Just in time for the busy holiday travel season, Google (NASDAQ:GOOG) is launching flight-tracking information. Just punch an airline and a flight number into Google's search engine -- like "American Airlines 1631" -- and the search engine will spit back the status on that particular flight.
The info is powered by FlightStats.com, a free site wallpapered with Google ads to help monetize the service. Registered users can sign up to receive mobile and email alerts, a move that has to leave Orbitz Worldwide (NYSE:OWW) concerned.
See, the travel portals tend to compensate for lackluster airfare commission checks by slapping surcharges on their bookings. The charge is typically just $5, but that's $5 a prospective traveler can save by heading out to the carrier's website to book the flight directly.
So fliers are increasingly leaning on portals only for travel information, and Amazon.com (NASDAQ:AMZN) has teamed up with SideStep to offer comparison shopping across the portals and direct providers. Considering these factors, travel sites need to bring something new to the table.
The portals are trying their best to earn their keep. Expedia (NASDAQ:EXPE) owns several content websites, including the lively TripAdvisor.com. Priceline.com (NASDAQ:PCLN) offers the "name your own price" option that conventional carriers will never ape. And Orbitz offers free flight status alerts as a way to stand out on the crowded tarmac.
Google's promotion of FlightStats.com won't help. Neither will Priceline's recent eradication of booking fees on published fares.
The timing is crummy for Orbitz, because it has been getting its act together since a horrendous IPO. Last month's quarterly report was inspirational, with net revenue and adjusted earnings climbing 20% and 23% respectively. Its shares have shed one-third of their value since Orbitz went public this summer at $15 a pop, but they've have actually soared 27% since bottoming out last month.
It was all starting to come together, and now Google comes along, moving the cheese again. What's an Orbitz to do?
Thinking outside the luggage box
Orbitz's cell-phone alerts to friends and families are still useful, even as the feature grows more common. The company's site has also been collecting traveler reviews. The breadth of those critiques isn't as wide as what one would find on TripAdvisor, but the site does require submissions to come from those who have actually completed trips through Orbitz. In other words, it's more genuine because the ballot box can't be stuffed like you sometimes see on other sites.
It's not enough, unfortunately. Orbitz will have to cook up a new gimmick. It needs to lay down a fresh sheet of flypaper to make sure its visitors stick around.
I've got a few suggestions, some more radical than others.
- Think widget. Every travel portal is cooking up ways to get into Facebook, Orbitz included. Unfortunately, SideStep already emerged as one of Facebook's original widget partners back in May. Expedia has come on strong, but there's a lot of free social-networking advertising awaiting the portal that develops a truly slick "must-have" widget.
- Buy Travelzoo (NASDAQ:TZOO). True, the travel publisher behind the weekly Top 20 emails is in a rut. However, with more than 11 million willing opt-in recipients, Travelzoo has the attention of both the audience and the travel providers who want to reach them -- a combination that's proved lucrative. Even during its most recent disappointing quarter, pre-tax profits clocked in at a juicy 27%. Travelzoo's expansion overseas is crimping profits (and propping up its tax rate), but that's where a globally proven travel portal like Orbitz would help practically overnight.
- Introduce negative booking fee rebates. Beat Priceline and direct providers to the punch by doing more than simply wiping the slate clean on air travel booking fees. Offer customers a rebate beyond the freebie. Hold back the bleeding by offering the rebate as a credit that can be used on future travel, or make it redeemable only after a certain number of bookings, but put the value proposition back in your corner.
Obviously, I don't expect Orbitz to lend an ear. In fact, I would prefer that it didn't. Instead, I hope that it's busy working to tackle the Google threat in ways I haven't even begun to consider.
Impress me, Orbitz. At the very least, send investors a status alert if your fizzy fundamentals will be delayed.
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