Aggregators: Changing the Way Consumers Book Travel Online

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A new breed of travel sites is making airfare, hotel, and car rental searches easier, and more objective

For many travelers, booking a vacation online is like going on a virtual scavenger hunt. They pick up a hotel at one site, search two others for a good airfare, and then turn to two more to compare rental car costs. Phocus Wright, an industry research organization, estimates that consumers check an average of three websites before ever making a booking.

But all that may be about to change thanks to a new breed of websites that have been making inroads into the way consumers research and book travel. Called "aggregators," they're the bloodhounds of the web, travel commerce sites that don't actually sell anything. Instead, they "google" travel offers, scurrying from site to site to find the best rates. If the consumer ends up booking a flight, hotel, rental car or (soon) cruise through one of these aggregators, that site gets a commission from the website that made the sale.

Sounds like a simple concept, right? But as more and more engines join this increasingly crowded field, they're bringing to it a wide range of services and user interfaces; and raising the hackles of the more established players.

Bad for the "big boys," good for consumers?

The larger, more established sites have good reason to worry about these new players; according to PhoCusWright, of the $40 billion dollars spent on online bookings in 2003, 75 percent were made through Expedia, Travelocity and Orbitz. These giants want to keep their customers right where they are.

"Customers trust us and they know that they can do it [book their vacations] on one site," contends Stewart McDonald of Expedia. "We believe that our business is about providing the whole trip."

But that model may be shifting as these new sites achieve prominence. Just today, Kayak.com (one of the newest of the aggregators) announced a partnership with AOL that will give it a much-needed infusion of cash and a serious dose of credibility. The other three we profile below all have plans in motion to expand their offerings and are picking up new users on a daily basis.

Just as importantly, these sites are much more cost effective for both the suppliers of travel and consumers. The New York Times recently interviewed Henry Harteveldt, of Forrester Research, who explained that airlines typically pay $10 to $17 for tickets processed by the global distribution systems travel agents use; with aggregators, they pay on average $5 or $6.

Consumers also pay a significant price for booking with one of the big boys. Users of Expedia, Orbitz and Travelocity are shelling out, on average, an additional $5 in service fees for airfare bookings (on top of taxes and security fees); for hotels these charges can be much higher. This is on top of rates for hotels and airlines that are inevitably higher (at least in our searches) than the ones found through aggregatores.

The aggregators also tend to offer a more objective search. Unlike many big online agencies, which give a more prominent position in their searches to the airlines, hotels and rental car companies that pay more for placement, most of the aggregators don't play favorites. "We all saw that online travel is broken. Consumers are cross-checking incessantly because they know they can't trust the first price they get," says Steve Hafner of Kayak. "It's a frustrating shopping experience. So we decided to change it with a site that offers comprehensiveness of rates and information, is easy to use and objective. We're a technology company, not a travel agency. We don't care what you buy or where you buy it."

Trying to hold onto their market share, the largest sites have been fighting back in the area that they can control: searches of their sites. Says Stuart McDonald of Expedia, "We have informed all of those small scraping sites that we will not be working with them and we do not wish for them to scrape [search] any of our prices. That's not just Expedia, but Hotels.com and Hotwire." Michelle Peluso, CEO of Travelocity, told the New York Times that her site would be doing the same, and two weeks ago Orbitz made a "low fare promise" that anyone who finds a lower fare than on their site will be eligible for a $50 coupon from Orbitz towards their next trip. (The pledge is so full of caveats and deadlines that we doubt many consumers will be able to catch them on it. Still, it's a potent PR move.)

But it may turn out that the aggregators don't need the biggies; they may be able to carve out quite good business models simply searching the airlines', car rental companies' and hotel chains' booking engines directly.

Which travel gumshoe for you?

In looking at the various search engines, it's important to first figure out what type of traveler--and shopper--you are. Are you flexible enough to schedule your air travel based on price? Are you particular about how many connections you'll take? Can you wait an extra 45 seconds to get four times as many searches, or do you want your results in 15 blinks of an eye or less. These are the issues that separate the four big players; and may some day determine which succeed, and which go the way of Urbanfetch.com.

Best for super-flexible travelers: Cheapflights.com

Searches: Flights only

Strengths: Cheapflights gathers ticketing information from sources that no other website--that we know of--searches: the small and medium-sized discounters (or consolidators) that specialize in very specific parts of the globe. "We bring the recognition that the big names in travel don't have the best deals," says Hugo Burge, Chief Executive of Cheapflights, USA. "This is especially true of international travel, where these smaller consolidators may have specially negotiated deals with the airlines for one particular route, which can save the traveler between $50 and $100 per ticket."

It does this by searching such relatively obscure discounters as 800-FLY-EUROPE, AirlineConsolidator.com, and Brazil Projects. Since these companies are so small, they don't have the capability to fulfill online searches by specific date. Instead, they give Cheapflights a range of dates with their lowest possible prices listed; consumers then contact the companies directly to get quotes for specific dates.

"There's no magic bullet that will allow you to always get the cheapest flight," says Burge. "But we aim to offer consumers a broader spectrum of flight deals so that they'll have a better shot, at least, of finding the right fare." Cheapflights also has the capability to search for business- class seats.

