Expedia a step closer to ditching TripAdvisor

Expedia to sell TripAdvisor for $4 billionTravel industry … welcome to high finance! By the end of the year, online travel agency Expedia is expected to spin off its TripAdvisor unit in an initial public offering, according to MarketWatch. And, the deal could be worth as much as $4 billion.

Think about it: all those hotel reviews you’ve written, photos you’ve posted and advice you’ve sought could be worth as much as Facebook generates in advertising revenue this year. Clearly, you’ve been working hard to churn out all that free content for your fellow travelers.

So, here’s the cosmic justice in all this. Expedia, the largest online travel agency in terms of revenue (which is what really matters), is set to benefit in a big way. But, you don’t post to TripAdvisor for fame and fortune. You do it to help your fellow travelers. Well, imagine how much traveling the folks cashing in on this IPO will be able to do. Maybe they’ll take your reviews to heart!

Look for the IPO filing in a few weeks … and celebration by a handful of people around the Christmas holiday.

[photo by jollyUK via Flickr]

American Airlines and Orbitz tangled in antitrust battle

American AirlinesThe online travel agency battle continues … and it’s getting ugly. The latest move comes from American Airlines, which is suing Orbitz and Travelport for alleged anticompetitive behavior. So, what started in November as a battle over fare distribution has escalated into an antitrust war.

Through the end of the year, Orbitz and American Airlines fought it out, ultimately winding up in court, where American emerged victorious. Along the way, the two sides in this commercial combat – travel suppliers, such as airlines, and online travel agencies – found other fields of battle, with Expedia, Delta, CheapOair and BookIt among those entering the fray.

American is claiming that Orbitz is trying to “control the distribution of airline tickets,” according to a report by legal magazine Corporate Secretary. The article gives some insight into the legal aspects of what’s happening:

‘The lawsuit raises innovative but real questions about market power and behaviors in the current airline structure,’ says Spencer Waller, professor and director of Institute for Consumer Antitrust Studies at Chicago-based Loyola University. ‘But I don’t think this lawsuit will get to a resolution on the merits of antitrust claims. I view this case primarily as a continuation of the dispute and negotiations over fees in the online travel agency.’

For American, the disintermediation of online travel agencies would lead to direct ownership of the consumer, as well as wider margins on each transaction. Corporate Secretary continues:

‘The dispute raises real antitrust concerns because firms have substantial market power, and higher fees are being generated that are being passed on to consumers,’ Waller adds. ‘The antitrust law is looking at it from a consumer perspective and in the end, this law would want the airlines to produce lower fees.’

We hit a period of calm earlier this year, but the war in the travel industry is heating up once again. The parties are back in court, only a few months after American’s last victory, and it looks like we’ll all have to wait for the judge.

You can read American’s filing here.

Five business travel challenges for small companies to overcome

business travelRegardless of economic conditions, owning and running a small business isn’t easy. It’s always tough to find clients, allocate your funds effectively and maximize your bang for the buck. And, business travel is a big part of this. When you go out on the road, you know you’re committing some serious cash to the endeavor, and you want to make sure you get as much value out of it as possible.

Part of this has nothing to do with what you’re spending: you want to make sure the reasons for your business trip are smart. But, you also need to keep an eye on the expense side of this to ensure you aren’t spending unnecessarily. Business planning covers the first aspect of this, and travel planning addresses the second.

So, how can white collar travel folks spend more intelligently on business travel? Here are five ideas:

1. Forget brand: are you loyal to a particular airline? Cut those ties. Sure, you’re thinking that accumulating miles can get you free business travel later … and there is some truth to that. However, you could be spending more than the price of a ticket when working toward that benefit. Also, there may be constraints on when you can take free travel.
2. Stay a little loyal, though: even if you aren’t buying on loyalty, you should still enroll in the loyalty programs for every airline, rental car company and hotel you use. It may take longer to accumulate benefits when you spread your purchases around, but the free perks you receive won’t come at the (literal) expense of your travel budget.

3. Shop around a bit: time is money, and the hours you spend looking for a flight are hours you could sink into other business activities. So, look at your effective rate per hour (i.e., how much your time is worth). Let’s say, for example, that an hour of your time is worth $100. If you could spend an hour to save $250 on a flight, that’s a good return – swallow the pill and do some comparison shopping for airfare and room rates.

4. Look at alternatives to airline loyalty: some online travel agencies have loyalty programs. Remember to join them, as you can accumulate benefits with them as well as with the airlines. As with airline choices, though, don’t choose a particular booking site just to accumulate points. Cash comes first!

5. Play the credit card game: use a branded credit card to make your travel arrangements. Choose one for the airline you use most. So, if you have a Delta card and wind up flying American Airlines every now and then to save money, you’ll still accumulate some benefits with Delta. Just don’t forget to pay the card off at the end of the month!

