Travel Weekly's Technology E-letter: March 10, 2004

SIDESTEP LAUNCHED a hotel search engine at www.sidestephotels.com, where Web shoppers can conduct a search without downloading SideStep's tool. VP-marketing Phil Carpenter explained that the California-based travel tech firm is trying to expand its reach, as there were consumers who "wouldn't or couldn't" download the search tool (the software is not compatible with Mac computers). Similar to the downloaded version, when consumers decide to make a purchase on www.sidestephotels.com, they are taken to the hotel supplier's Web site to book. Suppliers pay Sidestep a referral fee for each completed booking. In the next three to four months, Carpenter said, Sidestep plans to introduce air fare and rental car search engines that don't require downloading. Today, consumers can conduct searches for air, car and hotel by downloading the software from www.sidestep.com.

IN A MOVE to cut costs and control distribution, the Cendant Car Rental Group said it will stop doing business with Web sites that do nothing more than redirect Internet users to Cendant's own car rental Web sites. Cendant, the parent of Avis and Budget, said these linking sites "exist solely to collect fees from car rental suppliers for referring Internet users to supplier Web sites." In a statement, Scott Deaver, executive vice president of marketing for the Cendant Car Rental Group, said, "Unlike travel agents and travel portals, some travel Web sites simply take a piece of the rental car transaction without adding any value to either travelers or car rental suppliers." These intermediaries, Deaver said, "do little more than intercept customers already looking to find us."

IATA TRAVEL Settlement Services (ITSS), created by IATA to provide Web-based electronic billing and settlement services for agents and suppliers worldwide, will launch in the U.S. on a pilot basis in the second quarter, according to Kathryn Baltz, project director. Currently operational only in Canada, ITSS was rolled out there in October 2002. Air Canada Vacations, Royal Bank of Canada Travel Insurance, SkyLink, VIA Rail and WestJet Airlines use ITSS to handle financial transactions (partial or full trip payments, refunds and post-travel commissions) with 4,300 travel agencies, Baltz said. She added that ITSS aims to have most of Canada's major nonair travel suppliers and low-cost air carriers on line by the end of this year. Free to travel agents, ITSS enables retailers and suppliers to settle across national frontiers in their currency of choice.

ORBITZ president and CEO Jeff Katz said he expects his company's dispute with Travelweb will be settled in the next two to three months. Travelweb -- the Web distributor of merchant hotel rates owned by five major hotel chains, Priceline.com and Pegasus Solutions -- sued Orbitz last year, claiming Orbitz violated their distribution agreement by negotiating merchant deals with properties already participating in Travelweb's program. The Circuit Court of Cook County in Chicago is reviewing the merits of the complaint, according to a Travelweb spokeswoman. Orbitz has its own issues with Travelweb. Katz, addressing reporters at a press luncheon last week, said the relationship "has not worked out" because of Travelweb's inability to produce the lowest rate 70% of the time, which Katz said Travelweb is contractually required to do. Orbitz is by far Travelweb's largest distributor. The Travelweb spokeswoman admitted that losing Orbitz would be a big blow.

THE INTERNET travel market in the U.K. will consolidate, as Lastminute.com agreed to buy Online Travel Corp. for approximately $100 million. There has been speculation in the U.K. that further consolidation could occur, as Lastminute.com has been tabbed by analysts as a potential target for Expedia or Travelocity.

ORBITZ MATCHED Expedia's and Travelocity's lead by adding destination activities and services to the Orbitz palette. Tickets are available to attractions and activities like Sea World in Orlando, Red Rock Canyon Jeep Tours in Las Vegas, and tours of Mayan ruins in Mexico. Orbitz president and CEO Jeff Katz said destination activities and services are "high-margin products" that Orbitz can mark up 25% to 45%.

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