Expedia Banks on Corporate Travel

CEO sees acquisition of Seattle agency as key to success with online business bookings

By: David Peterkofsky

LOS ANGELES The success of the new Expedia Corporate Travel product will depend largely on the expertise of the Seattle brick-and-mortar agency the company acquired to serve as the backbone of the new product, said Richard Barton, Expedia’s president and CEO.

Speaking at the recent PhoCusWright Executive Conference here, Barton described Metropolitan Travel as “a gem of a regional corporate travel office” that offered invaluable advice about what Expedia’s corporate site should offer. In July, Expedia acquired Metropolitan, a $150 million corporate agency with a client list that includes Nordstrom and Starbucks.

Though some analysts at the conference questioned Expedia’s move into business travel, Barton said corporate travelers simply want the same thing leisure travelers want in an online site: access to competitive hotel and air rates and ease of use.

“All of the drivers that drew leisure travelers to the Web are there for corporate travel as well,” he said. “People want to plug their PCs into a volatile price market.”

Though positioned as an automated, self-booking tool for businesses, Expedia charges $20 per transaction for “agent-assisted” bookings that require the help of an Expedia agent. In addition, corporate clients pay $5 per flight booking, and corporate accounts are charged a $149 set-up fee, though Expedia is waiving that fee through the end of 2002.

Barton also said the Web has contributed to blurred lines between corporate and leisure airfares, and that’s not necessarily a bad thing for the end user.

“The delta between the average corporate fare and the average leisure fare is going to shrink,” he said. “A lot of people would love for that to happen. We would love for that to happen.”

In other news from the PhoCusWright conference:

" Don’t expect to see JetBlue fares in the online booking engines anytime soon, said David Neeleman, CEO of the successful startup carrier. Approximately 96 percent of all JetBlue customers book on the airline’s site or via the phone, Neeleman said. He pointed to his carrier’s 95 percent load factor in August as proof of his successful low-cost approach.

For a brief time, JetBlue posted fares in Travelocity, but it pulled out “because the cost didn’t justify doing it,” Neeleman said. JetBlue will continue to drive bookings through its own site, at which travelers receive an additional 5 percent off. Neeleman credited the site’s simplicity along with the carrier’s simple fare structure as a reason for its continued success.

“We don’t put so many bells and whistles in it that it’s unmanageable,” he said.

" Randy Garfield, president of the Walt Disney Travel Co., spoke favorably of the traditional travel agency sales channel, and he questioned the truthfulness of competitors who claim they never book directly with travelers.

“They’ve all taken direct bookings whether or not it’s a big portion of their business,” Garfield said of tour operators, which traditionally rely on the agency sales channel for bookings. There are no price incentives in place to drive bookings to Disney’s Web site, he said. “If we have an Internet offer that’s more appealing [to a client], it’s still fully commissionable to a travel agent.

“The demise of the travel agent is way overstated,” Garfield added, noting that agents who were in the airline ticket business have already changed their business model or closed for good. On the other hand, retailers who use customer databases to enhance their marketing and tout the service they provide “have found ways to thrive,” he said.

Along the same lines, Garfield praised Expedia and Travelocity for expanding beyond the Web to offer more offline services through their call centers. n

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