Apr 22, 2009

Fighting the Wrong War?

There’s a price war on among the large on-line hotel booking services, started by Orbitz and followed grudgingly by Travelocity and Expedia. Savings to the Orbitz consumer should run around $7 per night, on average.

I don’t see how Orbitz can come out ahead on this. Can you?

Of course, price-cutting typically does make sense when shoppers can see no real difference between competing alternatives.  And I’d be willing to bet that in 99 out of booking 100 occasions, they can’t - in either the price or the overall shopping experience. Why should a consumer think twice about minor disparities in rival booking fees?

 Bigger considerations will wash over all of this. Hotels vary in look and feel, amenities, location, and prestige, not to mention base price and daily deals.  Personally, I don’t think consumers can even tell if Orbitz is saving them a bit of money. I decide based on the all-in package deal. Don’t you?

More to the point for bookers, don’t on-line consumers prefer a website largely for its navigation characteristics? Personally, I hate sites that force me to reenter the airport names, number of tickets, time of departure, and so on every time I try a different destination or travel date. The aggravation and lost time cause me to write off the site entirely. Grrrrr....

More value in the customer experience is where on-line bookers should be competing head to head. Ironically, on this front Orbitz may already doing well. I know scores of Orbitz loyalists. Their repeat business has nothing to do with cuts in price, and everything to do with Orbitz’s cleverness in cutting their time spent and improving their ability to find a great destination.

Shouldn't they hold the line just like physical stores that have something better to offer? Didn't research just come out that discounts cheapen consumers' perceptions of a product long after the discounting stops?



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