Yahoo and AOL are embracing search engines that scour the Web for low fares. Could their moves reshape the way travel is booked online?
In a trend that could transform the way consumers find and book travel online, travel search engines are gaining increased backing from some of the Webs most heavily visited sites.
Yahoo Inc. has begun promoting travel search following its acquisition last year of FareChase Inc. On Friday, Yahoo started displaying a link to FareChase from the Yahoo Travel home page. It already was promoting links to FareChase in its shopping and Web search sites.
Meanwhile, America Online Inc. last week offered its answer to travel search. Released in beta, AOLs Pinpoint Travel ties into Kayaks travel search engine in order to search across the inventory of 500 airlines and 85,000 hotels.
Travel search engines scour the Web for flights, hotels and car rentals, aggregating itineraries and results from the Web pages of airlines and hotels as well as from some online travel agencies. Consumers then book travel directly from travel providers sites.
The approach is different from well-know travel sites such as Expedia Inc., Travelocity.com LP and Orbitz Inc., which as online travel agencies largely rely on the major travel-distribution systems and their own deals with travel providers for inventory.
"Yahoo and AOL together are going to contribute to total upheaval in the travel world," said Henry Harteveldt, a vice president at market researcher Forrester Research Inc.
By bringing travel search to their sites, Yahoo and AOL will become more formidable players in online travel, Harteveldt said. Both companies already partner with Travelocity.com for their travel-booking features.
Prior to the entry of Yahoo and AOL, travel search largely was a battle among startup companies. Along with Kayak, those upstarts include SideStep Inc. and Mobissimo.
Harteveldt said he expects consolidation in the online travel industry, specifically predicting that one of the two companies will either buy its own online booking engine or drop its deals with Travelocity.
"Yahoo is at the precipice of being able to do a lot more on its own without relying on a travel agency distribution partner," Harteveldt said.
Whos playing fair with international fares? Click here to read more.
In an interview with eWEEK.com, Yahoo executives said the FareChase travel search technology will play an increasing role in Yahoos travel strategy.
Yahoo already provides travel guides about popular destinations and offers travel reservations through Travelocity. FareChase fits in as "an unbiased way to search across [travel] sites," said Yen Lee, Yahoos general manager for travel.
Lee compared travel search to the earlier shift in travel booking where the offline travel agency model was moved online, allowing travelers to directly access the major reservations systems through the Web.
"We know that thats not the promise of the Internet, and consumers are asking us for unbiased and trusted sources where they show results not based on whos paying us or whos paying us more," Lee said.
Since buying FareChase, Lee said Yahoo has instituted a policy of not receiving any payments from travel providers as part of search. Travel search engines typically receive a revenue share from any booking that results from a search.
Yahoo also is courting travel suppliers, especially airlines, to forge direct relationships with the site. FareChase previously had a rocky relationship with travel providers, some of whom objected to its tactics for retrieving itineraries from their Web sites.
Lee said Yahoo is giving travel providers the option of being removed from FareChase searches. For example, Southwest Airlines, known for selling its reservations directly, is not included in FareChase results.
"Were open to any travel provider, and its free for all travel providers to show up in the engine," Lee said.
Yahoos business model for FareChase follows its overall search model. Yahoo plans to generate revenue from the pay-per-click advertisements that appear alongside search results, Lee said. Yahoo sells those sponsored listings through its recently renamed Overture Services division.
FareChases integration with Yahoos other sites so far has focused on the addition of links to the travel search engine. For example, a Web search on Yahoo for flights to a destination could return a highlighted link to FareChase, but so far would not return possible itineraries.
Harteveldt said Yahoo is taking the right approach by increasingly promoting FareChase throughout its network of sites, but he said the company also must integrate it more deeply.
"They have to do more than just make it a link," Harteveldt said. "They need to integrate it into the Yahoo search engine itself."
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As an online reporter for eWEEK.com, Matt Hicks covers the fast-changing developments in Internet technologies. His coverage includes the growing field of Web conferencing software and services. With eight years as a business and technology journalist, Matt has gained insight into the market strategies of IT vendors as well as the needs of enterprise IT managers. He joined Ziff Davis in 1999 as a staff writer for the former Strategies section of eWEEK, where he wrote in-depth features about corporate strategies for e-business and enterprise software. In 2002, he moved to the News department at the magazine as a senior writer specializing in coverage of database software and enterprise networking. Later that year Matt started a yearlong fellowship in Washington, DC, after being awarded an American Political Science Association Congressional Fellowship for Journalist. As a fellow, he spent nine months working on policy issues, including technology policy, in for a Member of the U.S. House of Representatives. He rejoined Ziff Davis in August 2003 as a reporter dedicated to online coverage for eWEEK.com. Along with Web conferencing, he follows search engines, Web browsers, speech technology and the Internet domain-naming system.