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Travelocity's announcement this week that it is now dedicated to "Customer Championship" (its term) and Expedia's new promotion that promises $50 savings on all-inclusive getaways. It's not a coincidence that both announcements come on the heels of last week's Travel Commerce Conference & Expo (TravelCom) held in New York. The theme of the conference was, not surprisingly, the value of differentiation.
The moves by Travelocity and Expedia speak to two important trends. The first—represented by Expedia's $50 coupon for all-inclusive bookings and its recent focus on all-inclusive getaways—is the thinly veiled fear among online agencies that consumers will shop around. What they really want, of course, is for you to purchase your airfare, hotel, car rental, activities, sightseeing tours, and—if it were possible—dinners and drinks directly from them. No shopping around. No mixing and matching the best price on different travel components to get the best overall price on your travel experience. With profit margins disappearing on airfare sales, the agencies are looking to bundle "travel experiences" that disguise the actual price of each component.
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The other trend is the effort of the different travel providers to differentiate themselves. Sure, Travelocity might have a nifty flight search tool, and Expedia might negotiate exclusive hotel rates in bulk. But that's not enough to keep you from comparing prices. Instead, Travelocity is banking on customer loyalty, hoping its customers will be so impressed by the agency's willingness to go the extra mile that shopping around becomes secondary rather than second nature.
It remains to be seen whether consumers will ultimately make their purchasing decisions based on convenience and loyalty, or whether the lowest price will continue to be king. Regardless, for those consumers who are focused primarily on getting the best deal, the lesson remains the same: shop around.
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