Hudson Crossing Travel Industry Insight

Roomkey.com - Keys to the Castle for Hoteliers?

2012-01-11T06:05:00.015-05:00

Roomkey.com, a new hotel metasearch site created by six of the largest hotel chains launched this morning.

With industry vet John Davis at the helm and backing from Choice, Hilton, Hyatt, IHG, Marriott and Wyndham, it somewhat resembles the industry's efforts to drive down costs and create consumer choice several years ago when a similar group created Travelweb.com - same CEO, slightly different group of hotel brands (noticeably absent from the group this time around is Starwood Hotels and Resorts Worldwide.) Travelweb was sold to Priceline.com and formed the basis of their non-opaque hotel product in North America.

Different this time around is metasearch. Roomkey is a pure meta play with room results returned in a nice, clean tile format:

Prior to the launch, the group purchased hotelicopter which had built a nice technology platform and user interface (as well as the awesome flying hotel ad that you may remember)

Clearly, and as expected, the call to action is a link to book at the sponsor's branded websites.

Roomkey (thus far) is a tool for comparing prices between hotels, not prices from different channels for the same hotel a la Kayak. Kayak pulls together disparate prices from various sources:

Multi-channel search, which Kayak never really delivered on the air side, is actually quite strong for hotels - and apparently, still an important issue judging from the sample above in which several of the founding members appear to be undercutting their own websites in various channels which Kayak is able to find and display.

Inventory today appears to be limited to the founding chains but we are sure that will grow, at least in critical markets such as New York and Las Vegas.

Hotel descriptive content on the beta site is decent with the usual photos and descriptions, although some brands (who shall remain nameless here) still seem to be returning content in ALL CAPITAL LETTERS. Given it is a beta, there are some photos with slightly strange descriptions: "NYCGH_P015 Exterior" but this will no doubt be cleaned up in due course.

That said, a great feature is the clear link to the hotels' property page where the rich content (and booking opportunity) lives.

Oddly, star ratings are included in the search results but it isn't clear how those stars are determined. In the past, the sometimes seemingly arbitrary OTA star ratings have been a source of frustration for hotels and brands alike. Roomkey promises to add user reviews shortly which should provide another, often more reliable way for guests to gauge hotels.

The hotel chains are not resting on their laurels after their past distribution wars with online travel agents (OTAs) and other distribution channels. Once fully built out with a mobile site, more inventory, reviews, Roomkey could be a potent weapon for consumers who want to be able to compare locations, features, rates across multiple chains and brands. With Google rapidly moving into the travel (and hotel) space and OTAs continuing to gain share, Roomkey will be another arrow in the chain's quivers to drive branded website growth and control distribution.

TSA Trusted Traveler Program: Finally, Something the TSA does RIGHT

2012-01-10T20:57:00.004-05:00

I'm not usually a big fan of the TSA. In fact, quite the opposite. As a heavy business (and leisure!) traveler, I've found many of the TSA's tactics silly or simply pure theater over the years.

However, today, upon leaving Las Vegas, I got sent to the Trusted Traveler line after the agent up front scanned my boarding pass. I'm an Elite flyer with both Delta and American, the two pilot airlines for the program but hadn't yet seen anything special. The last place I expected anything was certainly Las Vegas.

But, get this! First, there was NO line. Next, I didnt take off my shoes. Really. I didnt have to yank my computer out of the laptop (I did buy one of those Tumi bags that allows you just to unzip awhile back but I didn't even have to do that!) And, I may jacket stayed on. So did my belt. And I didn't have the nudie scan - just walked through the metal detector old school - like clearing security in 1972.

Finally, something done right by the TSA! Bravo. Now lets just get it to more airports.

Delta and USAirways try again in DC and NY

2011-05-23T17:31:00.008-04:00

Delta and USAirways, who previously (as we discussed here) tried to swap slots and gates at New York's LaGuardia and Washington Reagan National airports but were ultimately blocked by competitive concerns are at it again.

In the plan announced today, DL and US will still trade a similar number of slots and cash and will open up some additional slots for new competition and destinations from both LGA and DCA.

One major change this time around is Delta's plan to continue to operate the Delta Shuttle from the Marine Air Terminal at LGA (last time it was going to become USAirways home). USAir, Shuttle and all, will remain their current home at Terminal C at LGA in the new plan.

As before, Delta plans to operate 132 slots worth of flights (that is 66 departures and arrivals for those of you counting) with regional jet equipment vs. the prop-jets that USAirways utilizes on most of these departures. The cities may change, of course, but we expect that they will look largely as they do today.

One odd part of the press release is that the USAirways Shuttle is described as the "popular hourly Shuttle service between LaGuardia, Reagan National and Boston that is operated on dual-class mainline jets will remain unchanged as a result of the transaction." However, a quick scan of Sabre from our friends at Expertflyer.com reveals that while the LGA-DCA flights are, indeed, all operated with dual-class mainline jets, the service to Boston with the exception of the 6AM departure is actually operated with Regional Jets - USAirways' unions will probably have a field day with this...

Accuracy aside, we view this as a great move for both airlines, consumers and the cities served by USAirways from LGA today. Regional Jets will provide significantly more lift into LGA than the Dash-8s and such that USAirways operates today and Delta's much larger presence at LGA will create substantially more connecting opportunities from those smaller bergs than USAirways offers today. USAirways offers very limited connecting opportunities today unless you happen to want to fly from Portland, ME to Norfolk and such. Delta will offer those same connections from Portland to Norfolk but will also offer connections to many larger cities that Delta serves from LGA such as Orlando, Tampa, Fort Lauderdale and the like. This is good for those cities and good for consumers who gain more choice and competition.

As for Cincinnati and Memphis - we expect the aircraft Delta will require to operate these flights will come from those operations. Both are largely duplicative with Delta's hubs in Detroit and Atlanta, respectively. Delta certainly is not going to acquire new regional jets to "fund" this expansion in New York and the small amount of flights they are giving up in DC are not nearly enough. Look for a final de-hubbing in CVG and MEM following the inevitable approval of this transaction.

Tripit Launches Evolutionary iPad App

2011-05-03T09:11:00.002-04:00

Today Tripit, the company that brings all of your travel plans into a consolidated itinerary, is launching an iPad app to help you take those itineraries on the road. Unless you make most of your trips by covered wagon, you probably already use either the web based or smart phone versions of Tripit to manage your trips, and the company keeps things interesting by continuously improving its applications either by refining or extending the feature set. I’ve been a Tripit user from very soon after launch and I can count on the fingers of one hand the number of times it’s had a problem parsing the confirmation page from a supplier. It works well—period.

The iPad app is right in line with Tripit’s evolutionary development philosophy in that it’s not by any means a departure from the product on the web or phone, but a smooth shift to a midsized format. You may grouse that an iPad version should have some unique features that truly exploit some feature or capability of the machine (and you’d be right) but be patient—they first want to get off the ground with something that’s functional and usable before looking for the secret sauce. Having coached lots of product groups over the years, we know that’s a perfectly valid approach to the market, especially when you own a lot of mindshare for your product category.

When you install the iPad app, you’ll notice the same familiar look as on the iPhone, for example. Where the iPhone app uses a vertical ‘drill down’ approach that carries you from the trip level to the service level and further down to the details behind each service, the iPad app has the space to show the services and their details on the same screen. Most of the things you need are above the fold, but there are some additional items you’ll have to scroll down for if you’re interested.

One new feature is the map view, which shows you the locations of your trip on a map. You can see the relative placement of all of the components of your trip in one view. Unlike the rest of the application, this feature feels embryonic, as though it’s going to grow up into something interesting but it’s not there yet. It’s also fair to consider the whole app a little incomplete right now. There are features you remember from the other platforms that just haven’t been built out yet. The company says they’re coming in fast follow-on releases, so you probably won’t have to wait very long to have a full featured app on the iPad.

So what about those unique features that could really exploit the iPad form factor? I’m sure there are many plans in the hopper to spread out what’s already there. The map functionality, as mentioned before, looks like a great place to extend with the locations of points of interest, local businesses, etc. More important than all its technical and design assets, Tripit has a database of frequent travelers, many of whom have similar challenges on the road, and many of whom love the product and the company. The company could also expand laterally around some other things travelers do in connection with their trips. For example, given that Tripit already knows which services you’ve booked and, in some cases, how much you’ve paid for them, why not extend it with functionality like that of the amazing Expensify app that helps you prepare expense reports? Or provide tools aimed at all that time you have in the airport by taking a page from Gate Guru? Or, since Tripit knows where you are on your travels, what about creating a framework for local businesses to create promotions for travelers on the road? Arguably these are not iPad specific functions, but the larger form factor would help mitigate the additional complexity of the new features. Big screens make it easier to see the big picture.

It’ll be interesting to see where they’ve gone a year from now. I’ll probably still be using it regardless!

Look Beyond Orbitz/AA: Delta Pulls Inventory Off Three Other OTAs

2010-12-22T08:48:00.007-05:00

The current fight between American Airlines (AA) and Orbitz Worldwide (OWW) and Travelport by default has been well publicized. In a nutshell, after winning a hearing in court yesterday, AA canceled Orbitz' ability to sell tickets on the Orbitz family of websites including Orbitz.com, Cheaptickets.com and ebookers.com. The dispute revolves around how AA distributes inventory to Orbitz, both financially and technically.

To date, AA has been a lone wolf in this area with scant public support from any other airlines. Unlike in many other airline moves where one moves on Tuesday and the rest of the industry follows by Friday (think commission caps, bag fees, change fees etc) AA has stood alone.

Until yesterday.

In an amazing coincidence, Delta Air Lines (DL) yesterday announced that they would pull their inventory off of three smaller OTAs: cheapoair.com, onetravel.com and bookit.com.

Delta has made it clear that they value some distribution points more than others. These three websites generate a significant amount of traffic from meta and click-off search sites such as fly.com, bookingbuddy.com and tripadvisor.com - we can imagine that Delta probably tired of seeing these smaller, less relevant websites listed alongside Delta.com (and other, larger OTAs) as a booking option.

By flexing their distribution muscle and removing inventory from these sites, Delta is making a calculated move that they will be able to continue to sell the inventory currently sold through these websites elsewhere, and in particular, Delta.com.

We would bet doughnuts to dollars (just by the URL names alone) that the vast majority of tickets sold through these sites are low-yield tickets. As anyone in the airline business knows, airlines don't need help selling more $39 tickets to Orlando. There is nearly insatiable demand for low-fare tickets and consumers visit multiple websites in the hunt for these fares - Delta is banking that consumers will still find their low fares elsewhere, and hopefully that will be Delta.com.

And, if those same consumers don't visit Delta.com (or another OTA) there are plenty of other consumers who will those same cheap fares - airlines can fill planes all day long with $39 fares without any help from an OTA.

Chasing Delta Medallion Status? Qualifying Miles for Charity Donations!

2010-12-02T11:41:00.004-05:00

Delta is offering up to 15,000 miles towards status (not just regular old frequent flyer miles but status miles that push you towards Gold or Silver Medallion status which means free upgrades, no checked bag fees and the like) for donations to three Atlanta based charities.

Donate $500 or more and earn 5,000 status miles (or MQMs in Delta parlayance) - donate $500 to all three and earn 15,000 status miles. Given Silver Medallion status starts at 25K miles and Gold at 50K, this is a pretty good way to get the basic tier or bump up to a higher tier, particularly if you haven't flown much this year. Oh, and there is the tax write-off which, at least for many living in New York and other high tax areas makes the bite pretty reasonable. And, best of all, there is the do-good feeling!

Donation links are below:

https://www.aidatlanta.org/sslpage.aspx?pid=522

https://give.gradyhealthfoundation.o...e.aspx?pid=272

https://secure.mlkmemorial.org/site/...MK0PwE6LHLZPME

Expedia Jumps into Flash Sales - ASAP - A Sudden Amazing Price

2010-12-02T10:06:00.004-05:00

Just when you thought there were not enough flash sale sites out there, Expedia has jumped into the fray with a slightly different model. Expedia is calling their program ASAP - a cute moniker for "A Sudden Amazing Price." ASAP offers an even shorter purchase window (12 hours) than industry pioneer Jetsetter.com. In addition, ASAP is open to all consumers rather than the Jetsetter (and others) private sale version which requires registration.

Interestingly, Expedia is promoting ASAP as a short-term program between today and December 17th. Does this mean ASAP is not a long term program? Given the high placement on the Expedia home page and in other places throughout the site, we expect it will be around beyond the holidays...

American Fires Back First Salvo Against Impending Virgin America DFW Invasion

2010-11-29T16:32:00.006-05:00

American Airlines announced a new program squarely aimed at Virgin America's impending launch of flights from SFO and LAX to DFW.

The usual bag of tricks includes double AAdvantage miles and double elite qualifying miles. Somewhat unusual is the relatively long earning period - from tomorrow all the way until the end of February.

Slightly more original is the "15 Days of Giveaways" in which American is offering prizes on "mystery flights" between DFW and SFO/LAX free stuff such as 5K AAdvantage miles, Admirals Club Passes and AA Vacations discounts and AAvis car rental coupons.

A more original giveaway by American would have been a week on Necker Island...

Of course, Virgin still offers WiFi on every flight (free right now thanks to Google) and brand spanking new planes - two things, alas, AA can't come close to offering.

