A few data points regarding the Travel meta-search market

if you are interested in tracking the shopping/comparison engines market, I recommend the work of Brian Smith over at ComparisonEngines.com, where he mixes news with interesting analysis of that space. I discovered this blog when Brian wrote about client Kaboodle.

Brian recently commented on the move of Yahoo Shopping's Rob Solomon to SideStep, a mature player in the meta-search engine market, and mentioned a number of interesting facts concerning the online travel space - a $60B market:

• As for travel search (or travel meta-search engines), no one is releasing numbers, and total bookings are tiny compared to those from Online Travel Angencies (OTAs). However, there are a lot of factors which seem to be pointing to a tipping point in the industry: AOL driving traffic to Pinpoint Travel, Yahoo putting FareChase on its main travel page (as opposed to keeping it separate from Travelocity), Google working on travel search, established travel suppliers like Hilton Hotels and American Airlines signing deals with the travel search engines, Amazon choosing to partner with SideStep as opposed to an OTA, DCA3 carrier agreements up for renewal at the same time travel providers are seeing success with direct bookings, Mobissimo (and others) searching Orbitz, Kayak working on cool Google-like aps and an impressive travel only PPC engine, etc.
• SideStep is the leader in the meta-travel search arena, but the market itself is tiny in comparison to the online travel agencies (OTAs) like Expedia and Travelocity.
• Word of mouth adoption will continue to be important for the company, but SideStep needs to step up internet marketing and more importantly, business development activities. When I say internet marketing, I think there is a place for PPC marketing on Adwords and Yahoo Search Marketing, but the problem is that the OTAs make more money on every sale/lead so they are going to be able to outspend SideStep, Mobissimo, and Kayak.

Travel is obviously a huge online market, which explains why so many players have been able to sustain themselves with very limited differentiation - at least from the standpoint of the consumer. It will be interesting to see if a consolidation of some sort happens in 2006 - similar to 2005 that saw shopping.com, ShopZilla and more recently PriceGrabber all being acquired.

Comments

[Mark Johnson]

I'd expect some consolidation in 2006, though it's not clear to me who might buy a travel search engine (TSE). Farechase was bought by Yahoo in 2004, but it's fallen behind Kayak and SideStep since then. Kayak's deal with AOL and Google's attempt at travel search suggest that a portal might buy a TSE, but I think AOL is the only candidate. An online travel agent (Orbiz, Travelocity, Expedia) is unlikey, because they can't figure out how CPA/CPC would alter their merchandise revenue stream. A comparison shopping site might be a good fit, but the complexities of partner relationships in travel are a shift from their usual business. I'm still hoping for a SideStep IPO in late 2006 or 2007!

[Kedar]

I m not sure why there is so much value to a meta-data search engines. Whether its a travel or normal search. They are easy and cheap to program and there is nothing impossible involved there. The main factor is adaption. I guess that is why everyone pays for their acquisition. So considering this, Side Step should be aggresive about adaption more than anything else. I think they did pretty decent job beside being a application rather than just web page search.