ome of lodging's biggest brand names have been looking at the idea of an Internet joint venture for two years now, and they've come up with something called HDS that's a little like Orbitz.

In fact, the company has already signed an agreement with Orbitz to make its hotel inventory available on the airline-owned site.


Unlike Orbitz, however, the hotel joint venture claims it will not restrict the ability of its participants to offer lower rates to other outlets, as Orbitz does.

Joe Humphry, interim chief of HDS, said he is prepared to negotiate distribution deals with other Web sites, including agency sites if they are sufficiently large -- which could mean opportunities for mega-agencies and consortia.

But he also said, "What we're not prepared to do is work with 10,000 individual agents and send each one a commission check."

As an Internet distribution company, HDS has every reason to think in those terms, but we hope nobody confuses that kind of thinking with the retail marketing strategies of its individual hotels.

An apparent goal of HDS is to bypass CRS systems and provide Internet sites with direct connections to hotel reservations systems. Let's not bypass travel agents in the process. We believe it is in the best interests of the hotels to stay connected with travel agents any way they can.

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Margins

ravelocity's aspiration to be a tour packager and Disney wholesaler is pretty big news. Expedia's intention to acquire Classic Custom Vacations was pretty big news, too.

You can read into these events many things, but one revelation keeps reminding us that the worlds of online travel and offline travel may not be so very far apart after all. The two online giants are seeking to increase their margins, just like everybody else.

Buried in Expedia's recent earnings report was the disclosure that Classic "sold approximately $300 million in vacation packages to travel agents in 2001." Expedia, of course, does 10 times that volume in a year, but the online game isn't just about volume anymore.

Travelocity and Expedia figured out a while ago that retailing travel on the Web is no get-rich scheme. Both of these behemoths lost gobs of money doing it, which is why the public statements of the Big Two have increasingly been peppered with words like cruise, tour, customer service and merchant model.

Travelocity's average transaction in the fourth quarter was $281, and two-thirds of its business was everybody's favorite commodity: air.

If you were a brick-and-mortar travel agent doing two-thirds air with an average transaction of $281, you might be saying things like cruise and tour, too.

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