SideStep, the web's leading TSE?

Per the imperfect Alexa reach tool, they are certainly in the mix... in fact, with the latest buzz around "activity search" the bump shot them above Kayak for the moment. (By the way, anyone know if SideStep's toolbar views are accounted for in Alexa reach numbers?) Check out Brian Smith's review of SideStep's activity search feature.

Yahoo! promoting FareChase

Brian Smith wrote an excellent post for SearchEngineWatch that lays out the expanded exposure of FareChase and latest features, as well as providing a nice OTA vs. TSE comparison.
I too think of OTAs as travel 1.0 and travel search engines as travel 2.0. By the way, I had a discussion on this very topic recently with a founding member of the Expedia team. He was sharing the initial elevator pitch for Expedia which now sounds eerily similar to the pitch of TSEs...

Today, OTAs look more and more like offline travel agencies - call centers, service fees, high-merchandising and total trip focus. They once were about empowering the do-it-yourself travelers with tools and information to buy ala carte travel components (air, hotel, etc.). Now, that sounds like the positioning of TSEs. Better tools (sorting, filtering functionality) and information to enable users to find the best fares/rates to book direct for the best value (and avoid fees -- as OTAs helped users avoid fees from offline agents at one time). The TSE trend is clearly gaining momentum as consumers become more aware of the benefits of booking with suppliers. Beyond low fare guarantees, bonus miles and no booking fees, it's easier to make changes to your ticket, upgrade your seat, and access exclusive airline site promotions when booking direct.

Now for the moves by Yahoo! to promote FareChase. I believe it makes a significant statement to the market that Yahoo! is willing to risk future Travelocity revenue share and OTA search spend to move FareChase and travel search to the forefront. It makes sense that Google (referring users to OTAs via shopping assistant model), AOL, and others have treaded lightly as the OTAs represent significant keyword search spend/revenue. If FareChase is successful, look for AOL (Pinpoint/Kayak), MSN, and Google to respond with more aggressive moves to align themselves with TSEs.

Travel search acqusitions near?

4/17 Update:

Heather Dougherty, an analyst with Nielsen/NetRatings, was quoted in a NYT article today titled For Travelers, a Way to Save More Dollars While Using Fewer Clicks stating that she "believe[s] that Google and MSN may simply follow Yahoo's lead and buy the niche search players. "I've always thought pretty much all of them are ripe for acquisition," said Ms. Dougherty, of Nielsen/NetRatings. "If someone wants to play catch-up fast, that's the way to go." Could not agree more, and think it will be interesting to see how the various players marry up or not over the next several months.

4/12 Post:

My guess is that one of the privately held travel search engines will be aquired in the next 6-12 months. The factors that lead me to this conclusion are 1) TSE traffic and revenue is soaring, thus validating the model, and 2) the most realistic acquirers are in either a stronger financial position or more ideal strategic position.

From eyefortravel.com post on E-consultancy 2006 Shopping Comparison Engines Buyer’s Guide "The amount of traffic to shopping comparison sites is growing at a very healthy 30 percent year on year, yet market revenues outstrip this figure. Revenue growth of up to 500 percent has been reported by comparison engines, driving massive amounts of sales to merchant partners." Keep in mind, the guide profiles of 12 major shopping comparison engines in the U.K., however I assume similar growth trends exist in the U.S. for TSEs.

In my mind, potentail acquirers include: Google, Expedia, Cendant, Sabre, AOL, IAC, Amazon, and Microsoft/MSN. In a recent article from CNNMoney titled What Google should do with its $10 billion war chest "...Bill Tancer, general manager of global research with Hitwise, an Internet research firm, thinks... online travel search is another area Google should target, with sites such as privately held SideStep, Kayak and Mobissimo being possible buyout candidates." I agree with Bill, and believe the travel search category might be a great fit for Google.

The OTA conglomerates might look at a TSE acqusition as a diversification move, defensive move, and/or way to create product differentiation. In an article from The Street last month titled Online Travel Stocks Stranded, Aaron Kessler, an analyst with Piper Jaffray, states "domestic [market] is going to be a challenge... Like other Web-based services, online travel is no longer a novelty. Competition is intensifying as airlines and hotels expand their efforts to get travelers to buy on their sites. Plus, there's the added problem of specialized search engines, including Kayak and Sidestep. These operations help people find the best deal by comparing prices over multiple sites.

Who knows what the future holds, but either way, it should be an interesting several months in online travel...

SearchParty, hotel search engine

New hotel search engine SearchParty is filling a need by "comparing prices, taxes, fees and cancellation policies from 100+ web sites including Orbitz & Travelocity." Not sure how I feel about the user experience, but no doubt they help solve a consumer pain point. Understanding the break out of taxes and fees at OTA sites is just not transparent to folks. Dennis Schaal of Travel Weekly addressed this very issue in a recent posting where he calls out the major OTA leadership to "level with us":

This is an open letter to Dara, