Consumer WebWatch: Travel Web Sites researched

Consumer WebWatch: An Examination of Opaque Travel Web Sites Priceline and Hotwire

Summary:

The "project was conceived to answer two fundamental questions:

1) Are the fares and rates provided by either or both of the leading opaque travel Web sites — Hotwire and Priceline — truly lower than fares and rates provided by leading transparent travel Web sites when tested under real-time, apples-to-apples conditions?

2) If the fares and rates provided by either or both Hotwire and Priceline truly are lower than fares and rates provided by leading transparent travel Web sites, are the trade-offs required by the opaque sites worth the savings?


"A Brief Overview of Opaque Travel Web Sites"

In this study, Consumer WebWatch directly addressed this question by querying fares and rates side-by-side from Hotwire and Priceline, as well as Sabre, Expedia, Orbitz, Travelocity, and the hotel-booking site Quikbook.

Priceline and Hotwire used as examples of opaque sites which are defined as :

INTEGRATED OPAQUE SITES: these sites may or may not be owned by travel suppliers but they offer multiple products from competing companies at varying fares and rates and the identities of the travel suppliers are not provided to the consumer prior to booking (e.g., Hotwire, Priceline). In addition, the consumer may be required to bid for a fare or rate prior to booking (e.g., Priceline).

Compared to Expedia and Orbitz as the main 2 integrated travel Web sites, which are defined as :

INTEGRATED TRANSPARENT SITES: these sites may or may not be owned by travel suppliers but they act as online travel agencies offering multiple products from competing companies at varying fares and rates (e.g., Expedia, Orbitz, Travelocity); the identities of the travel suppliers as well as the fares and rates are provided to the consumer prior to booking.

BRANDED SITES: these sites are owned by one or more travel suppliers and are basically dealerships selling a single line of products (e.g., American Airlines) or consortia of partner products (e.g., Northwest Airlines-KLM Royal Dutch Airlines).

In this study, Consumer WebWatch directly addressed this question by querying fares and rates side-by-side from Hotwire and Priceline, as well as Sabre, Expedia, Orbitz, Travelocity, and the hotel-booking site Quikbook..

The breakdown of those who cited the importance of obtaining the lowest price according to Forrester was as follows:

26% of Hotwire users
19% of Priceline users
18% of Orbitz users
15% of Travelocity users
13% of Expedia users

Consumer WebWatch: concludes from figures that Hotwire and Priceline have found market niches for certain types of consumers.

Henry Harteveldt, a principal analyst for Forrester, says "Most people are not using an opaque site to plan the vacation of a lifetime, . These sites are, however, perfectly good ways to find a quality hotel room and to stretch your travel dollars."

The report covers the history of the websites tested and give interesting facts and stats:

Consumer WebWatch point out that Orbitz and Expedia "dominate the opaque travel market, collectively accounting for $1.547 billion in travel bookings in the U.S. in 2002, according to PhoCusWright...and both of the leading opaque travel Web sites have ties to non-opaque travel sites"

HIstory and relationships:

"Priceline acquired Lowestfare an integrated transparent travel Web site in 2002
Priceline also operates the non-booking travel site,RentalCars.com
Hotwire is now a sister company of Expedia and Hotels.com, Hotwire was acquired in November 2003 by IAC/InterActiveCorp (USA Interactive)
Interestingly, at press time Hotwire still maintained a marketing partnership with Orbitz, an integrated transparent travel Web site and a direct competitor of Expedia."

Conclusion:
"For travel suppliers, opaque Web sites provide yet another sales strategy as they seek to continually lower their distribution costs. Opaque Web sites undoubtedly help travel companies unload inventory that would have remained unsold, without cannibalizing existing distribution and retail sales channels. This point is made even more compelling by another piece of Forrester data: More than 10 million U.S. households reported taking at least one unplanned, unbudgeted trip in the last year. It seems certain that many of them have turned to opaque travel Web sites to help plan those trips."

Other Consumer WebWatch travel Web site projects:

Consumer WebWatch teamed with Consumer Reports Travel Letter (which ceased publication in December 2002) to extensively test travel Web sites providing domestic airfares and released the results in June 2002.

"Booking Hotels Online: An In-Depth Examination of Leading Hotel Web Sites," was a research report that was released in April 2003.

"An Analysis of the Potential Benefits and Dangers of Booking Through a Car Rental Web Site," was a research report that was released in October 2003.

"Booking and Bidding in the Blind: An In-Depth Examination of Opaque Travel Web Sites," a research report that examined alternative "opaque" travel booking Web sites, was released on December 8, 2003.

Consumer WebWatch will continue to test and evaluate travel Web sites throughout 2004. A minimum of three projects will be undertaken.