That said, penetrating a fortress hub like DFW is difficult for any upstart carrier, Richard Branson or not. American has already announced increased frequency on the LAX-DFW route and these programs will help ensure that AAdvanatge loyalists stay with Something Special in the Air.

Brian Clark Joins Hudson Crossing

2010-11-18T08:56:00.002-05:00

We are excited to announce Brian Clark has joined the Hudson Crossing team.

Announced at this year's PhoCusWright conference and only slightly overshadowed by the Kayak IPO news, Brian's deep commercial airline and online travel experience will bolster the Hudson Crossing team's rich operational experience.

"Brian’s real-world accomplishments, creativity and strategic foresight are the perfect complement to the Hudson Crossing team" said Tom Botts, Hudson Crossing Managing Partner. “He has distinguished himself as a true industry visionary with his accomplishments at both Virgin America and Fly.com.”

Brian has spent nearly 20 years in the travel industry and was most recently Senior Vice President and General Manager for Fly.com. In this role, Brian was responsible for launching Fly.com in the US and Europe, including the business and financial plan development, product planning and site design, marketing and PR, airline and online travel agency partner contract negotiations, and overall operations of Fly.com. Prior to launching Fly.com, Brian was a founding officer at Virgin America where he was Vice President, Planning and Sales, responsible for all commercial planning functions including route network planning & scheduling, pricing and revenue management, distribution, sales, and loyalty marketing. Brian began his career with US Airways where he held roles of increasing responsibility in revenue and schedule planning as well as operations.

"Hudson Crossing has created an excellent brand and contributed to the success of dozens of travel industry clients over the last several years," said Clark. "I look forward to continuing the tradition of strong industry leadership and to creating new opportunities and delivering superior results for our clients."

Welcome Brian!

And Virgin Jumps in with Free Holiday WiFi as well

2010-11-08T16:55:00.004-05:00

Virgin America has joined Delta and AirTran in offering free holiday WiFi via GoGO in conjunction with Google.

We have to wonder where American, one of the first airlines to offer WiFi, is in this game? And we aren't talking just about this promotion.

American started out fast offering WiFi on 767-200s and selected MD-80s and 737s. However, "selected" seems to, unfortunately, be the norm with AA. None of the 757, 767-300 and a good number of the MD80 and 737 fleet are so equipped. Alas.

Dueling Delta and Airtran BOTH Announce Free Holiday WiFi with Google/GoGo

2010-11-08T10:20:00.004-05:00

Have to laugh at this one. Delta and AirTran, arch enemies extraordinaire have apparently both been played by Google for the holidays.

In press releases issued minutes apart, both senior marketing types at Delta and AirTran announced free GoGo wifi for the holiday season courtesy of Google Chrome. A great boon for travelers but how ironic Google managed to get both AirTran and Delta signed up for the same deal.

Delta opines about their 540 aircraft that have GoGo installed (including a DC-9 I was recently on!) while AirTran states they are the only major airline with 100% GoGo on their entire fleet.

The promotion dates are even the same - November 20th through January 2nd.

Lets hope we can use Firefox and still get it free.

Gnomes in Citi's Future?

2010-10-25T23:24:00.003-04:00

Bloomberg reported today that Citigroup CMO Michelle Peluso (and former Travelocity CEO) has hired former Site59 and Travelocity co-conspirator Tracey Weber away from Barnes and Noble.

Tracey joined BN.com only in April after leaving Travelocity where she was COO.

The Gnome never sleeps......

Tripit Gets an Elf - and even a Unicorn

2010-09-22T12:41:00.005-04:00

TripIt has taken a Narnian turn by adopting Elfs and Unicorns in their newest product dem o, uploaded last night and sure to be a viral hit among travel junkies and fantasy seekers alike.

And in more serious news, TripIt also announced a great new feature for TripIt Pro users which monitors submitted flight itineraries for fare decreases. Using internally developed software, TripIt re-prices user's flights to scan for potential fare decreases. If TripIt Pro finds a user's fare has decreased (in Yapta-esq fashion) and that the consumer is in the black after the airline change fee, an alert is generated complete with sample language to feed the airline reservations agent to process the re-issue.

Virgin: Come Sleep With Me

2010-09-21T08:32:00.009-04:00

This morning Virgin Group launched a new website, virginhotels.com which gives a small peak into Sir Richard's long rumored plans to shake up the lodging space. Don't look to book a room just yet - Virgin is still looking for hotels to convert into the Virgin Hotels concept.

Taking a page from Virgin Atlantic Clubhouses, Virgin aims to create "unique spaces where our guests can get some work done, nourish and refresh themselves, meet other interesting people, or just take a break from the hustle and bustle of the city."

Virgin has long operated small, uber-exclusive properties around the world under the Virgin Limited Edition brand but Virgin Hotels aims to bring the Virgin experience to the masses with a four star product in "major urban markets." Those markets just happen to be large markets for Virgin America and Virgin Atlantic.

Virgin lists hotel industry hitters Raul Leal (ex- Desires Hotels) and Paul Whetsell (ex- Interstate Hotels) as leading their efforts as they push into hotels.

Ready to get into bed with Virgin?

TravelCLICK Maximizes: Max Rayner joins as new SVP Product

2010-08-24T17:18:00.004-04:00

Max Rayner, who was formerly CIO at Travelzoo (TZOO) until he departed several months ago has resurfaced as SVP of Product Engineering at TravelCLICK. The appointment was communicated internally today. Interestingly, Rayner will remain in the Bay Area where we expect he will grow TravelCLICK's internal IT resources and development capabilities. Given Rayner's title, we are betting TravelCLICK's growth plans include a host of new hospitality products.

Where I've Been Joins Private Deal Party w/ Groupon Twist

2010-06-30T17:21:00.009-04:00

Just when you thought the world had enough jetsetters, vactionists, voyage prives and tablets, its time for another.

Where I've Been is launching a similar private sale but going one step further than just deals on hotel rooms. By partnering with Groupon, they aim to sell "travel experiences" which include not only hotel rooms but also deeply discounted local attractions such as restaurants, surfing lessons and other important leisure additives. The partnership with Groupon only makes sense given Groupon's founders (Eric Lefkofsky and Brad Keywell) recently invested in Where I've Been.

We also have to compliment Where I've Been on possibly the simplest and cleanest online check-out screen we've come across yet. One page for your name, email, CC number, expiration date and the CID:

And yes, I am checking out with one night at the Bourbon Orleans hotels and 44 Rum tasting tours.

Glassdoor: Employee Satisfaction (or lack thereof) in the Travel Industry

2010-06-28T23:03:00.011-04:00

Glassdoor.com, a cool website where "anyone can find and anonymously share an inside look at jobs and companies" has provided an interesting peek at job satisfaction inside the travel industry.

Travel is probably an industry Glassdoor knows something about given the site's founders which include such industry notables as Bob Hohman (Hotwire, Expedia) Tim Besse (Expedia) Ryan Aylward (EzRez, Hotwire) along with a few others who serve on the board who've spent a bit of time in travel: Rich Barton, Erik Blachford and Stephen Kaufer.

And what has Glassdoor, which garners its information from current and former employees, come up with? Might as well start with the OTAs since Glassdoor practically grew up in the OTA world:

The chart above details the approval ratings of the companies themselves and their CEOs as reported by the employees who came to Glassdoor and left feedback. (Hugh Jones isn't rated because of a limited number of responses - probably because he is still new in the role.) Looks like Hotwire is a pretty good place to work - we'll leave it to you to decide if that is because all of these guys left to start Glassdoor or not. (Just kidding, Ryan et al)

Glassdoor's info gets more interesting looking at hoteliers:
The highest rated CEO, Issy Sharp, has just announced that he is stepping down - a real shame according to this report. Bill Marriott and Hyatt's Hoplamazian are just a hair behind Sharp, however.

Not surprisingly, airlines show by far the greatest variability from one to another:

Things appear pretty bleak over at American and American Eagle - with labor strife a way of life at AA, clearly Something isn't Special in the Air. Even US Airways pulls better rankings. Southwest and JetBlue, as usual, prove that they are run more like hoteliers than airlines with ratings like these. (oh, they make money like hoteliers, too)

But the big takeaway? Continental and United - look a the difference in internal company ratings. Glassdoor doesn't have a rating for Jeff, but boy do they have one for Glenn. This is going to be one interesting merger, don't you think?

Travelzoo.com Gets a New Habitat

2010-06-25T15:39:00.008-04:00

Today, Travelzoo.com launched a new, fresher homepage. The newly re-designed website offers a much cleaner look and feel and, best of all, the ability to search Travelzoo's deal content.

Previously, finding the deals listed in Travelzoo's weekly top 20 email outside of the email itself was a chore, if not impossible. Now, Travelzoo has (finally) given users a search box (front and center, no less) that allows searching by destination, keyword or using a "deal Locator" that allows you to enter your zip code to find details closer to home - Travelzoo for the staycation set. Mostly theater tickets now, but could this be the start of something bigger - a Travelzoo Groupon model of sorts?

There is also a "where to go now" section on the left that seems to be a destination marketing area. While it looks like editorial content at the start, we think the majority of this content is actually provided by (and probably written by) the destinations themselves - Look at Iceland for example. Thankfully, the deal content on the Iceland landing page is true to the Travelzoo mantra.

Wyndham takes a Tryp

2010-06-08T09:02:00.004-04:00

Wyndham Hotel Group (NYSE: WYN) has announced that they have acquired the Tryp Hotel brand from Sol Meliá Hotels & Resorts. This must be a little trippy for at least a few Wyndham executives as the old Cendant hotel loyalty program was built around "Trip" as in Triprewards.

It is a great deal for Wyndham as it greatly expands their presence in Europe and South America with an additional 91 hotels while remaining true to Wyndham's "franchise only" model of not owning or directly operating.

Tryp hotels will benefit from Wyndham's sales and marketing efforts, loyalty programs and broad centralized distribution platform almost immediately.

Wyndham gains a new, youthful brand ripe for expansion beyond its current European and Latin footprint. And a nice new fee stream. Tryp isn't as hip as Aloft but it will be a pretty nice additional to the Wyndham brand stable. We are waiting for the first Tryp to open in New York.....

New Logo for Fly.com

2010-05-23T14:38:00.005-04:00

Looks like Travelzoo property Fly.com has created a new, streamlined block typeface logo. This logo replaces the launch logo which looked a little bit like a torch...

Old:

New:

AirTran to Midwest Air Fliers: Give Your Miles to Charity & We'll Match the Donation in A+ Rewards

2010-05-14T09:24:00.006-04:00

The continuing battle over the hearts and minds of Milwaukee travelers between Midwest Airlines (soon to be renamed and merged into Frontier) and AirTran (which previously tried to buy Midwest) has taken an innovative new twist.

This morning, AirTran announced a program in which Midwest Frequent Fliers can donate their miles to charity and then AirTran will match the donation with a like number of miles in their own program, A+ Rewards. If you happen to live in Milwaukee and have 50,000 (or more) Midwest Miles burning a hole in your pocket, this is a great opportunity to donate your miles and then get them back again in AirTran's program.

Of course, it is also a great opportunity for AirTran to convert Midwest frequent fliers over to their program while building support in the community. AirTran gets new, hopefully loyal members and local charities get a nice boost. The big looser is obviously Midwest (aka Frontier soon enough.) A brilliant marketing play by AirTran!

WSJ OpEd on UA/CO: Does the Journal Understand the Industry at all?

2010-05-05T19:20:00.005-04:00

Read today's Wall Street Journal OpEd here on the impending Continental/United merger and then ask yourself if the WSJ has a clue about the airline industry.

The Journal's points supporting the UA/CO merger are well founded, however their knowledge of the airline industry appears to be quite flawed.

First, United and Continental have limited "overlap" across the North Atlantic. In fact, there are zero routes where both airlines operate head to head. They fly to many of the same cities in Europe of course, but not from the same cities in the United States.

Virgin America is no longer "under attack to provide its 'U.S. citizenship'," this was resolved many months ago with a new influx of capital and the departure of the previous C.E.O. Not was the compliant filed by "Air Alaska" - there is no such airline. Alaska Airline or Alaska Air Group, yes, but not "Air Alaska" anymore than France Air or Blue Jet. Oh, and Alaska Air is NOT a low cost carrier along the lines of Southwest and JetBlue as intimated.

JFK is not able to expand landing slots because there is simply no more runway capacity at peak times - this is why they are called landing slots. Short of adding new runways, as O'Hare has done, adding more slots and, hence, flights is a very poor idea - flown out of JFK lately?

Similarly, airports do not add more air traffic control technology as you suggest - this is not something local airports can go out and buy. It is the responsibility of the FAA to improve our creaky ATC infrastructure - something which must be done soon.

These miss-statements unfortunately leave this opinion grounded.

P.S. - If you are not a WSJ subscriber, simply drop "Mergers in Midair" into the Google and voila, you can view the whole OpEd for free.

New Front on the Old Hotel Chains vs. OTAs Battle: Occupancy Taxes

2010-04-09T11:10:00.016-04:00

It appears that a new front is opening in the ever tumultuous relationships between the large hotel chains and the online travel agencies (OTAs).

