For the past 15 years, Travelocity and Expedia have been staunch rivals as they compete with each other to gain dominance in the competitive online travel industry. In a surprising move, the two online travel agencies have signed a long-term partnership deal that would make them allies instead of enemies.
Travelocity and Expedia have announced a team-up deal that would make them complement each other in their respective weak points. The two companies are merging their resources and expertise to work together. Under the agreement, Expedia would handle most operations of Travelocity, which in turn would focus on marketing and promotions to entice more customers and to further build brand loyalty among their clients.
Sharing of resources and expertise
Thus, Expedia would take care of most of the administrative and operational activities for both companies, while Travelocity would handle marketing and advertising. Through sharing of resources and expertise, the two companies are confident that they would be a stronger and formidable force amid the intensifying competition in their industry.
Travelocity would gain from its new partner’s wider array of airfare and hotel offers. For its part, Expedia would gain greater exposure from its association with one of the most popular and best brands in online travel across the US and Canada.
Most online travel agencies now compete more to win attention of prospective customers. Expedia admits that this aspect could be considered its weak spot. Earlier this summer, the company disclosed that it lost many customers due to the aggressive advertising campaigns of another rival Priceline.com. As a result, its second quarter profit dropped 32% despite a 33% increase in its marketing cost.
This is an unusual deal that illustrates the modern challenges in the near-saturating online travel industry. In the past years, several Websites like Hipmunk and Kayak have entered into partnerships with the four legacy players in the industry—Travelocity, Expedia, Orbitz Worldwide, and Priceline.com. Even technology giants like Microsoft Corp and Google Inc have joined the fray by launching their respective flight and hotel searching apps.
Online travel agencies do business through searching for the best rates on airline and hotel reservations. Those companies earn commissions through booking transportation and accommodations in behalf of customers. Many customers recognize the fact that such agencies enjoy more leverage when they negotiate for fares and rates with airlines and hotels. Thus, this market is seen to remain lucrative in the years to come.
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