[photo by codepo8 via Flickr]

Not knowing wife’s name gets her stuck in China

ChinaWhen you take the SAT, you get 200 points for spelling your name right. Ever wonder why? Well, you should ask Wen Ling Lian and her husband, Robert Schlund. Lian left Wayne, Michigan for China, on a trip to visit her family. While in flight, she saw that her name had an “e” stuck on the end of it. Though not a problem in the United States, she knew it would be when she tried to leave China later. Fortunately, a resolution was found in blaming a company that hadn’t done anything wrong.

So, here’s the deal. Lian was on the ground in China and running out of time. Her name was wrong on her ticket, the result of an error made by her husband when making the ticket purchase with online travel agency CheapOair. By the time Lian and Schlund realized what had happened, of course, nothing could be done … except to buy another ticket. CheapOair could not change the name on the ticket, as it’s a matter of airline policy that tickets are non-transferable after purchase – meaning that the name can’t be changed. The online travel agency can’t make the change without the airline’s consent.

But, this didn’t stop Schlund from trying. Rather than spring for the new ticket to get his wife home, which would have cost him a few hundred dollars – or even contact the airline, China Eastern Air – he decided to pass the buck. After claiming that the online travel agency wouldn’t help him – an absurd notion given the fact that it does not have access or ability to do so without airline consent – and never even bothering to contact the airline, he decided to turn to a consumer advocate the media. Schlund shared his sob story with WDIV – Detroit’s “Ruth to the Rescue,” still refusing to take responsibility for not knowing his wife’s name … and to think I used to catch hell for not remembering anniversaries!

%Gallery-76818%Well, this is where a new problem arises: the broadcast isn’t accurate. CheapOair, which got Lian a new ticket at its own expense even though her husband had made the mistake (eating
$200, according to a spokesperson for the online travel agency, despite making a mere $4 on the original transaction), had no obligation to do anything at all. Nonetheless, in a moment of chest-thumping, “Ruth to the Rescue” claims to have affected a remedy because she got involved. Really, she was an accomplice to injustice, as a company was compelled to pay for the obvious mistakes of a customer. Also, the loaded report emphasizes that the ticket was purchased in October, which is wholly irrelevant since the passenger didn’t notice the problem until the plane was in the sky.

So, the net effect was that the only party that could have made the change wasn’t contacted by the passenger. The party that could not do anything to help – the online travel agency – was put in the hot seat publicly and forced to assume an expense unnecessarily.

Is corporate greed the culprit? I doubt it. I’ve spent $4 on a cup of coffee for a colleague and didn’t ask for a dime in return. So, I don’t see CheapOair risking its brand for that amount. And, the company had earned the cash, a sum insufficient to bear Abraham Lincoln’s likeness. Instead, it’s a case of inattention and irresponsibility on the part of a customer.

When I reached out to CheapOair about this, I learned not only about the net $196 loss it sustained in order to cope with the effects of a customer who had made a mistake and found a platform but also that the company expended several man-hours across several departments to address media inquiries (including mine), a fact that any business mind could identify immediately. Schlund’s mistake caused a cost of several thousand dollars to be assumed by a company that hadn’t done anything wrong.

“Our hands were tied on the original issue,” said the spokesperson, after explaining the technical process by which data is captured from the website and sent to the airlines (explained at a high level, not in technical-ese, for my benefit, I confess). “We literally could not do anything – we physically aren’t able to change the customer’s name in the system,” she continued, “without a code supplied by the airline. We have an entire department that tries to secure these and other waivers for our customers, but it’s ultimately up to the carrier.” She added, “We sympathize with Mr. Schlund; we really do. But, we can’t change what we can’t access. It really is that simple.”

Now, I’m not a fan of the airline industry – anyone who has read my work knows that. I routinely bemoan the paucity of customer service in the space. But, we have to be realistic. Asking these businesses do the impossible for us just isn’t an option. And, as customers, we do have to be ready to take responsibility for our own buying decisions. We have enough to complain about already – there’s no need to invent more.

[photo by autumn_bliss via Flickr]

Judge blocks Sabre, gives American Airlines a break

American AirlinesI guess it would make sense for American Airlines to turn to litigation. After all, this approach worked well against Orbitz.

Here’s the situation: the battle between airlines and online travel agencies escalated from the beginning of November – with American’s announcement that it would pull out of Orbitz – through the new year. The latest move was by global distribution system Sabre, which has made it more difficult for American’s fares to be found. Along the way, Expedia dropped American in a defensive move, and Delta pulled out of three smaller booking sites: CheapOair, OneTravel and BookIt.

The decision by Sabre to “demote” American Airlines had obvious business implications for the carrier, which is likely why it sought relief in the courts. As a result of a hearing held yesterday, Sabre has been blocked from limiting the visibility of American Airline flights, but there’s clearly more to come.

In addition to making it more difficult for customers to find American’s flights, Sabre also increased the fees it charges American, which would lead to an annual cost of $157 million for the airline.

Sabre maintains that it was within its contractual rights, according to an Associated Press report, while American believes the move was anti-competitive.