The major OTAs are currently pressing for legislative relief for future occupancy tax claims by states, counties and municipalities through a proposed bill known as the "Internet Travel Tax Fairness Act" or ITTFA. For those of you interested in a reprise of the old Schoolhouse Rock Saturday morning "how does a bill become law" cartoon, the initial draft of the bill is posted here

Interestingly, the American Hotel and Lodging Association's (AHLA) take on the bill is radically different from that of other smaller, regional hotel associations.

AHLA, which represents all the large chains, has come out as a vigorous opponent of this bill to say the least. AHLA offers a detailed description of their opposition to this bill which is centered on concerns that local hoteliers will see an increase in taxes or, worse yet, be stuck with the entire tax bill. As an aside, AHLA offers that the bill is "written in such a way that it may also exempt the payment of any occupancy tax on rooms booked through online travel companies." We don't believe this is the actual intent of this bill by the OTAs (call us naive, but this simply does not square with what the OTAs are trying to accomplish) whether you agree with that goal or not.

On the other hand, the California Lodging Industry Association (CLIA,) which represents "individually owned lodging properties," has just come out in favor of ITTFA. In a recent press release, CLIA declared that they would fight "with their Online Travel Company friends" to support this legislation.

So, why the disparity in thinking within the hotel industry?

For starters, independent hotels utilize the OTAs in very different ways from the large chains. Independent hotels do not (generally) have the powerful global brand recognition of the large chains much less the global sales forces and loyalty programs such as Hilton HHonors, Marriott Rewards and SPG. As such, they depend on the OTAs for distribution reach - reaching consumers that would not have ever probably stayed with these unaffiliated properties.

Many independent hotels have become much more aggressive in developing their own consumer web business, both directly and via the OTAs. New tools that distribute inventory, develop and implement SEO and SEM strategies, etc. have made these efforts much easier for small hoteliers. The web has become a great equalizer between branded and un-branded hoteliers' ability to reach consumers.

The chains have responded by offering their distribution services for hire - witness the launch of the Autograph brand from Marriott and the resurgence of Starwood's Luxury Collection. HC colleague George Roukas highlights these efforts and the reasons behind them here in a recent article in Hospitality Upgrade magazine.

It will be interesting to see where this bill ends up - the stakes are high.

New York State Attempts Fuzzy Math in Latest Occupancy Tax Skirmish

2010-04-08T21:41:00.008-04:00

The current budget under debate in Albany includes an interesting twist in the ongoing OTA lodging tax fight. The proposed budget contains language that attempts to compute the occupancy tax on the retail rate by simply multiplying the net rate by 120% and applying the tax rate on this amount.

Yes, you read that right. This simpleton proposal assumes that all OTA deals are created equal and that the mark-up is always 20%. If passed, this will certainly will make future hotel/OTA negotiations easy! Doubt it.

Tracey Weber Trades Gnomes for Tomes

2010-04-08T10:06:00.004-04:00

Long-time Travelocity (and Site59) executive Tracey Weber has been appointed EVP Textbooks and Digital Education at Barnes and Noble.com (www.bn.bom)

Tracey Weber is one of the last Site59.com senior executives still with Travelocity. We expect that getting back to New York City was a key driver of Tracey's decision. No immediate successor has been named.

Southwest Offers Double Credits (miles) Until Memorial Day Weekend

2010-04-07T16:50:00.004-04:00

We've been missing all the crazy double mileage deals that made traveling (slightly) more fun last spring. There have been a few isolated deals we've talked about (double miles from Denver for example) but nothing on a broad scale like last year when the economy was so dour.

Well, today Southwest came out with a new promo offering double credits (Southwest counts credits, not miles) from now until the start of Memorial Day Weekend.

Interestingly, this promotion was announced on the same day that Southwest announced March traffic figures. March looked pretty good for Southwest - traffic jumped slightly but RASM (Revenue per Available Seat Mile) soared 22% year over year indicating Southwest has been better able to align demand and capacity.

How long before the other carriers match? We doubt long - Airtran will probably match quickly. Other carriers may match more selectively (for example, only on routes where they compete with Southwest) but this may be the re-start of the battle for business travelers.

And isn't this a better story than Spirit airlines which just announced a plan to charge for carry-on bags?

Virgin America: Hello MCO & YYZ, So Long SNA

2010-03-18T12:46:00.004-04:00

Virgin America has announced plans to fly from Los Angeles (LAX) and San Francisco (SFO) to both Orlando and Toronto starting later this year. Toronto will mark Virgin's first international service while Orlando will be Virgin's second foray into Florida - and a route that potentially strikes at the heart of JetBlue.

Toronto makes a lot of sense for VA - good demographics, little low-fare competition - a great extension of the brand.

Orlando, while a huge destination, isn't exactly known for high yields. It is also the heart of both JetBlue (which runs a large operation at MCO) and AirTran (which also runs a large operation and is headquartered there.)

So, how long before JetBlue announces service from SFO and LAX to Orlando? Last time, it only took a day for JetBlue to announce overlapping service from LAX and SFO to Fort Lauderdale as we discussed.

And so much for Orange County (SNA) - San Francisco (SFO) flights which we chronicled here. While Virgin did succeed in running American out of town, apparently Southwest and long-time incumbent United were too much....

Pay Now or Pay Later: A New Choice at Priceline - And the Next OTA Battleground?

2010-03-18T08:15:00.004-04:00

Priceline.com has begun including "pay-at-checkout" inventory alongside traditional, "pay-in-advance" merchant model hotel inventory at select hotels. Priceline has developed a jazzy new logo and tagline: “Pay When You Stay” to highlight this option.

Users are then given the option of paying upfront or at time of booking when they click to select the hotel.

And this isn't a matter of simply including traditional agency inventory sourced via a Global Distribution System (GDS) such as Sabre or Travelport. This stroke of genius is actually the latest convergence of booking.com inventory with Priceline.com non-opaque (i.e. Travelweb) inventory.

Booking.com's rapidly expanding inventory base within North America now enables Priceline to offer multiple sources of inventory with multiple payment options for the same hotel. At the same time, as more hotels roll out, Priceline has removed one of the largest perceived negatives to booking with an OTA - upfront payment.

The gap between supplier.com and online travel agencies continues to close. First booking fees fall, then change and cancel penalties disappear and now this latest game-changer.

Continental: No More Free Lunch - Probably for the Best

2010-03-15T18:06:00.009-04:00

Continental Airlines, which has made considerable marketing hay about the fact that they still served airline food for free, has decided to drop the practice.

Clever Continental advertising pieces like these will need to be re-worked a bit but free (airline) food can't be as big of a draw as other airline purchasing influencers such as price, schedule and frequent flyer program.

Back when other airlines began imposing baggage fees, Continental was among the last of the airlines (save Southwest of course) that opted to begin charging for checked baggage. We are told that Continental was looking for signs of share shift away from airlines that were adding baggage fees. Alas, no share shift was apparent so ultimately Continental decided to match the other mainline hub and spoke carriers and enjoy the revenue benefit.

Similarly, it has probably become impossible for Continental to show any share-shift (and resulting revenue gain) from continuing to serve food. In fact, they may have actually been at a disadvantage as some carriers have started to really sell some good food.

From recent first-hand experience, we can report that while free food on CO was nice, it was certainly nothing to write home about. In fact, some of the buy-on-board food has become so good (particularly on Delta) we'd actually prefer to pay a few extra bucks and actually get something that is fresh, healthy and tasty. Or not.

So, we'll see some costs come out and, hopefully, some nice ancillary revenue gains - Continental is projecting about $35M in improved revenue and cost savings - and that's a lot of sandwiches.

Getaroom.com Tries Print - WSJ no less

2010-03-11T20:52:00.005-05:00

We were a bit surprised to be leafing through yesterday's Wall Street Journal and find the ad (left) for getaroom.com in Section A. No, in the Personal Journal (Section D) where most travel related advertising and leisure oriented stories end up, but actually in meaty section A.

First take is, wow, interesting audience to go after - would not expect the average WSJ reader to be drawn to any hotel in NYC that is selling for $99. Most WSJ readers are typically Four Seasons types rather than Four Points. We'll grant getaroom.com that maybe the economy and TARP may be pushing WSJ readers down-market so maybe this makes sense.

Second thought is: "Wow, haven't we seen that bell-hop before?" Like so many parts of getaroom.com (including the founders!) it is a Hotels.com do-over.

Lastly, we'd like to actually see some examples proving the "Up to 50% off other leading websites" claim - either in print or on the website. If the deals are that good, lets see some, please?

Irony - San Diego CVB: Expedia "Partner of the Year" While City Sues Expedia Over Occ Taxes

2010-03-11T09:17:00.015-05:00

Expedia Media Solutions (the media arm of Expedia Inc.) yesterday announced that the San Diego Convention and Visitors Bureau had named Expedia.com "Partner of the Year." According to the press release, the San Diego CVB was recognized as "a top advertising partner and major sales channel for San Diego hotels."

The press release continues:

"'As a promotion partner, Expedia not only grew San Diego's room nights year-over-year by 26 percent, but in these tough economic times they were able to grow revenue by 11 percent – exceeding ROI estimates and generating a significant return on investment of 125 to 1,' said Joe Terzi, President and CEO of the San Diego CVB. 'Serving many different consumer segments—from families booking a summer vacation to individuals arranging a quick weekend getaway—Expedia gives us a highly effective way to share San Diego's message to a broad audience of travel shoppers and potential visitors.' "

Hmmm. Interesting that the CVB is so enthusiastic given that the City of San Diego is one of the many municipalities currently suing Expedia and the other major online travel agents. An administrative hearing has been held on the case but before any decision was rendered, the Judge in the similar Anaheim case rendered her opinion in favor of the the OTAs.

And just how does the San Diego CVB receive most of its funding? You guessed it, occupancy taxes. According to the CVB's own website, "the majority of funding is derived from San Diego Tourism District Assessment Funds." Again from the CVB's own website, the current transient occupancy tax is 10.5% in the City of San Diego. There is also an additional 2% occupancy tax levied for the San Diego Tourism Marketing District. If you enjoy reading tax code, here is the actual language from the City of San Diego's municipal code.

Anyone who has been following the ongoing saga of the tax lawsuits against the OTAs knows that the issue is if the taxes above are levied on the net or wholesale rate actually charged by the hotel to the OTA or the marked-up, retail rate sold by the OTA.

So now we have an interesting situation: The very agency (the CVB) charged with promoting San Diego (whose funding comes from the occupancy taxes in question) is holding out an OTA (Expedia) as a great partner. At at the same time the city of San Diego is suing Expedia et al for non-payment of occupancy taxes that largely fund the CVB!

So, San Diego (and other cities) which is it?

Google: Organize the World's Information; TripIt: Google 's App Pick For Travel Organization

2010-03-09T23:42:00.008-05:00

Today, at Google's Campfire One "mega-do" TripIt's new Groups App was the only travel app included in the new Google Apps Marketplace.

TripIt Groups brings transparency to business travel allowing registered users (who choose to share their plans) to collaborate on their travel plans. The product provides business travelers within a company, division etc an easy way to see when, where and how fellow employees are traveling.

In keeping with Google's mission to organize the world's information, TripIt is Google's choice for organizing travel.

Internet Access at 4/5 Star Hotels: Getting Closer to Free (Finally)

2010-03-09T09:20:00.010-05:00

For a long time, the hospitality industry has managed to convince business travelers that they should pay extra for high speed internet access (or HSIA in industry parlance) in four and five star hotels even though the same companies offer it for free in their lower tier brands.

Four Points, Courtyard, Fairfield, Hyatt Place, Holiday Inn as well as newer brands such as Aloft and Indigo have all offered free HSIA to all guests for some time. However, their higher tier cousins such as Westin, Sheraton, Hyatt, Marriott and Intercontinental have long charged at least $9.95 (per day!) or more for the service.

Why?

Well, because they can. With a majority of their travelers staying on business where someone else is picking up the tab, upper-tier hotels have been able to get away with this. In contrast to the value oriented chains where the target is more leisure and small business clients (who may be paying the fees themselves) the big guys are targeting large corporate and group customers.

But holes are appearing in the "everyone pays for HSIA mantra"

During the peak of the lodging boom 2-3 years ago when hotels commanded pricing power, the upper-tier chains largely refused to negotiate on HSIA access charges for large corporate buyers. It was a sacrosanct rule at many chains to refuse to give it away as part of a negotiation.

Oh how the world has changed. Recent discussions with several of the largest corporate travel buyers have shown that free HSIA is now a very common component of rate negotiations. A quick check of many large corporate rates at several metro 4/5 star hotels yields similar results.

Don't work for a major corporation but have hotel loyalty program status? Free HSIA may be in store for you as well.

Hyatt started the trend last year when they began offering free HSIA to their top-tier (Diamond level) Gold Passport members globally.

Starwood fell into line beginning March 1st for Platinum members, again on a global basis.

And today, Marriott announced a similar program for not just top-tier members, but mid-tier members as well. Marriott, while covering more members, covers significantly fewer hotels however. Marriott's offering does not include hotels outside of the U.S. and Canada or even Marriotts located in Hawaii. (Maybe Marriott is trying to tell us something when we are on vacation?)

