This year, US consumers will spend $51.5 billion booking travel online, according to Forrester Research. That's expected to soar to $110 billion by 2009.
Jones, of Dallas, is chairman of a start-up called Kayak.com, which has offices in Maynard and Norwalk, Conn. Initial funding came from the Cambridge venture capital firm General Catalyst, where Jones is a partner. Kayak aspires to be the Google of online travel, providing the Web's most comprehensive search for consumers who want to make sure they're getting the best possible deal. Kayak will compete against a handful of other start-ups -- and possibly Google itself -- in an arena dubbed "multi-site search."
Another firm, Lexington's TripAdvisor, which collects reviews on hotels and destinations, was sold in April for $200 million to Barry Diller's InterActiveCorp. It had just 35 employees, and had raised only $4.5 million in venture funding. Cofounder Langley Steinert says his company has plans to offer multi-site search this year, in part to compete with Kayak.
SmarterLiving, a profitable Cambridge company that has eschewed venture capital, is adding employees and expects its revenues to double this year. Its roots are in an e-mail newsletter that founder Daniel Saul sent to his friends, alerting them to last-minute air fare bargains. Founded in 1998, the company has evolved into the Filene's Basement of the Web, offering page after page of information about air fare sales and dirt-cheap cruises. It launched a separate site last year, BookingBuddy.com, which allows users to search multiple sites for air fares, car rental quotes, hotel rates, or cruise packages.
Only one Boston-area site of substance, Somerville-based BizTravel.com, vanished for good after Sept. 11. VacationCoach.com, which offered guidance in selecting a vacation spot based on user preferences like travel time and available activities, went dark in 2002 when it was unable to raise additional venture capital. But its former chief executive, Rob Roberts, recently bought back VacationCoach's assets (except for its domain name), and revived the same service with a new name: TripSight.com. He paid less than $1 million, he says, for technology investors had put $5 million into, though he did give old investors a stake.
ITA Software, of Cambridge, supplies e-commerce technology to two of the top 10 most-trafficked travel sites, Orbitz and Cheap Tickets. This year, it has grown from 50 people to 75, and chief executive Jeremy Wertheimer says he expects revenue to be up about 60 percent. (Like Saul at SmarterLiving, Wertheimer runs a profitable company that never took venture capital money.) Later this year, ITA plans to debut a more sophisticated search engine for hotel availability. Small, independent hotels sometimes don't show up in the big reservations databases, Wertheimer says, and bigger hotels may advertise different prices on different sites. "Rather than forcing you to look at pages manually," he explains, "we're going to be able to say, 'We've looked at everything, and now we're showing it to you in some easy-to-read form.' "
Everyone seems to be interested in multi-site search, in part to stop consumers from shopping around. And everyone's anticipating Kayak.com's takeoff, waiting to see what the new site will do better than its rivals. Some competitors scoff at the idea of trying to launch a travel site in 2004: "It took us 4 years to get where we are," says Steinert at TripAdvisor.
The main thing that makes Kayak worth watching is the team behind it. Jones from Travelocity is chairman, Steve Hafner, a former Orbitz executive, is CEO, and Greg Slyngstad, a founder of Expedia, is on the board. "This is a start-up that comes with people who understand how quickly this industry mutates," Jones says. They picked the name Kayak to evoke the watercraft's lightness and maneuverability.
Kayak will need that maneuverability, since its rivals include not just TripAdvisor and BookingBuddy, but SideStep, Qixo, Mobissimo, Yahoo (which bought a company called FareChase last month), and potentially Google and Microsoft. All face the challenge of comprehensiveness; some airlines, like Southwest, don't seem eager to play in the sandbox. Others may not want to pay each site for customers referred their way, a key source of revenue.
"It's going to be incredibly difficult for all of these guys to survive," says Forrester analyst Henry Harteveldt.
Perhaps. But even though many dot-coms disappeared, travel sites have shown an amazing propensity for staying aloft.