Weaknesses: Because Cheapflights.com cannot offer date-specific searches (except through a side engine which only searches the big three: Travelocity, Orbitz and Expedia), sometimes using the site can be a wild goose chase. You finally find a fare that looks right, only to contact the company and find it cannot be booked for the dates you wished to travel.

Cheapflights is also a bit limited in its departure gateways. At this point, it only allows searches from US gateways to the rest of the world.

Best for international travel...sometimes: Mobissimo.com

Searches: Flights and hotels

Strengths: Founded by Stamford computer science PhD Svetlozar Nestorov (he was in the same class as the Google guys) and entrepreneur Beatrice Tarkas, Mobissimo wants to go where no other search site has gone before: to Europe, to Asia, Down Under. Instead of just searching US-based sites, it also scans the offerings of dozens of sites based in other countries, with a built-in currency converter to allow American consumers to see, in real time, ticket prices. So for flights within Asia, it will go to Zuji, the Asian equivalent of Travelocity; for France, it scrapes the offerings of Anyway, a French site owned by Expedia. "We believe that just like Google, if you want to provide good information, you have to search everywhere," says Tarkas.

Sometimes this global approach works like gangbusters: In repeated searches for tickets from foreign gateways to other gateways (for example, Lima to Hong Kong), Mobissimo won the price war by a significant margin. It was especially helpful when we were searching for airfares to get to the Olympics, being the only aggregator to search the smaller, low-cost European airlines.

Weaknesses: Unfortunately, Mobissimo is not often in first place, price-wise, when it comes to travel directly from American gateways. Though it sometimes matches other sites it rarely beats them, especially for domestic travel.

There are also issues with language and follow-up. Mobissimo translates prices on its site but when it shuttles consumers off to a foreign site they are often faced with booking engines in another language (thought to be fair the site does allow you to limit your choices to English-only sites). It's also unclear what the consumer would do should a problem arise with a booking; foreign sites are governed by different regulations than those in the US, and may be staffed by non-English speaking customer service representatives.

One final weakness: Mobissimo doesn't clearly distinguish between the fares that have taxes and service fees included and those that don't meaning you're often looking at apples...and kumquats.

Most convenient site: SideStep.com

Searches: Airfares, rental cars and hotels

Strengths: If you've ever wanted to see how the site you're searching compares with others--within 20 seconds or less--SideStep is the site for you. The only one that needs to be downloaded (it's a simple, quick process), SideStep creates a toolbar to "the side" of whichever site you're searching to run its own alternate search. The results are often impressive, partially because SideStep has partnered with such a wide range of sites (it's the only aggregator or booking engine out there with permission to post Southwest Airlines fares). While it does a good job on international travel, domestic travel is its strongest suit. It's currently the fastest, and may also be the biggest of the sites, with over seven million travelers downloading its tool so far.

Weaknesses: Though we find the side-by-side searches quite useful, many consumers are hesitant to download, worried about privacy issues. Phil Carpenter, Vice President of Marketing insists, "We have a really solid privacy policy, we never sell email addresses to make income, we wear the white hat. We're blessed by TrustE" (the web privacy watchdog group). But consumers and others in the industry continue to snipe (rival Tarkas of Mobissimo told us that your privacy was "better served" with her company as Sidestep would "trace your transactions").

This issue should be solved come January when Sidestep unveils its latest incarnation: A web-based search engines that won't need to be downloaded. The new site will also be accessible to MAC users--a big step forward.

Most bells and whistles-laden site: Kayak.com

Searches: Airfares, hotels, car rentals

Strengths: If big names guaranteed success, this site would be on its way to becoming the McDonald's of web travel. Of course they don't, but there are a lot of highly respected minds behind this newcomer, including Steve Hafner (a founder of Orbitz), Terry Jones (former CEO of Sabre and Travelocity), Greg Slyngstad (his last gig was Expedia) and Paul English (once a veep at Intuit). Their site is still only in its BETA infancy but it already has some comely features, including an option to share the search with a travel partner working on a different computer (in real time); and a whiz bang tool bar that allows consumers, with a smooth flick of the wrist, to shape their search, eliminating airlines they don't like from the mix, departure times that would be inconvenient, and flights that have too many stops. It's a bit hard to describe, but this new tool bar is certainly one of the most user-friendly, and just plain fun, that we've encountered thus far.

The site will also soon be customizing information, a la Amazon.com. "Finding hotels online, in particular, is an area where consumers feel frustrated," explains CEO Steve Hafner. "But we'll have the ability to personalize your experience. If you tell us which hotels you like in Chicago, we'll be able to cross-tabulate to hotels that people like you have picked for London." Travelers may eventually set up two profiles for themselves, one for business travel (where nonstop flights and fancy hotels may be de rigeur) and one for leisure travel (where saving money is the top priority).

Weaknesses: The site is currently the slowest of the aggregators, sometimes taking a full minute to cycle through all of the options. Though Hafner claims that that's because of the comprehensiveness of the search, it can be a frustrating wait. Hopefully, it will speed up once it's out of BETA-mode.

One other small glitch: Sometimes there's a discrepancy between the fares on the Kayak site and the quotes once a user clicks through to the seller's own website. On four separate test searches there was a difference in price by three or four dollars, and in one case the rate listed on the sellers site was a full $20 cheaper than Kayak displayed.

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