So, will HSIA revenues at upper-tier hotels go the way of phone revenues (picked up the phone in your room recently?) Between the growth of wireless cards and relentless competitive pressure, we think this revenue stream is toast. Even when lodging comes back in 2011, we doubt any of the chains will be able to convince customers that they should start paying for HSIA again. And by then, we may not be traveling with laptops anyway.....

Allegiant tries 757s - Aloha Hawaii

2010-03-07T23:28:00.006-05:00

Late on Friday afternoon, Allegiant announced they would purchase six 757s. These 757s are Allegiant's first stray from the venerable MD-80s which now make up the fleet.

Allegiant plans to begin flying them later this year from West Coast cities to Hawaii which currently lack nonstop service to the islands. Don't expect to see Allegiant announcing LAX-HNL service - while LAX is a focus city for Allegiant, we expect them to enter the Hawaiian market from smaller cities with less than daily service as is their trademark. We'd expect new service from places like Bellingham, Fresno, Eugene and the like.

This is clearly wonderful news for the Hawaiian hotel market given the massive over-capacity that currently exists. And we expect Allegiant to do well - given the softness in the market, they will be able to negotiate significant discounts on hotels and attractions which will translate into better prices for their consumers and better margins for ALGT.

Clearly, a new market and fleet type is not without risk but this is a company that knows the leisure business better than anyway. It is more of the same formula, albeit with a new aircraft type, that has served them so well in Las Vegas, Orlando and other key leisure destinations.

Anyone who thinks of ALGT as an airline has it all wrong - this is a leisure powerhouse that just happens to be required to file monthly statistics with the DOT.....

Orbitz Re-Tunes the Flight Matrix

2010-03-05T10:20:00.015-05:00

In the first significant change to the Orbitz flight results matrix in as long as we can remember, Orbitz has taken a less is more approach.

Traditionally, Orbitz has returned a myriad of flight options using the power of ITA to build numerous multi-carrier and multi-leg trips. While flights from New York to Boston via Buffalo may have been not only scenic but cheaper (and resulted in a few extra frequent-flyer miles) the results may have been overwhelming for some consumers.

Orbitz, at least in certain market/fare combinations, has now changed the display to initially reflect only nonstop pricing:

The result is a faster return of the most relevant flights. Messaging allows users to drill down deeper into additional flights should they care to explore other options:
Orbitz CEO Barney Harford commented via email that the new format was part of "a relentless focus on speed" for the site. He continued, "The rest of the site is also getting a lot faster, but it is not as immediately recognizable; this is a very visible example."

Priceline: "Name Your Own Price" Takes a Vacation

2010-03-04T09:25:00.010-05:00

This morning Priceline announced a major change to their vaunted Name Your Own Price Model that has been the basis of their opaque hotel product since inception. Billed as a "limited time offer" until the end of March, Priceline is actually showing winning bids and allowing consumers to simply tag-along and buy the same thing, assuming availability still exists. No bidding, no guessing - just a posted price. Its not perfect because Priceline may not have availability for the dates you are checking (vs. what the last consumer bought.)

Yes, you read that right, a posted price. In the example below, Priceline is offering a 4 Star hotel room in Boston without any bidding. Not so much "Negotiation" here - just "Big Deals"

Scrolling down, a user can simply enter their credit card details and buy - on the same page. No bidding, no guessing. Again, the bid may not be accepted so it isnt fool-proof.

Priceline is pitching this as a limited time offer - but we've seen this movie before. Remember the first OTA to cut fees? Yep, that was Priceline and that was a "limited time" offer as well.

It would appear this business model simplification is a direct swipe at opaque competitor Hotwire.com (full disclosure: I formerly worked there) which has always used a similar no-bidding model.

And this will also take some of the gas out of "cheater" websites like www.biddingfortravel.com which have long suggested bidding price points for use on Priceline.com. Of course, biddingfortravel.com also posted which hotels actually fulfilled the bids - and nothing is changing regarding opacity during the booking process.

We'll see where this goes, but we doubt this is any more "temporary" than booking fee rollbacks were over a year ago.

Ctrip and Home Inns: How Different China Really Is

2010-02-23T13:57:00.013-05:00

Just heard Ctrip CFO Jane Jie Sun speak here at the Goldman Sachs Technology and Internet Conference in San Francisco.

Obviously, as we all know, Ctrip has been growing like crazy and sees lots of room to continue those numbers - and for good reason. A few snippets in no particular order:

Only 2% of travel in China is booked online today - and Ctrip has 50% of that market

80% of air travel is sold by agents - and airlines are generally happy with this "outsourced" distribution model

High speed rail presents a minimal threat because main stations are located far from the city center, stations themselves have few amenities and the trade-off just isn't there yet on a time or money basis

In fact, CTrip sees rail as a growth opportunity - not from selling train tickets but from selling more hotels as rail travel increases

Ctrip feels that at least 50% of hoteliers would pay more than the average 15% commission they currently ask for but Ctrip believes this is poor for the long-term partnership

The Shanghai World Expo is expected to be very positive because, unlike the Olympics, it is a six-month long event. The Olympics were so concentrated that many people stopped traveling to Beijing. The opposite is expected for the World Expo - business travel will continue into Shanghai and Ctrip expects large amounts of domestic tourism, particularly families with children to visit during the Expo.

The Chinese government in general "likes travel" and has designated travel as a "pillar of economic growth" which is always nice

But the biggest take away, however, was her discussion of Ctrip's recent investment in lodging operator Home Inns. If you are not familiar with Home Inn, you should be - they operate nearly 600 moderate hotels in China.

She said the investment has allowed Ctrip to gain access to deeper inventory and that Ctrip and Home Inns are in the early stages of connecting their systems to allow electronic distribution. She also mentioned that she saw this reservations connectivity and inventory management as a catalyst for other domestics chains - as Home Inns goes, so goes the industry.

We've known that business in China is different for a long time, but can you imagine if Expedia was to invest in Intercontinental Hotels? Or Choice? Even back when Cendant owned Wyndham and Orbitz/Cheaptickets etc, many in the supplier community thought that back door dealings were probably going on. (I've been since assured that Cendant was way too dysfunctional for that to actually happen.)

It will be interesting to watch how this relationship develops - but I'm not looking for it to be replicated here anytime soon.

Chase Feels the Hyatt Touch: GoldPassport Gets a Co-Branded Credit Card

2010-02-23T09:58:00.006-05:00

Hyatt and Chase today announced a new co-branded credit card which will allow members of Hyatt's Gold Passport loyalty program to earn points with every dollar spent. Hyatt has been the key holdout among the large chains in issuing a co-branded credit card - Starwood, Marriott, Hilon and IHG have issued similar cards for many years.

Many feel that Hyatt has held out on this potentially lucrative revenue stream (banks buy the points that they offer consumers based on spend) because of the relatively small size of the Hyatt chain (which limited points burning options) and a desire not to dilute the earnings of members who have earned their points by staying in hotels - Hyatt's main business.

However, with the continued growth of Hyatt into new segments and the recent IPO, that thinking has clearly evolved. Also of note is that the card is a Visa - Hyatt has long partnered with Mastercard on Gold Passport earnings promotions.

Feds Ask to Halt Civil Rossgate Lawsuit - Criminal Charges Instead for Hilton?

2010-02-19T14:50:00.005-05:00

AP is reporting that Federal prosecutors have filed a motion in the ongoing Hilton/Starwood Hotels saga saying that the current civil litigation could harm a criminal investigation.

According to the AP, "The filing Friday by the U.S. Attorney's Office says it is pursuing possible charges of conspiracy, computer fraud, theft of trade secrets and interstate transportation of stolen goods against Hilton and two executives it hired away from Starwood"

Starwood has been pursuing two ex-Starwood executives who are accused of making off with truckloads of confidential documents which were used in the development of Hilton's now ill-fated lifestyle brand, Denizen.

Orbitz For Travel Agents Pays 10% Commissions

2010-02-17T12:10:00.007-05:00

Orbitz has launched a new platform for traditional travel agents which enables them to book stand-alone hotel rooms as well as vacation packages. This matches (for hotel only anyway) agentaccess, a program which hotels.com has offered to the agency community for some time.

The Orbitz for Agents platform offers a 10% commission to agents on stand-alone hotel bookings and 4% on packages which include air and hotel or car and hotel.

And, in an effort to sign up agents, the first 500 agents to register will be paid 12% commissions.

So now we have Orbitz, partially owned by Travelport, pushing agents to book outside of the GDS. And Orbitz is offering a strong economic incentive (at least for the 1st 500 agents) to do so. But will agents abandon their beloved green screens in large numbers? I doubt it - but plenty of small, independent agents may be interested.

And what of suppliers? It gives you some clue as to the level of margins Orbitz (and Hotels.com) are able to extract from hotels if they are able to not only match the industry standard 10% rate but still cover the other costs associated with the merchant model (e.g. credit card fees, fraud, customer care etc) which are normally borne by hoteliers under the agency model.

And it is a good move for Orbitz. Orbitz has a choice to drive incremental bookings - they can pay an agency 10% or Google. Stands to reason they already pay Google enough so this is an interesting way of lowering reliance on paid search.

Orbitz does allow for agents to add their own service fees - could this be the distribution model of the future in the hotel industry much as it has become the standard for airlines? Wait and see..

Expedia Delivers Opaque Branding for Flights: Where's Leonard Nimoy?

2010-02-12T08:59:00.005-05:00

We found something new in our in-box from Expedia this morning. The usual claim for the best prices from point A to point B yielded a flight at the top of the display with both the carrier and the exact time of departure hidden until purchase. We’ve seen it with hotels, but not air. In our search there was just one opaque listing at the top of the display for a significantly better price in an otherwise uniformly priced market. It looks like this in the display:

Clicking on the Tell Me More link brought us to the following explanation for the terms. It’s similar to the brand opaque presentation we’ve all seen elsewhere for hotels, but to avoid having the consumer tie it back to a specific flight that would reveal the carrier, the departure times are also masked.

Given the success of this marketing technique on the hotel side, it’s almost surprising that it hasn’t been used sooner on air for all the same reasons. It preserves the general pricing structure for the carrier, and caters to a market segment that values price over convenience and brand.

Will we soon see Expedia commercials with Leonard Nimoy encouraging us to “Name Your Own Fare?”

Guest posted by George Roukas

DOT: LGA and DCA Slot Swap is a Go for Delta and USAirways

2010-02-09T16:46:00.005-05:00

The DOT has just issued a tentative waiver that will allow USAirways and Delta Air Lines to swap their landing slots at New York LaGuardia and Reagan Washington National airports. As we discussed previously, this will allow Delta and USAirways to greatly increase their dominance at these two airports, respectively, by allowing them to effectively transfer under-utilized landing slots between themselves. USAirways operates a large operation at DCA which will grow larger while their operations at LGA will shrink dramatically when they cede slots over to Delta. Delta will pick up many of the small routes which US currently operates (often with small propeller aircraft) and be able to better integrate them into Delta's growing New York operation.

However, the DOT is mandating that US and DL give up some slots to "carriers with no or limited service" at DCA and LGA. 14 pairs at DCA and 20 pairs at LGA (a pair is required since take-offs must generally equal landings for a successful operation.) have been marked for re-distribution. To be sure, this is a small number of the 42 slot-pairs USAirways originally stood to gain at DCA and 140 Delta was expecting at LGA.

Let the jockeying begin but we expect JetBlue, Southwest, AirTran and maybe Frontier to be at the top of requesting parties.

And as we've said before, get ready for the final shut-down of Cincinnati by Delta as a hub or focus city. The airlines are only trading slots, not aircraft. Those 120 slots will need a substantial number of aircraft for operations - we bet they are going to come from the operation in CVG.

Sabre Travel Network announces new GUI workflow solution. Is that a green screen death rattle? Or just a chuckle?

2010-02-03T17:24:00.002-05:00

Sabre Travel Network announced a global pilot of a new work flow solution for the agency community. The new product will include a new GUI (graphical user interface,) work flow management across multiple GDS, a customer profile, etc.

We haven’t seen it (though we'd love a demo at the right time) but we're going to give it long odds until the proof is in front of us. GUI agent desktops usually fail in the agency community on two counts. First, the experienced agents (especially corporate agents, who get those stressful calls from travelers on the road after their flight has been canceled) can actually go much faster on the green screen than they can with mouse clicking and typing. So the pretty GUI actually slows them down to the point where they get frustrated and leave it. New agents like the GUI because it gets them up to speed faster, but after a while they want to be with the ‘cool kids’ and they slowly migrate away to the green screen.

The second challenge is integrating supply into a common UI and booking record. The GDS have been trying to push everything they can into a PNR for obvious reasons, but some content just won’t go into an active segment, and passive segments present synchronization challenges. So there are too many trade-offs to be made from an agent perspective. They still have fragmented booking records and spend extra time trying to make sure everything is up to date when itinerary changes occur.

So if you think the new product is going to be a hit, how do you measure adoption? Not by looking at the number of installations of the new product. That doesn't really tell you much, though it's easy to measure. You have to count the number of messages that flow through the core via the GUI applications vs. those that go through the green screen products. Surprise! The GUIs probably count for a lot less than you'd think.

