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Kayak To Establish Direct Hotel Bookings

They entered a white-label partnership with the Travelocity Partner Network. The Travelocity Partner Network which interestingly is not part of Kayak’s metasearch results will be the merchant of records and thus functions as the travel agent.

Since it is not an exclusive deal, Kayak can bring in other partner and might also extend its direct booking offers to flights or car rentals.

Kayak also plans to implement the hotel booking option in their iPhone app in the next weeks. This can be seen as an attempt to increase the conversion rate between information display and booking. Again, this is another sign for the growing importance of mobile apps for travel.

Over time, travelers will demand information faster and with less effort, which means that changes in the booking process will be necessary. In this context, consumers (not only in the travel industry) will demand more efficient access to relevant information than they now do, so that all the intermediate steps must be eliminated. Customers must be offered a point of sale without detours from whichever site they visit. This is especially true for mobile applications. Including a booking function will most likely improve the ROI for Kayak.

The general advantages are obvious: Kayak can increase its revenue and make customers stay on its site longer. And since the booking will be done on their site, Kayak has access to its customers’ data. With this valuable information Kayak can then improve its customer relationship management and further adapt its offers to its customers’ needs. Furthermore, this new feature might influence Kayak’s IPO positively and thus increase Kayak’s overall stock market value.

Establishing a direct booking option might also have disadvantages for Kayak. However, when announcing their direct hotel booking option, Kayak’s chief marketing officer Robert Birge denied the possibility that relationships with metasearch distribution and advertising partners might be hurt: “Online travel agencies are accustomed to choice within Kayak and how they view their relationship with us will not change”, he said.

But it seems he was wrong: Orbitz which holds a contract with Kayak, that ensures exclusivity rights for Orbitz, is pursuing legal remedies claiming that Kayak’s direct booking through Travelocity violates against their agreement. “Orbitz believes these promotions violate Kayak’s contractual obligations to Orbitz. We are confident that our contractual terms will be enforced through these channels”, said Orbitz spokesman Brian Hoyt.

So far this issue has not been resolved and it remains to be seen if Kayak can manage to establish direct booking options without creating further conflicts with its advertising partners. With regards to Google’s acquisition of ITA diversifying its product offerings might be a good strategy, though.

Image by Andrey Burmakin

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