SEARCH ENGINES IN PHOCUS

The consolidation that defined the hotel industry in the ‘90s is rippling through online travel distribution in the beginning of the new millennium. Remember 2002 and 2003, when the battle in the hospitality industry was between third-party intermediaries and the chains? Now that the industry is on the rebound, the battle seems to be over: chains and intermediaries are coexisting peacefully, using each other to increase business they share.

Today, the battle is between meta-search engines and search engines, according to various speakers at “The Big Picture,” the PhoCus Wright Executive Conference held in Hollywood Nov. 16 and 17. The 11th version of this high-end, technology-based conference drew nearly 800. Vendors and sponsors numbered 48.

The conference was studded with stars of Internet travel distribution, like president-CEOs Sam Gilliland, of Sabre Holdings Corp., Gary Loveman, of Harrah's Entertainment, and Jeffery H. Boyd, of Priceline. Also speaking: Jonathan E. Miller, chairman and CEO of America OnLine; Erik Blachford, president and CEO of IAC Travel, and Jeffrey G. Katz, president, chairman and CEO of Orbitz, the airline-and-then-some consortium recently acquired by Cendant Travel Distribution Services. Blachford and Katz recently left their posts.

Philip C. Wolf, president and CEO of PhoCusWright, a “travel intelligence organization” specializing in B2B consultancy, made five predictions:

  • No matter the complexity of the product, most travel will be booked online within 10 years. Forrester Research predicts online sales will hit $119 billion by 2010, up from $52 billion this year. According to PhoCusWright, most such purchases will be made with the help of searches, with online consumers shopping an average of 3.6 sites before buying an airline ticket.

  • Consolidation in online distribution, like the Cendant-Orbitz acquisition and Priceline's recent absorption of TravelWeb, will lead to innovation and business synergies

  • International expansion into online travel is imperative for U.S. firms, though the global online travel market is between the “neo-natal” and “infant” stages

  • Intermediaries will become more analytical, while suppliers will become more service-oriented. They can't do without each other, however

  • The “airline mess” will clear as subsidies dry up.

The hottest topic of the conference was the meta-search engine, like Google, Yahoo! and, because of its investment in Kayak Software Corp., AOL. Kayak is a comparison-shopping search engine focused on travel; like SideStep, Yahoo's FareChase and Mobissimo, it exemplifies the “screen-scraping technology” several speakers blasted for further commodifying travel products. Such search engines lift and consolidate data from target, purpose-driven websites, roiling the websites they mine with issues of ownership and economics.

Jeffery Boyd, the outspoken head of Priceline, a pioneer of opaque, price-driven travel-product sales, decried such engines, suggesting he'd be glad to invest in an imaginary one called FarePile. The reference to www.Dogpile.com, an established aggregator of search engines, didn't go over anyone's head.

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