SAN FRANCISCO (09/07/2000) - Two new Web sites are planning to enter the already crowded online travel market with new twists on discount ticketing.
Savvio.com officially launches its site Thursday and will sell tickets with a 10 to 40 percent discount, as well as tickets with prices that drop within a specific time period, until they are all sold.
Savvio, based in Alviso, Calif., also is borrowing from stock-exchange practices, letting customers set a limit order to buy a ticket automatically when it drops to a specific price.
Hotwire.com, a project created by six major airlines, will be the next in line to launch within two weeks, according to company officials. Backed by United Airlines, American Airlines, Northwest, Continental Airlines Inc. (CAL) , America West, US Airways and investment firm Texas Pacific Group, San Francisco-based Hotwire allows customers to choose travel dates but masks the carriers and times, much like competitor Priceline.com. But unlike Priceline, which requires customers to bid on ticket prices, Hotwire will tell travelers the cost and give them 30 minutes to decide whether they want to buy.
Both sites give the airlines yet another outlet to fill empty seats. But the jury is still out on how many of these online travel ventures can survive, says Bill Carroll, a senior consultant with PhoCusWright, an online travel consultancy based in Sherman, Conn.
"It ultimately comes down, in my opinion, to who will be successful in gaining potential travelers' attention to their site and how much will it cost to make that happen," Carroll says. "One has to wonder what will be the reaction of the other players. And given that reaction can they - Priceline or Expedia Inc. (EXPE) - get the message that they have potentially equivalent offerings."
PhoCusWright projects total U.S. online airline revenues will be $8.7 billion this year, or about 9 percent of total air travel.
Both Savvio and Hotwire say they offer something new to the online travel market. Savvio founder and CEO Karen Ha says her site will target middle-market travelers who she contends are left in the lurch by a deep discounter such as Priceline and full-service sites like Travelocity. "It's for the working professionals who tend to say, 'I don't want to pay $1,000 full fare, but I don't want to lug my family on a red-eye,' " Ha says.
Unlike Priceline and Hotwire, Savvio also will offer frequent-flier credit. The company, which received $14 million in second-round financing in July, will specialize in international air and cruise travel.
Hotwire is more heavily financed, with $75 million from its well-moneyed backers. It will offer discounts of 40 percent or more to entice leisure travelers whose No. 1 priority is price, says President and CEO Karl Peterson. He maintains that Hotwire offers a simpler way to save money than sites such as Savvio and Priceline.
But Peterson still argues that the online travel market has a long way to go before it reaches its saturation point, thanks in part to the airline industry. "There's plenty of room to grow," he says, "especially when you are considering we're helping the suppliers with extra inventory."