|
Going for Broke: The Online Travel Agency Showdown Heats Up |
|
|
|
 Carroll Rheem, Phocus Wright's Director of Research, takes on this subject crisply and clearly in her March 20th FYI Bulletin Online:
"Some questioned Expedia's strategy when it threw down the gauntlet on March 11 by announcing a promotional fee cut for flights. Competitors were bound to respond, sparking a downward spiral cutting into their revenue margins.
There is no doubt that each of the big three (Expedia, Orbitz,
Travelocity-or Exbitzity) will suffer a hit in air driven revenues as a
result (Priceline had already eliminated airline fees in 2007).
However, not all transactions are created equal. Air has always been a
low margin product for online travel agencies (OTAs); hotel is what
brings in profits.
Expedia saw an opportunity to grab share from competitors-taking the
hit on air could potentially pay off in (or at least be softened by)
increased hotel revenues-and hit a major competitor where it really
hurts."
MORE at http://www.phocuswright.com/library/fyi/593
|
Issues & Insights 
