Updated Wal-Mart Site Offers Travel Services

In a departure from its typical retail roots, Wal-Mart Stores Inc. in Bentonville, Ark., is going into the travel business.

The redesigned Walmart.com Web site, which was launched Jan. 1, now offers airline, car rental and hotel booking capabilities.

Wal-Mart also announced last week that it's setting up a separate company for its Web business, called Wal-Mart.com Inc., to be based in Palo Alto, Calif.

Accel Partners, a Silicon Valley venture capital firm, will own a stake in the company. The Web business will have a separate board of directors and management team.

Developed by Quantum Leap Communications Inc. in Chicago and software supplier Site & Sound Software Inc. in Portland, Ore., the travel site caters to Wal-Mart customers who are unfamiliar with booking travel online.

In addition to a simple low-fare finder and hotel booking process, the site features a customer service section that helps educate site visitors about online travel. Customers also can call a customer service center.

Basic Service

"For now, we're addressing the basic travel needs of our customers," said Walmart.com spokeswoman Melissa Berryhill. "We do plan to evolve into more sophisticated offerings as we learn more about the business and our customers."

Berryhill declined to elaborate.

One thing customers won't see on the site, however, is lower travel prices than those offered by online competitors.

"Currently, the savings that a Wal-Mart customer usually sees in the retail sector they're not going to see on the travel site, which I think will be a hindrance to Wal-Mart," said Krista Pappas, an analyst at Gomez Advisors Inc. in Lincoln, Mass.

Pappas said if Wal-Mart begins offering travel packages, with air, hotel and car rentals negotiated at lower rates, customers will start to see savings.

Wal-Mart is not the first to stray from its core business into the travel market. CNN, Rand McNally & Co., iVillage Inc. and Hoover's Inc. have full-fledged travel-booking engines as part of their sites.

"Wal-Mart is following the steps of other companies who have a strong online presence and want to get into travel as a way to better serve their existing customers and generate incremental revenue," said Henry Harteveldt, a senior analyst at Forrester Research Inc. in Cambridge, Mass.

David White, marketing director at Site & Sound Software, said companies can spend $1 million to $5 million to add a booking engine to their sites.

Forrester estimates that consumers will spend $14 billion on online travel this year - up from $7.8 billion last year.

Some observers said Walmart.com and its travel site won't make a splash online.

"Wal-Mart is not going to do to the Internet what they did to small-town America," said Barry Parr, an analyst at International Data Corp. in Framingham, Mass. "They're facing a completely different class of competitors."

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