A new way to shop online for travel bargains
Eleena De LisserWall Street JournalAug. 18, 2004 01:31 PM
Comparing Travel Search EnginesServices like these look for travel prices on many different sites at once:
FareChaser, www.farechase.comWHAT IT SEARCHES: Looks at 150 or so travel Web sites for air, hotel and car rental prices.EXAMPLE: Found fare of $148 from Atlanta to Chicago's Midway airport. Lowest price on Orbitz for the same dates and to the same airport was $172 on Delta Air Lines.COMMENT: Yahoo Inc. recently bought it.
Mobissimo, www.mobissimo.comWHAT IT SEARCHES: Currently only air fares, but company will add hotel and car rental capability later this year.EXAMPLE: Search for inexpensive flight to New Orleans from New York City, turned up JetBlue flight for $166.70. Lowest price on CheapTickets.com was $239 on American Airlines.COMMENT: Searches non-U.S. travel sites, and plans to allow searches based on activity. (Example: New York to the beach, instead of New York to Jamaica.)
SideStep, www.sidestep.comWHAT IT SEARCHES: Company says it searches "dozens" of travel Web sites.EXAMPLE: A search on www.sidestephotels.com for a room in Beverly Hills spotted a $98.47 nightly rate at the Crowne Plaza Hotel Beverly Hills. On Travelocity the price for the same class of room and same date was $129.94 a night.COMMENT: For hotels and car rentals, consumers can search SideStep via any Web browser. For airfare, currently SideStep is software that you must download and install.
Qixo, www.qixo.comWHAT IT SEARCHES: Searches more than 28 airfare sites, and also has limited hotel and car-rental search tools.EXAMPLE: Looking for a Miami to Las Vegas flight, we found a $201 flight on American Airlines. The price on Expedia for the same flight was $200 (not including Qixo's $20 fee).COMMENT: This search engine acts like a travel agent because it makes the reservation for consumers, unlike the other engines. Qixo charges users $20 per ticket.Examples were searches done last week for flights departing Aug. 30 returning Sept. 6. Hotel example in SideStep was for one night, Aug. 30.
A fast-growing class of travel search engines can help find good prices quickly:
• Search engine Mobissimo.com found a $152 flight on American (listed on Travelocity.com)
• Qixo.com found a $153 American flight (but it tacks on a $20 charge)
• For comparison: The lowest offering from travel agent Expedia.com was $191 on DeltaNote: Searches performed Monday for roundtrips Sept. 6-10 between New York JFK and New Orleans.
For bargain-hunting travelers, it has become almost second nature to turn to Web sites like Expedia.com, Orbitz.com and Travelocity.com in planning a trip. But increasingly, the established players lack some of the best prices - and are being challenged by a new generation of price-searching sites.Rather than serving as online travel agents, the new sites are search engines that scan as many as 150 other travel sites, including the majors, for prices. That lets travelers do side-by-side comparisons rather than having to check lots of different sites.In addition to scanning the travel-agent sites, the search engines also typically pull prices directly from the Web sites of airlines, hotels, car-rental agencies too. For example, a search might provide the price of a plane ticket on Delta Air Lines through Expedia, as well as the price available by booking directly through Delta. That's important because, as the travel industry gets squeezed, many companies are keeping some of their best prices on their own sites. Airlines, for instance, can save up to $17 in various costs per ticket by selling directly to the public.
One of the more powerful new search engines is Mobissimo.com, which rolled out a tool for finding airline prices in March and plans to expand into hotel and rental-car prices by Thanksgiving. Also, the company is developing a search tool that will let you search based on an activity, like skiing or going to the beach, rather than a specific destination. For example, Mobissimo says that later this year, you will be able to ask the site to search for the best prices between New York and the beach.
SideStep, a travel search engine that previously required installation of special software, has two new Web sites that browse for prices - www.sidestephotels.com and www.sidestepcars.com. It plans to add Web capability for airline searches later this year. (Airfare searches are currently available through its downloadable software.)One of the newest entrants:
A group of former executives from three major online travel agencies - Expedia, Orbitz and Travelocity - have launched a company, Kayak Software Corp., that next month plans to offer a test version of a new search engine at Kayak.com.
