I don't share my colleague Eric Buscemi's enthusiasm for Expedia Inc. (NASDAQ: EXPE). The second IPO in four years for Orbitz Worldwide Inc. doesn't thrill me either.
Online travel is a commodity business where people's sole loyalty comes from whoever gives them the lowest price. While in theory that's great for consumers, that's lousy for investors. The travel sites are big advertisers because they need to convince people that they are different from one another and that they can offer better bargains then each other and the service providers.
The public is bombarded with a confusing array of advertising about where they can get the best travel deals on the Web. Both Orbitz and Expedia offer $50 travel coupons to people who find better prices online within 24 hours of booking a trip on their sites. Airlines make the same promise as do hotels and car rental companies.
If all of these claims are accurate, why should anyone even bother using Expedia or Orbitz?
I realize travel providers need Expedia and Orbtiz because they can't sell all of their excess inventory themselves.
But is that a good enough reason to invest in either company?
I don't think so.
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Reader Comments (Page 1 of 1)
5-11-2007 @ 3:02PM
walter said...
both are horrible services unless you are taking a very simple round trip.
AMEX is infinitely better if you have any type of a complex itinerary.
5-11-2007 @ 4:01PM
humbaba2000 said...
EXPEDIA is the worst: poor customer service and deceptive business practice. Read recent complaint about EXPEDIA at www.expedianews.com
5-15-2007 @ 7:42AM
David Smithson said...
I’m glad someone else agrees with the lack of appeal of Expedia and Orbitz. And you’re right, brand loyalty in many cases does come from who gives the best prices. For me, that site is Sidestep. I like them for their selection and lack of booking fees that you see on Orbitz and Expedia. As a whole though, Metasearch is IMO the way to go for travel. Whether you use Sidestep, Kayak, Farechase, or any other metasearch, it’s definitely better than the big online travel agencies.
5-16-2007 @ 5:09AM
Sumitra Menon said...
Silicon Valley entrepreneur and strategy consultant Sramana Mitra, evaluates Expedia, and Orbitz.
5-16-2007 @ 5:12AM
Sumitra Menon said...
Silicon Valley entrepreneur and strategy consultant Sramana Mitra, evaluates Expedia, and Orbitz.
Links:
http://sramanamitra.com/blog/982
http://sramanamitra.com/blog/980