SOURCE: The Oregonian http://www.oregonlive.com/business/oregonian/index.ssf?/base/business/11015= 60398236710.xml Next generation of online travel services take off Where Orbitz and others have paved the way for easy Internet bookings, a ne= w breed of search engines makes them cheaper Monday, November 29, 2004 MICHAEL LIEDTKE SAN FRANCISCO -- Like a lot of frequent travelers, Kevin Pollard relies on = the Internet to save money on airfares, hotel rooms and rental cars. The qu= est generally took him to the Web's most popular travel sites -- Orbitz, Tr= avelocity and Expedia -- until he discovered a new breed of specialty searc= h engines that promise to dig up even better bargains.=09=20 "I am always looking for something that gets me the best deal out there wit= h the least amount of effort," said Pollard, 56, an international marketing= consultant who travels from his Metairie, La., home every other week. Pollard says he got just that with Mobissimo, which he used to plan two rec= ent trips. The company, based in San Mateo, and other so-called Internet "t= ravel aggregators" such as SideStep, Cheapflights, Qixo, Kayak and Farechas= e are hoping to win more converts as people arrange holiday season getaways. "Many consumers are becoming frustrated with the online travel experience,"= said Mobissimo co-founder Svetlozar Nestorov. "Our goal is to make it bett= er." Millions of travelers turn to their computers whenever they plot their itin= eraries. Forrester Research estimates that 29.4 million U.S. households wil= l use the Internet to book travel in this calendar year, spending $53 billi= on in the process. Expedia, Travelocity and Orbitz have helped change the way people book trav= el by deploying sophisticated travel reservation systems that quote prices = from most major airlines, hotels and rental car providers. "The online agencies really represented 'Travel 1.0' because they democrati= zed the process of booking travel and made it available to all of us," said= Phil Carpenter, SideStep's vice president of corporate marketing. "The nex= t generation is represented by the travel search engines. We're 'Travel 2.0= .' " The travel engines say they are more consumer-friendly because they crawl t= he Web sites of travel suppliers more frequently, generating an even broade= r array of choices. After a selection is made, the travel engines send people directly to the s= upplier's Web site to complete the purchase. They collect referral fees fro= m the travel suppliers, but those commissions generally fall about 50 perce= nt below the costs triggered by a booking at three major online travel agen= cies -- a difference that leads to lower consumer prices. San Francisco-based Qixo is the only travel engine that charges consumers t= o use its service. Besides offering better prices, the search engines say they pull fares from= suppliers that aren't represented by the major travel agencies. Several tr= avel engines include fares from JetBlue in their indexes. SideStep, the old= est travel engine, includes the entire inventory of Southwest Airlines, the= industry's longtime discount leader. Neither Southwest nor JetBlue list their fares through the online travel ag= encies -- a void that has prompted many consumers to consistently visit thr= ee or four travel Web sites to ensure they are getting the best deal. The t= ravel search engines depict themselves as one-stop shops that provide a tot= ally transparent window into industry pricing. The growth prospects of the travel search engines look even brighter now th= at Internet heavyweights Yahoo and America Online are moving into the space. Yahoo bought Farechase for an undisclosed sum in July and AOL acquired a mi= nority stake in Norwalk, Conn.-based Kayak earlier this month. But not everyone is convinced that the travel search engines are bound for = success. Although they do offer a few convenient features, the travel engines still = haven't proven they will be compelling enough to overcome the higher name r= ecognition and deeper pockets of Expedia, Travelocity and Orbitz, Forrester= Research analyst Henry Harteveldt said. The greater financial resources of the big three online agencies also give = them the wherewithal to launch their own search engines if the upstarts bec= ome a threat in the next three to six months, Harteveldt said. Recent market share data illustrate the uphill climb facing the new travel = engines. As of mid-November, the top six travel search engines held a combined 0.42 = percent share of all traffic to online travel sites, according to Hitwise, = an Internet research firm. In contrast, Expedia, Travelocity and Orbitz hel= d a combined 16 percent share of online travel traffic, Hitwise said. SideStep believes Hitwise data underestimates the use of its travel search = engine, largely because its users must download software to their computer = desktop to find airfares. SideStep says its software has been downloaded mo= re than 7 million times. The company plans to launch a Web version of its a= irfare search in early January. SideStep already provides Web searches of c= ar rentals and hotel rooms. Meanwhile, the online travel agencies seem intent on preventing the search = engines from gaining any more ground than they already have. Travelocity, O= rbitz and Expedia are becoming increasingly choosy about which search engin= es they allow to crawl through the fares on their sites -- and even banned = some of the engines from using the data. Mobissimo, for instance, only obtains agency data from Travelocity while Si= deStep only pulls information from Orbitz. The search engines say they stil= l hope to persuade all the online agencies to share their information, argu= ing that they can generate more business for everyone involved. "The travel ecosystem is extremely dynamic," Mobissimo Chief Executive Offi= cer Beatrice Tarka said. "We're just scratching the surface of what we hope= to do."