Yahoo Inc. has also recently gotten into this business. Last month, it acquired FareChase Inc., whose FareChaser service at FareChase.com searches about 150 travel sites.
The new sites aim to address what they see as shortcomings of the major online travel agents. For example, most of the fast-growing discount airlines like JetBlue and Southwest Airlines don't show up on the big travel sites at all. Other discount carriers like Spirit Airlines sometimes offer promotional fares only via their own sites. And just this week, InterContinental Hotels Group said it intends to remove its 3,500 hotels from Expedia and Hotels.com in its continuing effort to wrest control of its room inventory from third-party Web sites.
A search on Mobissimo for flights the first week of September between New York and Paris generated a list of options culled from travel Web sites both foreign and domestic. The least expensive was $478 for Virgin Atlantic on OneTravel.com, a budget-travel site; the highest was $1,953 for an American Airlines flight listed on American Express's travel Web site. Click on a specific flight, and Mobissimo sends you directly to the vendor selling that flight.Almost none of the search engines charge a fee. Rather, they hope to make money by getting referral fees or commissions from the hotels, airlines, car-rental and travel agencies when users click through and make a purchase.
One exception to that rule: Qixo.com. The site searches roughly 28 sites, charges a $20 transaction fee to users who make a purchase through the service. Qixo says charging a fee is appropriate since the site is providing a service to customers.These search engines don't see themselves as a direct threat to the big online agencies, because in many cases they are simply steering sales traffic to the sites of Orbitz, Expedia and the others. The benefit to travelers, the search engines say, is that they don't have to scour Orbitz, Expedia and Travelocity separately but can instead see all those sites' prices, as well as results from other sites, at once.
Still, there is some reluctance in parts of the travel industry to fully embrace the search engines. FareChase in June 2003 settled a lawsuit filed against it by AMR Corp.'s American Airlines, which objected to FareChase accessing its fares without permission and selling that information to third parties such as corporate travel agents. Under the terms of the settlement, American agreed to let FareChase search prices on its Web site for the "mutual benefit" of both companies.
Kendra Thornton, a spokeswoman for Orbitz, says SideStep is a "good opportunity for us to reach new customers" but says the travel search-engine business model is imperfect because search engines have an interest in steering customers to the sites where the search engines receive the most compensation.
David Dennis, a product manager for Expedia, concedes that Expedia won't always have the lowest price on airfares. But he says it does have the lowest prices on the hotels in its system because the hotel chains have agreed not to undercut Expedia's prices on their own Web sites.
The new search engines are the latest effort to capitalize on the rapid expansion of the $58 billion online travel-booking industry. Last year an estimated 35 million Americans booked travel online, a nearly 17 percent jump from the year before.Some of the travel search engines are still in testing phase or just do some types of searches and not others. Still, they provide some powerful tools for comparison shopping.
Mobissimo, for example, is useful for international travel because it searches both foreign and domestic sites.
FareChase, which previously focused on corporate travel, is now going after leisure travelers by making its technology available to the general public. The company has a test site up and running at FareChase.com that is accessible to Windows PC users. FareChase.com sorts by price, supplier and number of connections. You type in what you're looking for - say, a Tuesday flight to Miami from Atlanta - and the search engine goes out and looks for prices. Yahoo says it is looking for ways to combine FareChase's service into Yahoo's travel platform.
One of the key differences between SideStep and its competitors is that it searches fewer sites than some rivals. However, SideStep points out that it has formal agreements with the sites it is accessing, which it says increases the odds that it is getting access to all of those sites' best prices.
By contrast, some rivals rely on a different method to collect prices sometimes called "screen scraping" - where special software visits the site and performs searches much like a human visitor might. The risk is that the software might miss special promotions. Mobissimo's president, Svetlozar Nestorov, says the risk of missing a price is minimal.
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