Pac Man fever

There are times when the interactive travel industry seems like an enormous, if not surrealistic, game of Pac-Man.

Remember that early ’80s video game, in which a faceless yellow protagonist gobbles the dots from an electronic maze, dodging ghosts along the way?

So, too, it goes with interactive travel today. Picture several large corporate entities systematically clearing the playing field of upstart companies in something of a large-scale pie-eating contest.

Take Reed Travel Group, the mercurial unit of multinational publisher Reed Elsevier. After several unsuccessful attempts at building a large online presence, it swallowed a producer of destination information and a booking engine at virtually the same time. What could they be up to?

Pac-Man fever was bound to break out sooner or later, for two reasons. First, in most emerging industries, coming of age means consolidation. The young upstarts of yesterday file for bankruptcy, or merge with one another. More frequently, they are bought by larger competitors.

It happened in publishing and banking, and it looks like this business is next. There are simply too many upstart companies now reaching earnings and product ripeness, ready to be harvested by the big players.

A second reason for interactive Pac-mania is that it’s often easier to acquire a product than develop it.

One good example of growth-by-acquisition is American Express. Very little of its proprietary travel systems, from its online presence to its software, appear to be original. Instead, the industry giant prefers to look for small entrepreneurial companies developing innovative applications, and then buy them lock, stock and barrel. Or it joins with a software giant like Microsoft for a double-handed game of Pac-Man.

In that sense, Amex is a master Pac-Man. It consumes untold “dots” as it hurtles toward a high score.

Who else is in the game? Electronic Data Systems, the publicity-shy enterprise that’s already nibbling on the interactive travel pie through agreements with CRSs, travel agencies, and a host of information providers, is a likely candidate.

EDS desperately wants to be a big player and is used to getting its way. Look for it to snatch up an Internet booking engine or application-if not outright, then by “lending” someone the money to do it.

Which brings us to Microsoft, which owns the best booking engine in the business. (And if not the best, then at least the best-used.) Also accustomed to getting its way, it won’t rest until it swallows a big slice of the travel-bookings pie.

The boys in Redmond aren’t shooting for second place. Expedia and Mungo Park are just the beginning of a long-term strategy to dominate our industry. It hasn’t ruled out growth by acquisition or negotiation either, as evidenced by deals to buy WebTV and to collaborate with Reed Travel’s parent, Reed Elsevier and, earlier, with Amex.

The dots abound, but true players are few and far between. Perhaps America Online, Time Warner, Condé Nast or Sabre have the resources to participate, too, yet their motives are still unclear.

Whether you define yourself as a dot or a Pac-Man in this equation, you can’t escape this inevitable conclusion: as time passes, there will be fewer and fewer entrepreneurial companies. They are about to be eliminated one by one in a corporate feeding frenzy.

Christopher Elliott is the author of Scammed: How to Save Your Money and Find Better Service in a World of Schemes, Swindles, and Shady Deals. Critics have called it “eye-opening” and “inspiring” — it’ll “grab your attention and won’t let go.” Order your copy now on Amazon, Barnes & Noble or iTunes.

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