It would be possible to design a system that would overcome these issues, but it’s not easy to do. If the GDS are 'listening to their customers’ on this issue then they’ll likely fail. It's one of those situations where "It's what I asked for but it's not what I need." Interviews can't easily communicate the reasons for the relationship between the agent and the green screen. It's best to just observe them and see what they do, interpret the rationale and then plan the product accordingly. If you've ever spent a few (or many) afternoons watching how they work and asking a few follow up questions, you'll have a solid appreciation for how skilled agents work with the green screen and why it serves them so well. You'll also have a new appreciation for how good some of these agents really are.

Carry on, Sabre. We hope you’ve cracked the code.

Guest Posted by George Roukas

The iPad cometh; trade in your Tylenol for Assassin's Creed

2010-02-03T10:48:00.005-05:00

Last week apple announced the iPad, a device designed to inhabit a middle ground between a Smartphone and a laptop. Having had a few days to digest the announcement and bounce a few ideas off of our colleagues in the travel and technology arenas, we thought it a good time to prognosticate about how the iPad might impact the world of travel.

First, a quick assessment of what the iPad is and who is likely to buy it. The easiest way to get a handle on the iPad is to think of it as a big-screen version of the iPhone (or iPod touch, which is similar but without the phone capability.) The screen resolution is 1024 x 768, which is comparable to a decent sized laptop or desktop. The physical size of the screen is about 9.7 inches on the diagonal, so it's a little more than four times the size of an iPhone but significantly smaller than a laptop.

So who is likely to buy these things? Well, the iPad provides a great platform for email, music, calendar, address book, eBooks, videos, and games. It's a convergence device, which means that it does a lot of things well. So if you have a blackberry, for example, and you want something that handles your video, eBook, and music tasks, then the iPad is a good solution for you. What about IPhone users? Well, we initially thought there was so much overlap that the iPhone community would be reluctant to buy an iPad. Why have two devices that have so many of the same functions? We’ve seen other posts about the impact of iPad on travel and they focused on the likelihood of a new class of application that would only run, or would work significantly better, on an iPad. If that happened, iPhone users might be tempted to use an iPad for those new apps. We don’t really see that happening, at least not in the short term. But there will be reasons why the iPad will change traveler’s lives—even travelers with iPhones.

We thought a little more about two critical factors of the iPad: (1) its function as the 'in between' device and (2) convergence. We've all seen how laptops have been shrinking over the past few years so that now you can buy both Mac and PC laptops that fit into a manila envelope. As travelers rebel against the 20 pound laptop briefcase crammed with cables and connectors and power cords, the option of a smaller and lighter device with 'just enough' functionality to allow them to leave the laptop at home or in the hotel seems almost too good to be true. Given all the special purpose applications available today in the iTunes store and the word processor/spreadsheet/presenter replacements for the iPhone/iPad such as Documents to Go or the (upcoming) iWork suite, it's not hard to see that travelers will view the iPad as the key to keeping their shoulders and backs safe from the scourge of the laptop bag.

The other factor, convergence, comes into play in still another scenario when travelers are trying to simplify their lives and lighten the load. We saw one prediction that posited the Kindle would thrive against the iPad because of the price differential. True, the entry level Kindle is only about half the price of the entry level iPad, but do travelers really want to carry a dedicated eBook reader like the kindle when it comes as part of the iPad? We haven't seen the screen of the iPad up close, but it's rumored to blow away the Kindle screen in terms of both readability and functionality. So the purchase of an iPad means you don’t have to buy and carry that Kindle, or the Zune, or any other single-purpose device that iPad can emulate.

So it seems like the market for the iPad among travelers will be brisk regardless of what's already in your pocket or briefcase. We suspect that many travelers will be lured by the siren song of a lightweight platform that has just enough functionality to un-tether us from our desktops and laptops for some period of time, then lets us sync up or transfer our work back to home base for final polish and refinement. Remember that it’s not a laptop (or iPhone) replacement—it’s a complimentary device that lessens your dependency on the others and provides a richer experience to boot.

If the frequent (and even not-so-frequent) traveler is a good target market for the iPad, then how will iPad applications evolve for travelers? It seems natural that some of the travel applications now available for the iPhone will be altered to take advantage of the larger screen on the iPad, but it's hard to see where the extra real estate will actually enable a new class of application. Travel guidebooks will be much richer on the bigger screen, we bet many of those are already written to take advantage of whatever screen size the device has, so it's not technically a rewrite of the application though it looks better on the iPad. Think of how Microsoft Word works--if you change the size of the window, the text automatically re-flows to fit the new window size. It'll be the same with the guidebooks.

Even the travel booking process, which is traditionally very demanding on the user interface, has been very ably addressed by Kayak, for example. (Kudos to the Kayak product management team for a very sharp design.) We're not saying that the guys at Kayak aren't probably jumping up and down in anticipation of what they could do with the extra screen real estate, but it's safe to say that aside from a slicker look there probably isn't much more they could do that's truly innovative with respect to the iPad device itself. Those apps may come, but they’ll take a while to arrive.

So our prediction is that travelers will be impacted by the iPad more in terms of the form factor than by unique travel applications. Sure, there will be some new ones to exploit that amazing screen, but the ones that are already available will continue to provide a lot of functionality. An expanded Kayak or OTA application will be simpler to use, but we see the iPad contributing to quality of life for harried travelers who will at last be able to do a little work, watch a few videos, read a book, and browse pictures of the kids on a 6 hour flight (iPad can show 10 hours of video on one charge) without changing batteries or dislocating a shoulder.

Maybe they should have called it the iSmile.

OTAs Prevail Against Anaheim: Court Calls Prior Rulings "Logical Fallacy"

2010-02-01T19:03:00.015-05:00

The major Online Travel Agencies today notched a huge win in Anaheim, California where a judge threw out a $21,326,881.30 ruling against Expedia, Travelocity, Priceline, Orbitz and their related subsidiaries with a strongly worded rebuke to the Anaheim City Hearing Officer's earlier findings.

This case was originally heard by the City's Hearing Officer who made the determination that the OTAs did, in fact, operate hotels under Anaheim's definition. The Hearing Officer originally found that each OTA is both "the proprietor" and the "managing agent" of every hotel in the City of Anaheim. Wow. As such, the Hearing Officer found that the OTAs owed the princely sum of ~$21M covering back taxes, fines, interest and, no doubt, extra donuts for the office.

We'll get the whole decision up shortly for reading on your next flight but here are the highlights:
The big take away is that the judge who decided this case will also be presiding over several other similar cases currently in various stages of litigation in California. These include cases in Los Angeles, San Diego and a particularly nasty one in San Francisco where the OTAs have already paid significant damages in order to even have the right of appeal under the City's "Pay to Play" rules. (Note: Anaheim had this rule as well but the OTAs were able to get it overturned.) While no one can predict how a judge will rule and each case is obviously different, this judge clearly understands the issues at hand.

The ruling states "OTCs do not control and run hotels. The Hearing Office's factual findings list several functions performed by OTCs with the respect to resale of hotel rooms" including marketing functions, determining mark-ups etc. The Court correctly determined that "none of these facts comprise incidents of control of a hotel or give the OTCs the right to run the business of a hotel. The hotel control the production of the product sold, the quality of production, the channels of distribution of the product and the pricing of the product." This discussion of Marketing 101 and the " Four Ps" reminds me of my first marketing class in college - sounds as if the Judge may have taken a similar class along the way.

In one of the stronger worded sections, the judge concludes that the Hearing Office that it is "a logical fallacy to conclude, as the Hearing Officer apparently did, that because a hotel operator is responsible for collecting rent and taxes from [guests], any entity that collects rent and taxes from a [guest] must be an operator [and be liable for the occupancy tax] " The footnote explains it more clearly still: "Principles of formal logic demonstrate that when the statement 'if A then B' is a true statement, it is incorrect to conclude that the converse 'if B then A' must be true. Yet the Hearing Officer accepted this reasoning." Ouch. Basic logic, right?

However, the judge clearly leaves the door open for the City to base an occupancy tax on the total amount paid by the guest for the hotel room if the law was drafted (as New York City has attempted to do) and constructed to facilitate such a tax. "There seems to be no reason why such a tax scheme could not be drafted and considered." But before Anaheim goes off to re-do the tax wording, consider the Courts further discussion in regards to the City's position that times had changed (with the advent of the merchant model) and that the taxation laws should simply morph to fit the times: "where a taxing agency has not anticipated a new revenue opportunity, the court may not act to fill what might be perceived as a 'gap' in tax coverage. Creation of a larger tax rate or larger tax base requires voter approval pursuant to Proposition 218. California Proposition 218 states that "A taxing methodology must be frozen in time until the electorate approves higher taxes"

This ruling came down to carefully interpreting the current tax laws on the books. Clearly, opportunities exist for taxing authorities to adjust those laws (at least outside of California) to change with the times - but a go-forward tax is a far cry from a huge retroactive tax from the OTA's perspective.

United Matches American With One-Way Mileage Awards

2010-02-01T11:38:00.004-05:00

United has announced that Mileage Plus members may now redeem awards on a one-way basis rather than the previous round-trip requirement. Best of all, there is no premium for a one-way redemption - it is a simple 50% of the miles required for a round-trip award. This new structure matches that of American, Alaska and British Airways, among others.

For members, it greatly simplifies award redemption. Now consumers can make an informed choice about to earn vs. burn based on the price in miles or money based on each direction of their travels. In addition, given the scarcity of frequent-flyer award seats these days, consumers can redeem the higher peak level one direction while taking advantage of the lower off-peak award in the other direction - previously, the higher mileage level applied round trip, even if the low mileage level was actually available.

One possible downside for consumers is that if they are booking these awards separately on the phone, they may get nailed with more phone booking fees - one for each direction of the trip.

And, alas, the new structure only works for United/United Express flights - no one-ways on Star Alliance partners. At least yet anyway - one Star carrier, BMI does allow one-way awards on all Star Alliance partners - we only hope United will do the same in time. And American and BA already allow one-ways on their partners.

United also announced that users can now combine "miles and money" if they are short on miles. While I like the flexibility this offers, I've never found combining miles and money to be in anyone's interest except the airlines....

Overall, however, greater flexibility is always a plus. Or a Mileage Plus in this case.

Kayak/Lost Partnership? Try this search...

2010-01-29T08:14:00.004-05:00

Thanks to a Facebook posting from our good friend (and recovering airline/OTA exec) Ellen Lee, we found a curious flight display on Kayak this morning...

Try a search for a one-way ticket from SYD to LAX departing on 09/22/2010. The results display a rather expensive flight from "Oceanic Airlines" as below

We won't spoil the fun, but try to book this flight and see where you end up.

Good fun from Kayak (maybe a little morbid given it is a travel site?) and a really interesting viral marketing play.

OTAs Win on Taxes in Texas

2010-01-20T17:59:00.005-05:00

A trial court in Houston today dismissed a case brought by the City of Houston against the major online travel agencies for nonpayment of occupancy taxes. The court issued a summary judgement indicating that the judge found the evidence supporting the plaintiffs' case insufficient to even proceed to trial.

This ruling is a big win for the OTAs as the court looked at the same language in which a San Antonio jury concluded that the OTAs (somehow) control hotels. We took a look at this ruling back in November and concluded that ruling was a draw. Based on today's ruling, we are going to give it to the OTAs, minus legal fees and the overall distraction factor, of course. San Antonio, see you on appeal as they say...

TripIt Gets Serious About Business Travel: New Blackberry App

2010-01-20T12:23:00.005-05:00

TripIt has announced a new application for Blackberry, allowing BB users to view all their travel plans just like iPhone and Android users have been able to for some time. All of the regular TripIt functionality has been adapted for the 'berry including flight status inquiries, directions and, of course, the Tripit Pro features.

As TripIt continues to move closer to the business travel world, supporting the Blackberry has become more critical given the device's deep penetration into corporate IT platforms.

Obviously, TripIt (and Hotwire.com) founder Gregg Brockway's itineraries are not the sample screen shots. As Gregg would no doubt agree, the likelihood of him splurging on the George V in Paris is about as likely as pigs flying.

Priceline's New TV Ad Brings Revenue Management 101 to the People

2010-01-20T09:22:00.008-05:00

Today, Priceline.com launched a new TV ad campaign featuring a new Shatner side-kick known as "Big Deal." Not only is the Big Deal big, but he also appears to have a deep understanding of hotel revenue management (in addition to some really nice tats.)

In the spot, Shatner calls in Big Deal to help negotiate with a hapless front desk clerk who initially refuses the $65 price Shatner suggests. Big Deal intones "is it wise to allow a perishable item to spoil?" Shatner follows with "Is it wise to leave a room empty" to which Big Deal adds "The additional revenue easily covers operating costs." Shatner closes the negotiation with "$65 is better than no dollars." As you would expect, the clerk relents.

A rather high-brow discussion (lead by a decidedly low-brow, knuckle-cracking, meat head, no less) of the principles on which Priceline operates is an interesting advertising ploy. Educating consumers of the intricacies of the model is a first - some hoteliers are still trying to figure it out, let alone consumers. But it may expand the market if more consumers can get comfortable with how Priceline actually gets such good pricing.

And how will hoteliers react? Given the revenue they are seeing from Priceline these days, they will probably just take a deep breath and keep offering those $65 rates...

