Travelocity, AOL expand partnership

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AOL, which has exclusively used Travelocity as its reservations engine for AOL Travel since 1999, on April 1 renewed and expanded the partnership for two years, with an optional third year.

The new agreement evolves the relationship from an exclusive distribution partnership to a strategic technology relationship, said Jeffrey DeKorte, vice president and general manager of AOL Travel.

DeKorte said Travelocity will be AOLs exclusive, integrated online travel agency, the provider of air, car, hotel, vacation package and cruise for AOL.

The new pact also will have Travelocity using its travel and technology expertise to make AOL Travel more comprehensive by integrating editorial content, user-generated reviews and blogs, personalization features, MapQuest maps, RSS alerts and video.

We want to make a way bigger bet on the travel category, and some of the things that you need to make that bigger bet are innovative products that Travelocity has added into their mix, said David Lebow, executive vice president and general manager of AOL Media Networks.

The agreement also gives AOL the ability to integrate its Pinpoint Travel search engine beyond AOL search functionality and into AOL Travel.

Today, the AOL Travel home page features Travelocity but has no mention of AOLs Pinpoint Travel, the comparison-shopping engine powered by Kayak. (Travelocity refuses to participate in most travel search engines because they promote supplier-direct offerings and focus on low prices.)

Pinpoint Travel will be integrated with AOL Travel soon, said AOL.

The next step, DeKorte said, is a meeting of AOL and Travelocity officials to determine how to expand the travel offering together.

Travelocitys initial agreement with AOL in 1999 required Travelocity to pay AOL up to $200 million and share advertising and commission revenue. But the agreement has been revised twice before this years renewal. In 2005, the two sides established a formula where Travelocity would pay AOL up to $13 million but less if AOL didnt meet revenue targets.

AOL officials would not comment on the financial terms of the new agreement.

Our incentives are aligned on this to focus on selling more travel together, DeKorte said.

Of its two main portal agreements, Travelocitys Yahoo agreement, under which it is the exclusive air, car and hotel booking engine on Yahoo Travel, is probably the more important in terms of volume.

Travelocity this year is obligated to pay Yahoo $26 million for advertising, corporate services and a share of transaction revenue, although the payment could be reduced based on performance.

Yahoo, which purchased comparison-shopping engine FareChase in 2004, has much more aggressively promoted FareChase than AOL has promoted Pinpoint Travel.

FareChase, for instance, has a button on top of the Yahoo Travel home page, and is integrated elsewhere, as well.

The Yahoo-Travelocity agreement expires Dec. 31.

To contact reporter Dennis Schaal, send e-mail to [email protected].

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