Here’s a “recovery” every bargain hunter is gonna love

By | July 20th, 2009


Traffic to the three major online travel agencies — Expedia, Orbitz and Travelocity — is trending upward, as bargain-hunters snap up discounted airline tickets, hotel rooms and rental cars. It helps that the agencies eliminated some of their booking fees a few months ago.

Expedia’s bounce (in blue) is the most dramatic, with traffic levels markedly higher than it was at this point a in 2008. The other two OTAs (Orbitz in yellow and Travelocity in green) are holding steady, versus last July’s levels.

You might think that rebounding traffic would translate into an upward stock price. Not necessarily.

The share prices of Expedia and Orbitz are barely treading water, while Travelocity, which is owned by Sabre Holdings, is also struggling. Here’s a chart for the same period (Expedia in blue, Orbitz in red and Sabre/Travelocity in green).

I’m no stockbroker and I only follow customer service developments at online travel agencies, with less of an eye on the financials. But you don’t have to be a beat reporter or analyst to see what’s going on here.

• While there’s a recovery in travel interest — and maybe even in demand — it’s not translating into higher profits. To me, that means travelers are in control, when it comes to setting prices.

• Cutting booking fees was terrific for customers. For online travel agencies, not so much.

• There are still plenty of bargains out there, and if I were a bettin’ man, I’d say there are more on the way.

The real question, as far as I’m concerned, is: How will this affect customer service?

Related story:   Hey travelers, who owns your Internet phone call? Hint: it may not be you

Companies can either raise prices or cut costs in order to lift profits. Raising prices isn’t an option. So will they cut costs in ways that will affect customers?

If they do, you’ll probably read about it here first.

Update: Please disregard the Sabre/Travelocity stock price. Sabre went private in 2007, and for some reason, I pulled up the wrong ticker symbol when researching this chart.

We want your feedback. Your opinion is important to us. Here's how you can share your thoughts:
  • Send us a letter to the editor. We'll publish your most thoughtful missives in our daily newsletter or in an upcoming post.
  • Leave a message on one of our social networks. We have an active Facebook page, a LinkedIn presence and a Twitter account. Every story on this site is posted on those channels. The conversation ranges from completely unmoderated (Twitter) to moderated (Facebook and LinkedIn).
  • Post a question to our help forums or ask our advocates for a hand through our assistance intake form. Please note that our help forum is not a place for debate. It's there primarily to assist readers with a consumer problem.
  • If you have a news tip or want to report an error or omission, you can email the site publisher directly. You may also contact the post's author directly. Contact information is in the author tagline.