Watch the ad:

"Hiltonizing:" A New Verb in Continuing Starwood/Hilton Fight

2010-01-15T17:08:00.013-05:00

We've been watching this lawsuit go forward with interest for some time now. As you'll recall, Starwood sued Hilton over two senior executives (Ross Kline and Amar Lalvani) who departed and managed to show up at Hilton with seemingly truckloads of confidential documents relating to Starwood's luxury brands. Hilton fired Ross and Amar and sent the documents back to Starwood but claimed they didn't really appear to be confidential documents. Denizen, Hilton's new luxury brand, bit the dust soon after the first lawsuit was filed. The suit even contains a quote from this blog describing the similarity of Denizen to W at the brand launch - what foresight!

As first reported in today's WSJ, Starwood filed an amended complaint today in New York District Court alledging further wrong-doing by Hilton. Most shocking in the new complaint is the seemingly personal attacks against Hilton CEO Nassetta. Starwood is going for the jugular by attacking the senior management team at Hilton.

We've pulled the document (all 130+ pages of it) and posted it here for your weekend reading pleasure.

But in case you don't have time or inclination, we'll post a few of the best parts of this spectacle below:

It appears that the sheer amount of documents (and copies thereof) were truly enormous. Starwood (with just a touch of drama-queen) writes in the amended complaint:

"Hilton has delivered to Starwood hundreds of thousands of pages of documents and computer files retrieved from Hilton offices and the homes of Hilton employees around the world, and there is no end in sight. Deliveries of documents pursuant to the Preliminary Injunction continue, and documents were received as recently as yesterday, nearly a year later. This mountain of undisputed evidence...."

And many of the documents were sent by "Starwood employees used as corporate spies" recruited by Klien using personal email accounts with cute notes attached to the files like: “fyi, I do not ck this email from work so it is ok to send stuff on.” Obviously, the computer science major who wrote these words didn't quite understand how nothing is really ever "ok to send stuff on"

And here is a great quote from an email from Lalvani regarding a potential W in Thailand: “Here’s an interesting one. . . . I have good connections with the owner. Lets discuss protocol during my transition on deals like this so we don’t miss them but also dealing with the fact we don’t have a lifestyle offering yet. This is going to be fun!!” Fun indeed.

And Hilton allegedly made it easy for all of the team to use the Starwood documents by uploading them onto Hilton's common drive:

“[W]ere you able to retrieve that strategic development list of cities/countries from Amar’s discs? Maybe you sent it and I missed it? We now need it urgently. Could you send to me or show me where to search?”

In response, Swierk informed Mani:
“I asked Joy to put all of those documents on the s: drive so they are all located in s:HPP/HPP Development/W docs.”

And "Hiltonizing" the stolen documents was a top priority:

"Further to our discussions earlier today, I think we need to have your team work with you ASAP on Hiltonizing this and sharing it with the Exec Group ASAP."

Starwood's asks of the Court in response to Hilton's actions are unprecedented; the best of which include:

Court appointment of one or more “monitors” to assure Hilton’s compliance with all injunctions and Hilton’s non-use, directly, indirectly or derivatively of any Starwood Confidential Information or information derived therefrom;

Euthanizing Hilton’s terminally infected Denizen Hotels brand;

Imposing a “penalty box” or “time out” enjoining for an appropriate time period any further development of Hilton’s luxury and lifestyle brands to compensate Starwood for Hilton’s unjust enrichment from its wrongful use of Starwood Confidential Information across all of Hilton’s luxury and lifestyle brands

Starwood is asking for a baby sitter to watch over Hilton and is even suggesting a "time out" - obviously the drafting lawyer has children.

Still, our favorite has to be the request to "euthanize" the "terminally infected" Denizen brand. Again, spectacular drama.

As we mentioned, Starwood is clearly going in for the kill with this - but at what cost we wonder? Lawsuits are not Starwood's core business - hospitality is. If the allegations are true, Starwood is clearly entitled to relief but one wonders if such a nasty public feud is in the best interests of anyone.

Hotels.com Updates Loyalty Program welcomerewards

2010-01-14T17:37:00.009-05:00

Hotels.com today announced a re-tooling of their loyalty program, welcomerewards. Welcome Rewards was announced in October 2008 and was (or is) the first robust frequency program offered by an online travel agency. Maybe it was a little too robust.

welcomerewards offered a simple proposition: Stay 10 nights, get one free. Each stay had to be $40 or higher and you could use your free night for up to a $400 hotel stay. In other words, a really good deal.

Today, some enhancements were announced such as extending the expiration of credits and a removal of the $40 minimum rate requirement. (Handy for those $18 rooms in Vegas)
However, the big change was on the redemption side - no longer will members be able to claim a room valued at up to $400.

Instead, Hotels.com will average the room the room rates over the ten stays and offer that amount as a credit towards a future booking. For example, if a customer buys five room nights at $75, two at $200 and three at $100, they would now be eligible for a free night valued at up to $107.50 rather than the previous $400.

We are not totally surprised by this change - the program seemed almost too good to be true when launched - Welcomerewards was a better offering than anything the chain hotels offered through their loyalty programs and certainly the broadest redemption possibilities. Compared to Starwood Preferred Guest, for example, the same spending levels in the example above (for a non-elite member) would have earned 2150 StarPoints - yes, enough for a free weekend night at the lowest of the low redemption categories - but certainly not a $400 value. I doubt that any of the Starwood SPG Category One hotels ever see an ADR of $400!

United Air Feels the Hyatt Touch: Tom O'Toole Named CMO

2010-01-14T11:19:00.012-05:00

United Airlines (UAUA) has named travel industry veteran Tom O'Toole as their new Chief Marketing Officer. Tom was previously CMO and CIO (yes, he actually wore both hats!) for Global Hyatt Corporation(H) until his departure last at the end of 2009.

Tom's appointment marks the first move we can think of from Hyatt to United - most industry talent has flowed the other direction.

Appointing a non-airline (albeit a very well versed) expert to the marketing helm at United may be just what United needs to help drive a new course. The challenge, as always, will be in delivering at the operational level what has been promised - we bet Tom's unique blend of operational and marketing experience will be a great help in making that happen.

And here's hoping that Tom doesn't break any guitars.

Haiti Needs YOUR Help

2010-01-13T21:44:00.005-05:00

A somber moment from our usual glib. The pictures and news reports coming from Haiti are shocking to say the least. North America's poorest country (indeed, one of the world's poorest countries) has been rocked by a brutal earthquake of epic proportions.

I encourage all of our readers to take a brief moment to assess their position in life and consider donating to the Red Cross in order to help the relief efforts in Haiti.

American Airlines has announced a mileage bonus tomorrow for all donations to the Red Cross tomorrow at AA.com. If that makes the difference, go for it.

I hope that all of us in the travel industry will take a moment to help. Haiti is hardly a glamorous destination of 5 star hotels and private jets - far from it. But the people of Haiti are in their darkest hour - now is our time to shine.

Micros Acquires TIG: Now What?

2010-01-12T12:03:00.002-05:00

Micros Systems, an information technology provider for both the retail and hospitality businesses just announced the acquisition of TIG Global, a leading interactive marketing company focused on travel. Though Micros has been in the hospitality business for several decades with its Micros hotel CRS and Opera hotel CRS/PMS, their real focus has always been in retail POS systems, leading many to believe hospitality distribution was an ancillary product line. This acquisition may signal a change in that orientation as they follow in the footsteps of SynXis and TravelCLICK in acquiring an interactive services group.

Theoretically, a hotel distribution player with strong interactive services can provide a more complete solution to its customers. While all major, and many minor, CRS providers have internet booking engines (IBEs) that allow hotels and chains to distribute directly to consumers, the quality of a ‘standard’ CRS booking engine varies widely. Further, the number of configuration options required for a generic IBE makes enhancement a slower and more complex proposition. The result is a lot of IBEs that, aside from cosmetics, provide no differentiation for the hotel brands. At the same time, the IBE channel is extremely important to hotels because it is very inexpensive and can theoretically enable the property to really emphasize its brand and USP—assuming the technology and content are there to do it. Having an in-house interactive service means the CRS provider can offer more highly customized standard IBEs as well as the promise of faster and cheaper development of custom IBEs. Customized IBEs that differentiate the brand were in recent years a luxury, but are now becoming a requirement for many hotels.

Another holy grail of hotel marketers (to be potentially deliverable via this union) would be the ability to track SEO/SEM programs from first click through booking and, via the integrated Opera CRS/PMS, down to the folio level. This would give hotel marketers a highly detailed view into the results of their campaigns covering not only the booking but also the spend at the hotel. Ah, but we’ll believe it when we see it.

The pace of innovation on the hospitality side has never been blindingly fast at Micros. We recall the many, many years that elapsed between their announcement of Opera and its first commercial implementation. Still, the acquisition of such a strong player in the interactive community may indicate Micros no longer sees the market for retail POS as its dominant focus. It may be truly setting its sights on the CRS space which, despite a few major players, is still largely up for grabs.

Guest Posted by George Roukas

United Matches Southwest's (and Frontier's) Promo for Colorado Residents

2010-01-11T16:26:00.003-05:00

Let the Denver airline wars continue. As we predicted last week, both United and Frontier have matched (and in United, case, upped) the offer that Southwest initiated.

Southwest is offering a free ticket for each ticket purchased. United is similarly offering Colorado residents who purchase a ticket by February 14th a free additional ticket to any North American destination. For customers who purchase a ticket to a trans-Atlantic/Pacific or South American destination, United will offer a ticket anywhere in the world United flies.

Clearly, United is looking to leverage their global heft in the "Denver Wars" - clearly a free ticket to Sydney or Cancun is a lot more exciting than Amarillo. (No offense to Amarillo, of course.)

New Travelocity Deals Pages: Not Your Father's Travelocity

2010-01-11T09:03:00.006-05:00

With apologies to Oldsmobile and hoping that our readers can even remember that nameplate, Travelocity has quietly (so far) launched a new deals section that is radically different from the current site. Building off the long dormant and under-utilized Experience Finder, the new Travel Deals "tool kit" section is pretty slick. A far cry from some aspects of the current user experience, these new tools put the consumer in the driver's seat with easy and well thought out features and functionality. However, the integration with the Travelocity mother-ship is nicely done so that the overall integrity of the site is maintained.

Travelocity has done a great job reinventing the age-old flight deals map. I'm an admitted map-geek so new mapping features are always fun to play with, especially when they are done well, which this is.

The new "Deals on a Map" page allows users to easily display recent airfare deals from their home city (which, in a first for Travelocity, actually uses auto-complete to help you input the city name!) to various clumps of destinations such as Ski, Florida, Hawaii, Europe or U.S. domestic.
Each destination is clearly shown with recent flight deals as well as, not surprisingly, the latest air+hotel package deals that Travelocity has put together. I say not surprisingly because, unlike stand-alone air, packages are highly profitable to Travelocity (and all OTAs.) As such, there are plenty of gentle hints to move users towards a package purchase such as only displaying the air+hotel pricing prior to zooming down to the hotel level.

The zoom feature (above) is great which allows users to drill down into a specific region and then into a city to see the latest pricing at the hotel level. Clicking on a specific hotel yields hotel-only pricing as well as a "community rating" (not quite sure what that means unless it is the standard Travelocity user rating) as well as the Travelocity star rating. Also included is a teeny, tiny photo that anyone who remembers driving an Oldsmobile Toronado will not be able to actually see.

Also part of the tool kit is a revamp of the deals page which is now easily reached from multiple places off the Travelocity home page. Given how price sensitive consumers have become these days, this is a great improvement in both functionality and placement.
Best of all, the new deals page finally puts the consumer in control of how they search and define what a deal is. Consumers today are constantly blasted with a bevy of "deals" many of which are not relevant to an individual consumer or, worse yet, not really even that much of a deal.

Travelocity's new page serves up some teaser deals but then allows the user to dive deep into various other promotions and sales that Travelocity has catalogued. Slick tool bars allow users to change destinations, dates and pricing. And, to keep us from going insane comparing all the different deals, there is a cool drag and drop feature that allows users to tag the deal while they look at other possibilities. Not to be left out of social media, Travelocity also allows these deals to be shared on Facebook and Twitter right from this page.

These new features go a long way to improving the consumer experience by exposing deals and then allowing users to make up their own minds about what constitutes a deal. We'd still like to see deals and flights searched in real time so I can input actual travel dates and then explore what options are out there for a specific time period. This would help answer the age-old problem of "I have a three day weekend coming up, I'm cheap and don't know where to go." Oh wait, wasn't that Site59?

Virgin America Really is American Says DOT

2010-01-08T12:36:00.004-05:00

The AP is reporting (even before Virgin America has put out a press release themselves) that the DOT has ruled that VA is, in fact, controlled by U.S. interests. Per U.S. law, foreign entities are limited to 25% of the voting rights of any U.S. carrier. (Heaven forbid that Singapore Airlines bought a good chunk of United and actually tried to bring it up to SQ's level!)

This whole ownership issue arose when Alaska Airlines requested the DOT review Virgin America's status as a US carrier early in 2009. Since then, both Alaska and Virgin America have gone back and forth in public regarding this issue.

While Alaska has claimed they are simply trying to ensure that all carriers in the US are on a level playing field (which is fair) one has to wonder how much happier Alaska (and the other majors, for that matter) would be without Virgin America around - not only for the inherent capacity reduction but to raise the flying bar. (Yes, there is a pun there!)

