name Your Own Price´ service, and that´s truly unique, because you can´t find these prices elsewhere." stresses CMO Brett Keller. (Priceline´s ´Name Your Own Price´ option is "opaque," in that consumers supply location and other factors, and learn the actual hotel/airline flight after purchase. Non-opaque options are also available.)
At the same time, in recent years, Priceline has been "layering in" shopping tools. The Zagat hotel reviews join the site´s existing Zagat restaurant and attractions reviews, plus customer reviews.
"The idea is to help users find the right hotel as quickly and easily as possible, and go beyond the typical online hotel information and pictures, to provide a rich resource of reviews by name brand," says Keller, who adds that more general travel content wouldn´t fit the purpose. "Our content is designed to support the decision-making process for a hotel or flight or package--to help the consumer get really great value for the travel dollar," he explains.
Next steps at Priceline include offering next-generation mapping tools that enable enhanced user interactivity for a variety of purposes, such as easily calculating walking/driving distances.
Meanwhile, the competition is busily promoting its own value-adds.
Last year, Orbitz moved beyond a more or less basic flight status alerts service to create a branded "TLC" services suite. A "command center" staffed by former military air controllers and travel experts continuously updates information on flight and gate changes, weather conditions and any development affecting travel to destinations around the world (e.g., transportation strikes), plus advice on how to deal with specific problems--all accessible by mobile or web-enabled phone or computer. The traveler´s friends can also be alerted to delays, and if there´s a need for last-minute flight changes or hotel booking, a connection to Orbitz´s booking agents is but a click or dial away.
"The value proposition is giving people more for the same price, in the form of giving them more control over their trip," says Wagner, who confirms that customer loyalty/repeat business are indeed enhanced, while the open-access services policy attracts new customers and bookings that Orbitz might not otherwise have garnered.
Orbitz also offers customer-generated reviews (screened to verify these are from actual travelers/hotel users, not vested third parties) and branded Frommer´s reviews.
Expedia promotes its "Best Price Guarantee," refunding the difference (and adding a $50 bonus) when customers can document lower prices elsewhere. Site value-adds include a redesigned home page for easy navigation by destination, deal and trip type (e.g., "beach," "family"), and a new page that consolidates all of its booking tools. Air fare and hotel rate calendars show how prices change by shifting travel dates. RSS feeds and FareAlert features deliver the latest deals on a traveler´s specified routes and destinations in real time. Virtual hotel tours are complemented with (verified) customer reviews. Customers can shop by trip theme and book on-site transportation and entertainment/sports activities in advance.
Travelocity also offers a price guarantee, and in 2005 introduced "Customer Championship," a broad series of initiatives/investments in technology, policies, company culture and training and "empowerment" of agencies. ExperienceFinder, a site that´s now in beta stage, aims to go beyond automating individual shopping and booking components, to provide a "holistic approach to the dreaming and planning" stage. ExperienceFinder will create/sell "unique experiences in a cutting-edge way that enables Travelocity to differentiate, especially from supplier direct and meta search," she says.