Booking Flights and Hotels: Online Agents or Direct?
Expedia, the online booking site that owns other major players, including Hotels.com, Hotwire and Travelocity, announced about two weeks ago that it was planning to acquire yet another rival, Orbitz Worldwide. So what does that mean for travelers?
Consider it a sign of the sea change already underway. Over the last few years Americans have been more likely to book flights on an airline website such as Delta.com or United.com than with an online agent like Expedia or Priceline — “officially ending” online travel agents’ “decade-long dominance in leisure air bookings,” declared a 2014 report from PhoCusWright, a market research company. The percent of leisure travelers who typically book their airfare with online travel agents was 32 percent in 2013, down from 37 percent in 2011, according to the report.
Analysts suggest that the shift is in part the result of travelers’ expanding appetite for modest comforts such as priority boarding and seats with more legroom, which can’t always be booked through third-party sites. Airlines have poured millions into their websites so that travelers can customize (read: increase the cost of) their flights with a few clicks or taps, adding lounge passes and Wi-Fi. And to sweeten the pot, some airlines are wooing travelers to their sites with the occasional discount code.
The direct booking trend is also being fueled by a boom in metasearch tools such as Google Flight Search, Google Hotel Finder, Hipmunk and Hopper, which make it easy to compare prices across multiple brands (although some airlines like Southwest have already chosen to keep their prices off such sites). Little wonder then that many consumers are using online agents like Orbitz (which owns CheapTickets and HotelClub) and Travelocity simply to educate themselves about their options — before booking directly with a hotel or airline.
George Hobica, the founder of Airfarewatchdog.com, said it reminded him of people who curled up on couches in Borders bookstores with pens and notebooks, scribbling advice from travel guides yet never purchasing them. “I thought, ‘These places are going to go out of business,’ ” he said of the bookstores (Borders liquidated in 2011). “This is what happened to the online travel agents. It’s exactly the same thing.”
Even so, that doesn’t mean that Expedia (which, with the acquisition of Orbitz, would become one of two major online agents in the United States) and Priceline (which owns sites such as Booking.com and OpenTable.com), are about to disappear. While there has been plenty of industry consolidation amid fierce competition — in 2013 American Airlines and US Airways completed their merger, and last year InterContinental Hotels Group agreed to buy Kimpton Hotels & Restaurants, to name two examples — there continue to be advantages to booking with online travel agents.
For instance, last-minute airfares on online agents’ sites are often cheaper. And package deals that include hotels and cars, or cruises, can trim costs. Of course with less competition from other online booking agents (expect more mom and pop sites to be bought up in the future, some experts say), those bargains may not be as alluring as they once were. Or maybe, given that Expedia and Priceline would be the two leading online agents in the United States, they would be able to drive a harder bargain with the airlines and hotels, scoring better deals for their users. We’ll have to wait and see.
In some cases, booking through an online travel agent can result in better service. “Expedia will pick up the phone faster in a snowstorm than United,” noted Mr. Hobica. Yet it’s a double-edged sword. Booking through a third party can mean that if you want to make changes to your flight while at the airport, for example, the airline will tell you to call Expedia. And hotel cancellation policies can be less strict than those from online travel agents, though this varies so it’s necessary to do your homework. The primary advantage of dealing directly with an airline or hotel is, in a word, cost. More and more, airlines and hotels are offering special packages and resort credits not found on third-party sites.
Even as direct booking is gaining popularity, more travelers are choosing to book places to stay through alternative lodging websites like Airbnb and HomeAway. PhoCusWright estimates that 14 percent of travelers booked a private home, condo or apartment for at least one of their trips in 2013, up from 8 percent in 2010.
“As the population gets younger and more comfortable with online booking,” Mr. Hobica said, “they’re going to be weaned off online travel agents because it’s your grandfather’s way of doing business.” (Keep in mind though that the same was said of travel agents, and lots of travelers still use them.)
Currently, online travel agents are very much in business. And if you’re the kind of traveler who’s not particular about exactly when you fly or where you stay, the packages offered on such sites can make a vacation more affordable.
If you’re an Orbitz.com user, you’ll find that just as other Expedia sites operate under their own brand name, the same is likely to be true of Orbitz. “We structure our businesses so that a number of these brands are essentially independent entities,” Dara Khosrowshahi, Expedia’s president and chief executive, said during a conference call with investors last month. That means if you’re a member of the Orbitz loyalty program, Orbucks, you’ll continue to earn “bucks,” though that could eventually change if Expedia ever decides to tweak it, or introduce a single rewards program across all of its brands.
To find out if your loyalty is well deserved, take time to surf the web. Don’t assume that the online travel agent, or the brand website for that matter, has the better deal. As Mark Okerstrom, Expedia’s chief financial officer and executive vice president for operations, said on the investor call, the $1.3 trillion global travel market is “huge, rapidly growing, but also highly fragmented and highly competitive.” Consolidation is inevitable, especially with Google playing in the travel space. But for now, you can still shop around.
Source: Stephanie Rosenbloom “The Getaway” columnist for New York Times / 25 Feb 2015