InformationWeek

arket forces are great levelers--just ask any dot-carnage victim from the fields of pet supplies, home furnishings, or medical information. But as the twin forces of consolidation and attrition decimate Web businesses, why does the introduction of travel sites continue unabated?

There's an easy answer, says Suzie LeVine, marketing director for Expedia Inc. "Travel has three primary factors that make it ideal for the Web: It's a virtual, non-warehoused item; it's global; and it's fragmented."

Those dynamics led five airlines--American, Continental, Delta, Northwest, and United--to jointly invest $50 million in Orbitz, a Web site that launched last week. Orbitz says it will deliver customized travel pricing better and faster than the two market leaders, Expedia and Travelocity.com.

"The Internet has created the sensation where consumers believe they can easily find the best price, but travel is a hard product to do that for," says Melissa Shore, research director for Jupiter Research. "There are probably more than 500 routes to get from New York to San Francisco, and fare prices change on average eight times per day. The possibilities that can be shown to the consumer can be overwhelming, so many have tried to build a better mousetrap."

Which, given recent activity, must mean there are lots of mice. In the last several months, FareChase, Hotwire (discount travel), iDrive (a site for posting personalized travel requirements, among other services), and SideStep (search engines for travel services) have entered the online travel market. Each wants a piece of the $20 billion that online travel is expected to generate this year, according to travel consulting firm PhoCusWright.

New travel sites aren't limited to selling airfare and hotel rooms. When Boeing Co. disclosed a sweeping re-organization in March, it reaffirmed its support for Connexion By Boeing, a portal for Internet and corporate intranet access, as well as E-commerce, live television, and entertainment for ground and airborne passengers slated for release later this year or early next year.

Even the world's third-busiest airport is getting in on the action, albeit not in a completely commercial way. In March, Dallas/Fort Worth International Airport unveiled a Web site that offers users arrival and departure times for any airline, as well as traffic and parking conditions in and around the airport. Information can be delivered to a Web browser or via E-mail, pager, mobile phone, or handheld device. A terminal guide helps visitors locate stores and concessions.

Businesses are also relying on the Web for their own travel requirements. Xerox Corp. employees use the company intranet to book airline, car rental, and hotel reservations automatically, following company travel policy, says Pamela Moll, travel services manager. Such control over travel and entertainment costs also gives Xerox data to prove its volume when negotiating with travel providers. "We can demonstrate that we move market share," she says (see sidebar story, "Travel Sites Spell Convenience And Control").

Travel-site operators and investors caution that with the many newcomers in the travel space, the market is getting even more competitive and polarized. Travel sites consist of either big sites with lots of partners, or budget sites for the cost-conscious, reselling seats, cars, or room nights to attract business and leisure travelers.

In addition, online travel hasn't been immune to the consolidation that's so rampant in airlines, retail, media, and other sectors. PhoCusWright reports 20 mergers or acquisitions by online travel companies last year, totaling more than $1.8 billion. Global distribution systems such as Galileo and Sabre led the way with purchases of online travel agencies and vendors supplying the technology.

There's also been outright attrition. Discount travel site Savvio.com and adventure travel site Amisto.com pulled the plug after only a few months of operation.