Orbitz, Lagging Expedia and Priceline, Bets on Technology
Orbitz Worldwide has a mushy problem.
The popular online travel company, which employs about 800 in Chicago, where it’s based, is not doing poorly: It’s a top agency, with some $11 billion in annual bookings. But it’s not excelling either, compared with industry behemoth Expedia and fast-growing Priceline, for example.
Chart: Orbitz Market Cap vs Expedia and Priceline
The challenge for Orbitz, industry experts say, is to not be relegated to an also-ran in the hypercompetitive industry of booking airfares, hotel rooms, rental cars, cruises and vacation packages.
“The problem is that Orbitz just isn’t a leader in any single category where they can hang their hat,” said Henry Harteveldt, a travel industry analyst with Atmosphere Research Group. “It has no competitive advantages.”
Carroll Rheem, research director at travel market-research company PhoCusWright, sees it similarly.
“They’ve been in a tough position for a while now,” Rheem said, adding that compared with competitors, Orbitz “has been struggling to drive growth.”
Perhaps that perception is why Orbitz CEO Barney Harford, as he sits with a leg tucked beneath him on a leather sofa in his Chicago office overlooking Metratrain tracks, talks about what makes Orbitz different — different today and different in the near future.
Harford, 40, an adventure traveler himself, tells a story of a friend and travel agent who always has great suggestions on where to go.
“He knows me so well that what he’s offering to me is always very exciting,” said Harford, who speed talks in a British accent.
Harford doesn’t want Orbitz to return a long list of available hotel rooms and rates, for example. “You go to any website today and it’s so much a one-size-fits-all experience,” he said.
Instead, he wants Orbitz to gather data about how people use the website and use ultrasmart technology to return recommended hotels, customized for that person.
“We at Orbitz want to use technology to (re-create) the magic of Barney’s travel agent. We want to distill that down and use the insights we learn from the millions of people who shop at our sites every month to delight customers,” said Harford, who has led the company for three years. “It is not something you do trivially. It’s an entire company orientation.
” As I look around at our competition, I don’t think that anyone else has chosen that particular strategic orientation so far. I think we can use that … to develop a competitive advantage.”
Developing an advantage is important. Prices for flights and hotels can vary from site to site, and some, including Orbitz, have a few exclusive offers. But as a general rule, travel shoppers will see similar airfares and room rates as they shop online. So online travel agencies such as Orbitz must give customers additional reasons to book with them versus competitors.
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