As if the travel industrys margins werent thin enough, new technology from SideStep Inc. allows consumers to more precisely pinpoint the lowest airline fares, rental car rates and hotel bookings.
Many of the travel companies themselves, however, are not upset by this potential assault on revenues and, in fact, are embracing it.
Late last month, the Santa Clara, Calif., developer signed up US Airways Inc. to use its namesake travel bot technology. The software, which is given free to consumers on SideSteps Web site and by travel companies themselves, searches the Web for the best airline ticket, hotel and rental car deals.
The proprietary software, which SideStep CEO Brian Barth calls a parallel real-time access engine, works differently from services offered by online travel agencies such as Expedia Inc. and Travelocity.com LP. Those services, which are used by the commercial airlines, for the most part pull information from the CRSes (computerized reservation systems) of companies such as Sabre Inc. and Amadeus Global Travel Distribution S.A.
When a user requests a price quote from the SideStep client, it sends out agents that hit the Web sites of more than 80 travel companies to access those companies host systems, which can provide a more up-to-date picture of available inventory, analysts say.
As the technology gathers data from various companies, it creates a series of nested state machines that track the applicable fares a user is considering and updates changes while maintaining access to the lowest fares.
"Our engine has to understand when we are holding inventory in a host system and be cognizant that we are bringing the buyer to that exact same session, not just the same request for information," Barth said.
By going into the travel companies host systems, SideStep cuts out the CRS and its additional fee.
"We have a fundamentally different approach to accessing the information," Barth said. "Virtually all airlines offer specials on the Web, and we can get that for [our customers. CRSes] dont have all the inventory; they dont have the Web specials."
Not all airlines have worked out fee arrangements with the online travel agencies. Southwest Airlines Co., for one, has felt it can do well enough selling its seats on its own Web site and does not pay Expedia to list its fares. Expedia doesnt provide Southwest bookings to its customers, industry insiders said.
New York-based JetBlue Airways Corp. has found that not all of its seats are available through many online travel agents, either. To keep costs down, the airline does not post all of its fares in the Sabre CRS. As a result, online travel agents sometimes sell seats on JetBlue flights that are already full, said Amy Curtis, vice president of marketing at JetBlue.
In addition, JetBlue cant pay special sponsorship fees to online travel agents that would push its fares higher up on the lists that those agents show to customers.
"We will rarely come to the front of their lists, [but] with SideStep we will truly have a level playing field," Curtis said.
SideStep is pushing the idea that travel companies will build loyalty by providing customers with information on all air fares, even those from competitors. In this way they might bring customers back to their sites.
While Curtis agrees that building customer loyalty is important, for JetBlue the bottom line is the bottom line. She expects that JetBlue will sell more seats while paying a cheaper commission to SideStep than it would paying the major online travel agents.
"If we get a booking through them, it would be less expensive," Curtis said. "When you deal with margins our size, it makes a difference."
Search technologies that scour Web sites for the best travel deals have been hot lately. In addition to SideStep, which launched in November of last year, FareChase.com Inc. and Qixo Inc. both launched sites last fall.
Neither of the latter two online agencies requires the downloadable client that SideStep does. That could be important to some consumers.
"People dont love to download applications, especially if they dont know what it is going to do," said Krista Pappas, an analyst at Gomez Inc., in Waltham, Mass. "Also, I find it somewhat annoying in that it pops up when Im on a travel site."
But SideSteps technology wont be used only in the travel industry. Barth said his companys technology will work to find better prices for any commodity sold on the Web and could be useful in such areas as electronic marketplaces.
"A lot of these exchanges are disconnected from each other," Barth said. "They have large volumes of high-value trades in disconnected exchanges.
"We are waiting to hear ideas [that are right for us]. It could be energy trading, it could be a bandwidth exchange."