After all, brand new aircraft, great in-flight entertainment and happy flight attendants are something all U.S. passengers should have the opportunity to enjoy - no matter who controls the airline! Cheers to Virgin America.

First Airline Bankruptcy of 2010: Mesa Airlines

2010-01-05T09:42:00.006-05:00

Yesterday, we discussed the first airline mileage promotion of 2010. Today, we bring you news of the first airline bankruptcy filing of 2010: Mesa Airlines.

Never heard of Mesa? You are not alone, but chances are pretty good you've flown on them at one point or another. Mesa operates ~130 aircraft under the codeshare colors of United, Delta and USAirways from coast to coast. Mesa also operates a small operation in Hawaii linking the major airports there under the go! brand.

Mesa has fallen victim to falling demand and rising fuel costs which have caused the major airlines to cancel contracts with Mesa for codeshare flying.

In November, United announced that they would cancel contracts covering 26 CRJ-200s currently operated by Mesa no later than April of this year. With fuel prices back up and airline yield softness continuing, these 50 seat aircraft have become some of the least desirable aircraft in the skies. Mesa also is scheduled to terminate a similar contract with United for 10 Dash-8 props at the same time.

Mesa is also embroiled in a contract dispute with Delta whereby Delta is attempting to return another 22 regional jets to Mesa.

There are no homes for these aircraft with the majors right now in the current climate. With over 40% of the Mesa Air fleet potentially side-lined in the coming months, one can understand the need for a reorganization.

Will Republic Airways ride in as the white knight to offer DIP financing as they did with Frontier in attempt to further consolidate the regional industry? Republic and Mesa already have a joint venture in Hawaii with go! and Mokulele.

We doubt it, but we know Southwest will NOT be at the table this time...

Southwest Announces the First Bonus Mileage Incentive for 2010

2010-01-04T17:44:00.003-05:00

Remember how good business travelers (those that were still flying, that is) had it in 2009? The falloff in business travel brought dogfights to the skies as airlines showered travelers with miles to try and stimulate business and steal market share.

American, United and Continental all offered double status points for not just one period during 2009 but for two separate multi-month periods.

Delta offered double miles to on all flights for American Express card holders and American offered double miles to everyone living in the New York area.

Delta offered 50,000 miles flights to London and the list goes on...

Southwest has fired the first shot in 2010 by offering Colorado residents a free ticket for every ticket purchased. Yes, you have to buy one of the more expensive (for Southwest, anyway) Business Select tickets but then you earn a free one anywhere they fly.

Look for United to match with something similar in the Denver market shortly. And we bet Frontier, not wanting to be left out in the 3-way Denver fight will also offer an incentive as well.

So far, only Colorado residents are benefiting from the continued slump in business travel but we bet more incentives are on the way soon....

OTAs Win in Louisville on Occupancy Tax Issue

2009-12-22T12:37:00.003-05:00

This morning, the United States 6th Circuit Court of Appeals affirmed a lower court's motion to dismiss a lawsuit filed by Louisville against the usual Online Travel Agency (OTA) suspects.

Full opinion here for your reading pleasure.

As is usual in these cases, Louisville (and some surrounding areas) filed a lawsuit claiming the OTAs had not paid occupancy taxes based on the rate charged to consumers on their website but rather on the wholesale rate remitted to lodging operators.

The lower Court rejected Louisville's suggestion that the OTAs are not "like or similar" to "motor courts, motels, hotels or inns" because they "have neither ownership, nor physical control, of the rooms they offer for rent." In fact, according to the ruling issued today, the court remarked that the Kentucky laws had "simply failed to keep up with the times."

Of course, Louisville et al appealed this ruling - Today, the court agreed with the lower court's analysis.

A few highlights:

This ruling is a clear rejection of the way the taxation statutes are written today. In particular, the Court ruled that "like or similar" was vague and unclear when questioning if the OTAs were "like or similar" to hotels etc. The Court was concerned about how broadly this "like or similar" verbiage could be construed.

Similarly, the Court ruled that taxes are collected on the "entities doing business as hotels and the like" not the individual occupants of the hotel rooms. As such, the Court rejected counties' suggestion that the amount paid by the ultimate consumer was the amount that should be taxed.

Finally, the Court looked at several other rulings where concern was raised that a hotelier could simply sell all their rooms through a subsidiary of some sort at a very low rate, collect the tax on said low rate and then simply market the rooms to consumers at a higher, marked up price. Thankfully, the Court rejected this claim and suggested that the right place to fix this problem was through legislation, not the courts. They also rightly noted that, in this case, anyway, there is no common ownership between the OTAs and the hoteliers.

This final claim, while positioned as a absurdity, shows the basic lack of understanding of hotel distribution that exists out there. While we doubt the Court has taken any of Bill Carroll's classes up at Cornell, they did a nice job of rejecting this concept which ignores the fundamental ways in which the majority of hotel rooms are distributed - which isn't via OTAs.

Oh, and anyone stayed at a "Motor Court" recently?

Thanks to bluehighwaysofamerica.blogspot.com/ for this great image!

DOT: $27,500 PER PASSENGER Fine for Long Delays. Total insanity.

2009-12-22T10:49:00.009-05:00

In what is being heralded as a "Christmas Miracle" by some air travel watchdog groups, the DOT announced new fines for airlines that keep passengers on board an aircraft for longer than 3 hours after departure from the gate.

While we are not advocating that passengers should be kept on aircraft for long periods of time and deprived of basic necessities, we do worry that this arbitrary time limit will have a huge (and negative) effect on how airlines operate during periods of bad weather. Airlines don't intentionally keep people stuck in a tube for hours on end - it is clearly not in their best interests either. And a few of the incidents that have drawn widespread media attention (the Continental Express flight that spent the night on the tarmac in Rochester, Minnesota, for example) are so egregious that we agree something had to be done. But issues like the one in Rochester happened because of utter stupidity and the failure of the crew and airline to properly monitor a nasty situation - not because of malice or profit motive.

The new fine of $27,500 per passenger (which is going to the government, mind you, not the passengers sitting on board!) is arbitrary and capricious. I guess the DOT was trying to send a message, but they might want to check in with the FAA what is a reasonable fine. For example, lets assume a 228 seat 767 sits on the runway for 3 hours and 5 minutes waiting to take off. This would subject the airline to a $6,270,000 fine! In contrast, the FAA recently proposed fining United Airlines $3.8M for flying a 737 on over 200 flights with shop towels covering an oil sump area rather then the proper caps. And most FAA fines are reduced by half if the error is corrected and not repeated. So, a 3 hour delay costs over $6M but 200+ flights with rags in the engine costs ~$2M. This makes no sense. Ont top of that, no compensation goes to the passengers actually sitting on the plane. At least when an airline bumps you (under rules also set by the DOT) the compensation goes to the passenger, not the enforcement agency.

Further, because the fines are so large, airlines will be extra careful in ensuring the aircraft return to the gate in order to avoid these fines. Get ready for your next flight to be sitting in line waiting for takeoff on a snowy evening and after waiting for two hours or so, you head back to the gate. As such, you lose your spot in the queue, maybe the crew goes illegal, bags have to removed etc - you end up stuck in an airport. Some Christmas Miracle indeed.

Net/net, less passengers will make it to their final destination with this new fine.

This is a classic example of the government over-reaching into the operational aspects of a business for reasons beyond protecting the safety and welfare of citizens. Yes, something had to be done to prevent another Rochester, MN but this is not the answer. This is a cheap headline, hardly a "Christmas Miracle."

AirTran Pinches SI Swimsuit Partnership Away from Southwest

2009-12-17T09:48:00.006-05:00

AirTran announced a partnership with Sports Illustrated's Swimsuit edition this morning that culminates with AirTran flying the models from NYC to Vegas after the release of the magazine. Of course there are the usual opportunities for a contest winner to join the models on the flight and more promotional tie-ins are promised. We can only imagine.

But what is interesting about this promotion (beyond the obvious) is that last year Southwest (who had yet to begin service into New York LaGuardia at the time) issued nearly the same press release including a similar flight, contest as well as a new take on Southwest's logo jets - not another Shamu plane. Rather, a full length shot of cover girl Bar Rafaeli. Southwest took a fair amount of heat (others called it a stroke of marketing genius) for the airplane pictured here.

So, was SI too hot even for Southwest, the carrier formerly known as the Luv Airline? And what about SI models flying AirTran - that sounds like worlds colliding. The battle between Southwest and AirTran continues - at least this time it is in NYC rather than Milwaukee.

Facebook and TripIt Get Trippy

2009-12-17T07:18:00.006-05:00

This morning, at long last, TripIt announced a Facebook app that allows TripIt users to integrate their itineraries into their News Feed. Much like TripIt's LinkedIn connectivity, it allows users to share their plans (or not) but on a much larger platform.

Not only will your FB friends be able to see when and where you are headed (if you choose to allow them of course) but they'll also be able to suggest places to eat, things to do, people to meet and who knows what else. No longer will I have to update my status: "Just landed in Antananarivo" - everyone will already know.

In TripIt's (cheeky) example below, it appears that people can even schedule a contract review through FB! Is FB on track to take over email/outlook as a primary business communications device as well? Probably not but at least it is now possible to separate "work" friends from all those people you went to high school with that are now your "friends" even though you barely spoke 20 years ago!

Bravo to TripIt.

Jetsetter Speaks Out at HEDNA on Marketing and Distribution

2009-12-10T13:11:00.004-05:00

Jetsetter CEO Drew Patterson was a panelist at this week's HEDNA convention in Las Vegas and had some great insights into marketing, distribution and revenue management.

Drew began his remarks with an observations that what is really missing in the online travel industry today is inspiration. Paraphrasing, the major OTAs are not really about exciting people to travel or getting them to book an incremental trip - they are largely order takers. (My words, not Drew's!)

Drew's comments are similar (but not as blunt) to Harrah's CEO and President Gary Loveman's remarks at this year's PhoCusWright conference during which he lamented that the OTA industry has done little to actually drive tourism and increase trips - most energy (in his opinion) is spent on beating up one another (OTA vs. OTA as well as OTA vs. supplier) vs. actually driving and inspiring consumers to travel (and stay in his hotels, obviously.)

Drew also commented on the often difficult relationship between Revenue Management and Marketing within the hotel industry. In Drew's words, "RM and marketing have to work in partnership to stimulate activity. Lowering rates without communicating the price change just dilutes an existing customer base. At the same time, marketing communication without value or a reason is a waste of money because consumers will see through it. The two have to be integrated to have an impact." Sage advice for hoteliers and distribution partners.

Clearly, Jetsetter aims to solve for these issues, but they alone can't be the total answer for what ails the industry today. (Drew has big plans but it is a big world out there.) Will anyone step up in 2010?

Lodging Recovery: 4 Years Away, OTAs vs. Suppliers, Google vs. TripA and Other Good Discussions

2009-12-04T09:20:00.004-05:00

Check out the blog over at uptake.com for some good thought-provoking discussions following the PhoCusWright conference down in Orlando.

Yen does a nice job of explaining Bill Carroll, Chris Anderson and Jake Fuller's analysis of the lodging cycle and the opportunities for the OTAs. In a nutshell, look for another 4 years of pain for hoteliers and substantial continued opportunities for OTAs.

Solid musings on the potential GDS IPOs along with HomeAway, Kayak and ITA - should be a big year in travel IPOs

And what would a travel discussion be without thoughts on google and tripadvisor?

Catch all the details here including my thoughts on OTA vs. supplier.com innovation and growth. The reply below is in response to Yen's thoughts around the growth of OTAs during the last economic blip - good supply helps but innovation is critical as well:

I think the question is as much around supply vs. demand as it is innovation vs. the lack of it. Hotels.com and Expedia built their businesses just as much around great pricing as they did around great websites, content and functionality. The chains and airlines fought back and brought their sites (somewhat anyway) up to snuff. But, particularly for airlines, they have relied on booking fees charged by the OTAs as a crutch to create differentiation. With those fees now moot, is it any wonder why consumers, for the same price, aren’t booking where a better booking experience happens – the OTAs? No wonder OTA air segments are way up – which obviously feeds the hotel and car lines of business. The innovation pendulum has swung squarely to the OTAs from the suppliers. Just look at Orbitz Price Assurance for air and hotel or Travelocity’s Guarantee or Expedia’s packaging product to see how the OTAs are changing the game. The suppliers are nowhere in these customer friendly areas. Will the airlines fight back with more negatives (as they are sooo prone to do) by restricting seat assignments or frequent flyer mileage accumulation to their own websites? (Remember when hoteliers did this?) Or will they match the innovation of the OTAs and really attempt to compete? We’ll see next year."

Is Allegiant Air Feeling the Heat From AirTran?

2009-12-01T14:32:00.004-05:00

Allegiant Air, which has long operated exclusively from Orlando Sanford Airport, today announced that ten destinations will now be served from Orlando International Airport.

Normally, we would not consider this to be very interesting news except that we've been following the growth (or dare we say copy-catting) of AirTran from Orlando International Airport (MCO). AirTran has added significant new service over the past several months from MCO which closely follows Allegiant's strategy of operating less than daily (2-4 weekly frequencies) in under-served leisure markets such as Bangor-Orlando, Duluth-Las Vegas and the like. We doubt that AirTran hast been able to build the kind of vacation packaging revenue that Allegiant depends on, but clearly Allegiant decided they needed to compete on more equal terms.

