SAN FRANCISCO -- The new discount travel Web site that is backed
with investments from six major airlines is looking to offer hotels
and car rentals in addition to airline tickets.
Executives for Hotwire.com, which has been operating under the code
name Project Purple Demon, said they intend to operate an "open
model" and not offer products solely from their founding investors,
which include the parent companies of United, American, Northwest,
Continental, US Airways and America West.
Those carriers have minority stakes in San Francisco-based
Hotwire.com, which attracted $75 million in initial funding. The
majority investor is Texas Pacific Group, a private investment
company based in Fort Worth, Texas.
"We're targeting leisure travelers motivated by price," said
Karl Peterson, Hotwire's chief executive officer.
Peterson, a former Texas Pacific partner, said it is too soon to
discuss hotel and car rental offerings because the focus is on
solidifying the airline product, which is expected to launch in
September. However, he said the hotel product is "under development
as we speak."
The Hotwire concept attracted a great deal of press attention
because of the airline involvement and the comparison to
Priceline.com, the name-your-own-price Web site that sells 80,000
tickets a week.
The difference, said Peterson, will be that consumers will tell
Hotwire where they want to go, their origination city and the date
of travel and will not name a price.
Hotwire will send the request to participating airlines and come
back with the best fare, which Peterson expects will represent
"substantial savings" compared with published fares.
"We're not buying blocks of inventory months in advance, we're
intent on finding the best possible deal on any given day," he
said.
International and domestic fares from U.S. gateways will be
available. Consumers would not know the airline or the time of day
of the flight until they buy the ticket.
A Priceline spokesman said that to his knowledge the six
airlines are not among the investors in the site.
"Based on everything we know, the airlines have not put a dime
into this, and any suggestion that they have is based on faulty
information," said the spokesman, who went on to downplay any
direct competition with his firm's site.
"Our reaction is that this is another consolidator, like the
hundreds of other consolidators that are out there, offering fixed
price fares.
"It does not follow our choose-your-own price model, and so we
don't see it affecting us or our forecasts in any way. If anything,
we look at this site as one more place consumers can go to shop for
prices, which could then guide them when using our site."
Peterson said he is aware that ASTA has denounced his company's
concept, comparing it to airline-owned Orbitz, which the Justice
Department is looking at because of anticompetitive concerns raised
by agency groups.
But Hotwire has two things going for it that make it immune from
any of the concerns plaguing Orbitz, he said.
The first is that Hotwire is not limiting itself to a select
number of suppliers that have invested in the company. The airline
investors won't receive preferential treatment over other travel
suppliers that later also will sell inventory on the site, he
said.
The second reason is that the company does not have the airline
investors in its management or on its board of directors.
"A point of differentiation that will make the Justice
Department more comfortable is our governance. The airlines do not
have board [of directors] seats and do not have any say in the
day-to-day business," he said. "We are an independently managed and
governed company."