Allegiant is moving markets where they directly or closely compete with AirTran to larger and more conveniently located MCO. These include: Allentown, Knoxville, Lexington and Des Moines where they fly wing-tip to wing-tip with AirTran as well as Greenville, Grand Rapids, Springfield MO, Tri-Cities TN, Huntington WV, and Youngstown where Airtran operates nonstop service to MCO from cities within a very easy drive.

Allegiant's press release says customer preference for MCO drove the decision but we see it really as a way to put pressure on AirTran. And AirTran is pretty good at picking fights - they have proven they can succeed in Delta's back yard in Atlanta and are waging a huge war in Milwaukee with Midwest and now Southwest. Even Northwest, which has a history of not tolerating LCC's in their hubs was not able to drive AirTran from Minneapolis, Detroit and Memphis. This will be fun to watch...

FlightSearch.com: An Interesting Twist on Search Aggregation

2009-11-18T10:30:00.009-05:00

Does the world really need another search aggregation website? Well, we are about to find out. FlightSearch.com has gone live (in beta) with an interesting approach to searching multiple travel sites.

Unlike some other players such as TripAdvisor's bookingbuddy.com, TravelZoo's SuperSearch, FlightSearch searches multiple sites without opening window after window after window as each separate site is searched. Users are able to simply tab between results from Priceline, Orbitz, CheapTickets, Vayama, Kayak and others. (Does Kayak's inclusion make FlightSearch a meta of metas?) FlightSearch is a really nice take on an oft-copied model. And not a bad URL either.

FlightSearch is led by travel industry vet Ted Perlstein (full disclosure: Ted worked for me at Starwood as a summer intern once upon a time - he probably considers it a dark period in his career) who has also has been at Orbitz and once upon a time, carried a business card with the title of "Head Sherpa" when he was at an earlier incarnation of lastminutetravel.com

As we mentioned, FlightSearch is still in beta so there are a few things we'd still like to see improved, but we'll be watching to see when other OTAs (and metas?) join up. And how about a few suppliers? Where are you American and United et al? Obviously, driving traffic in this hyper-competitive space will be a challenge but we like the approach Ted and team are taking...

Buy your hotel room or car with SkyMiles at Delta.com

2009-11-17T18:26:00.007-05:00

While trolling around Delta.com this afternoon looking to burn some of our hard-earned SkyMiles we came across a new (or re-launched) feature called the SkyMiles Marketplace. SkyMiles members can search for hotels and cars and then use SkyMiles to pay for some or all of the cost of the room or rental. The redemption rates can be a little dear but hey with air redemptions getting harder and harder, it is nice to have another option - particularly one without capacity controls and the like.

A little sleuthing shows that this is another website powered by ezRez. ezRez has been on a terror of late, launching similar pay with miles/points programs with the likes of Starwood, IHG, and United.

One of the coolest features is the slider bar that allows members to choose the mix of miles to cash they want to pay for the hotel or car.

At the rate we've been earning miles lately, it is great to have another way to burn them that doesn't rely on the whims of revenue management!

Planet Hollywood Hotel Mirrors JetBlue's All You Can Jet Pass

2009-11-16T09:21:00.009-05:00

Over the weekend, we noticed an interesting promotion from the Planet Hollywood Hotel in Las Vegas that reminds us of JetBlue's wildly successful (at least on the PR side) All You Can Jet Pass.

The Planet Hollywood "Phanatic Pass" offers consumers any ten nights between now and March 15th for $599 - in other words, just 59 bucks a night. Whats more, it is even valid during some of the biggest weekends in Vegas such as New Years Eve and Super Bowl Weekend. A quick check of the non-promotional rates shows the Planet Hollywood selling regular rooms for $310 on New Years Eve so the savings are huge if you are (or want to become) a regular in Vegas. What is more, the PH is waiving the resort fee that normally applies (don't get us started on resort fees - they are worthy of another diatribe.)

Obviously, Planet Hollywood is hoping for some breakage on this one, but we like the creativity they are using to generate buzz and interest. And if the goal is to keep customers coming back to the hotel and get them gambling, eating, drinking and hitting the shows etc, this is a pretty cool way of generating repeat business. We bet (as we've seen with hotel loyalty program redemption) that people staying on this deal will have a higher incremental spend than average. The logic goes that people who think they scored a great deal (or used points) on the room will be more inclined to spend on F&B etc.

More details on the PH deal here

Expedia and Choice Hotels Kiss and Make Up

2009-11-11T20:33:00.008-05:00

Expedia (EXPE) and Choice Hotels (CHH) tonight announced they have signed a new, long-term deal that will return Choice's inventory to Expedia's global family of websites including Expedia and Hotels.com. The three year term is even included in the press release but maybe that is standard for a deal negotiated in the press.

More of note, the jointly issued press release begins with a quote from Dara Khosrowshahi, CEO of Expedia Inc, that makes it very clear to anyone wondering about the deeper issues of the dispute (LRA and rate parity as we discussed here) as where the two sides ended up: "We’re pleased to be working with Choice in an agreement that respects the guiding principles which we operate under." In other words, Choice agreed to similar terms that everyone else has: coup averted.

Choice Hotels CEO has a line as well but not nearly so telling: "Choice Hotels and Expedia worked together to establish a new agreement that is mutually beneficial and enables hotels in the Choice system to effectively manage their businesses."

Glad this thing is over - relationships negotiated in the press are never positive for either side. A public spat like this does little for the industry (hoteliers or OTAs) and takes the focus away from what everyone should be concentrating on in times like these - generating revenue.

Expedia drops phone booking fees

2009-11-05T13:07:00.006-05:00

Expedia announced today that they are removing booking/service fees on all travel products sold through Expedia's call centers.

From an airline perspective, the move is interesting in that it will now be cheaper for consumers to book with an OTA then calling the carrier directly. (Except, of course, for Southwest which does not charge extra for a call center booking but they don't participate in the OTAs anyway.) The move is another example of how the OTAs have continued to differentiate themselves from the suppliers in terms of service, functionality and price. The list of enhancements the OTAs have made this year is long and compelling and great for consumers. Just to tick off a few: Orbitz TLC, Orbitz Price Assurance, Expedia's SeatGuru reviews, Priceline's iPhone app all come to mind.

And what of the timing, by the way? Interesting that Expedia announced this change the same morning as Orbitz announced earnings - particularly when Orbitz had this say in their statement: "This net revenue decline was due primarily to the removal of most air booking fees and the significant reduction of hotel booking fees on the company's domestic websites, as well as a decline in average hotel room rates globally."

Today's move by Expedia along with the OTAs' other enhancements this year should be a wake-up call for suppliers - Airlines and hoteliers cannot continue to sit still while they are out-innovated by the distributors. Piling on more fees or other dis-incentives for booking through specific channels only further harms the supplier's brand and the overall customer experience. Suppliers, wake up!

Expedia Billboard Effect: Cornell agrees that it is real

2009-11-04T07:49:00.012-05:00

Expedia and other OTAs have long touted what has become known in the industry as "the billboard effect" whereby they have claimed that positioning on their sites generates not only bookings through the OTA but also a halo effect on the hotels' own sites by generating brand awareness. Non-loyal consumers start many of their searches at an OTA to gain a perspective on the options available, relative costs and positioning of the hotels in a given market against one another. Then, they often check other sites to compare pricing - usually including the website of the hotel they are interested in.

Personally, I saw strong evidence of the billboard effect while I was at Starwood and Expedia has long claimed that for every booking generated on Expedia, another booking is generated on the hotel's own website.

In a new whitepaper, Cornell assistant professor Chris Anderson has measured the billboard effect with a several branded and unbranded hotels. The results are striking, particularly for the independent hotel in the test.

For the study, Prof. Anderson worked with Expedia and JHM Hotels, an ownership group with hotels under the Starwood, Marriott, Hyatt and Hilton flags to cycle specific hotels on and off of Expedia over a three month period. That is, the hotel was listed at the top of the search results when the hotel was participating on Expedia and and removed altogether from search results listings when the hotel was dark on Expedia. By the conclusion of the study, each hotel was listed on Expedia for 40 days and dark for 40 days.

The results are below:

According to the study, the hotels saw a boost in reservations ranging from 7.5% to as much as 26% for the inde hotel when they were listed on Expedia vs. when they were dark.

Prof. Anderson suggests that the branded hotels may not have seen as large of a boost because when consumers go the brand websites they are presented with other "in-chain" hotels, e.g they are searching for a Marriott but upon arriving at marriott.com they are presented not only with the Marriott they saw on Expedia but also a Courtyard where they may actually end up booking.

We'd like to see an expanded test at some point with some slightly different parameters. For example, what happens if the hotel isn't listed at the top of the search results on Expedia? Could the brand numbers be further refined if the test was conducted in markets without sister hotels nearby? What would the results look like for resort hotels? How did the booking curves differ? And the cancellation rates? Could leveraging the billboard effect actually be cheaper than buying google key words? And of, course, what do the bottom line ROIs look like after all distribution costs are taken into account. Those questions may be ripe for another study - any of you OTAs or chains reading ready to sign up? Lets talk....

Florida AG sues Expedia and Orbitz - If cities can, we can too

2009-11-03T16:04:00.007-05:00

Bill McCollum, the Florida Attorney General filed sui t against Expedia and Orbitz this afternoon, opening the next chapter in the ongoing fight over occupancy taxes. Florida is the first state to take such a step - all of the previous actions have been filed by cities or groups of cities in a specific state.

It is not clear why the suit was only filed against Expedia and Orbitz - in the past these actions have usually been taken against all of the major OTAs including Priceline and Travelocity, among others.

In reading the actual complaint, there does seem to be some confusion in how the merchant model actually works.

For example, in Section 9: "each Defendant purchases and receives inventories of hotel rooms at negotiated rates from the hotels." and "re-sells the rooms to consumers at rates determined by that particular Defendant." Lets take a look at these two statements. Does Expedia, in most cases anyway, actually purchase a block of rooms and hold the inventory? No, not since the early days of Hotels.com - most, if not all, rooms are not purchased and held in advance. As far as determining the rates paid by consumers, again, certainly in the case of the chain hotels, the OTAs are not setting the prices - the chains are through their contractual agreements.

The AG claims that the OTAs are using a "purchase and resale" model which just isn't the case.

The big issue is that the model roughly described by the AG has been in place long before the Internet came around - how do they think all those rooms at Disney World are filled? Thousands of rooms are sold every night in Florida under the wholesale model - I bet more than in any other state in the country except for maybe Nevada. These wholesalers also remit the taxes back to the state based on the wholesale or net portion of the room rate, not on what the consumer actually paid for their package which may include Disney tickets and plenty of other things also bought on a wholesale basis.

Texas Cities vs. PCLN, EXPE, OWW et al: A Draw at Best

2009-11-03T09:15:00.005-05:00

Late last week, a jury in San Antonio delivered a verdict on a class-action suit against the major OTAs that was brought by around 170 cities in Texas. The verdict against Expedia, Orbitz, Travelocity and Priceline is for $20M plus court imposed penalties and interest.

While this sounds dire, (and if you read the lawyers press release you would think this was a slam-dunk) a detailed analysis beyond the headlines should give the edge to the OTAs. Why?

First of all, the jury rejected the municipalities' claims that the OTAs willfully pocketed tax dollars that were collected (as taxes) from consumers. This precedent setting verdict finally makes it clear, once and for all, that the OTAs are not collecting taxes and pocketing it - a position that many of the other lawsuits have taken and one that was sure to ring true with juries, particularly in this day and age. The "tax and pocket" position was a highly emotional stance that anyone who truly understand the true economics of the merchant model would obviously reject. Yes, taxes and fees have long been bundled together but the spirit and goal was clearly not to defraud consumers or rob cities and towns of tax dollars - the intent was to protect the underlying contractual agreements around margins.

Secondly, the jury rejected punitive damages against the OTAs because they agreed that the OTAs were not, in fact, pocketing tax revenues. Obviously, this is a no-brainer.

Interestingly, the jury did find that the OTAs "control hotels" and therefore are required to remit the occupancy taxes required by hotel operators. Knowing more than a few hotel General Managers, I can't imagine a statement that would boil their blood faster (except, maybe to say that "corporate" controlled their house!) than to say an OTA controlled the hotel. By now, everyone knows that hotels set pricing, inventory, discounts and room allocations either on the fly or during negotiations with the OTAs. The OTAs then re-market those rooms that have been offered to them to sell. This is hardly control. Furthermore, the hotel is clearly in control of the guest experience - after all, it is the hotel that decides which rooms to allocate to specific guests and who to "walk" when things go wrong.

Lastly, we believe the jury's definition of "control" may expand well beyond the OTAs. Put in the context of the ruling, traditional tour operators control rooms as well. Traditional tour operators (which pump a lot of rooms into Texas resort cities) have always paid the occupancy taxes based on the net rate of the room, not the gross selling rate. This has been going on long before the Internet and the OTAs came along.

Bottom line: if Expedia and the like are hiring, firing, allocating capital, negotiating with unions, customers, franchisers and managing to get the beds made and the bacon crisp, we'd agree that they control the hotel. Last I checked, these functions were not part of the OTA business model.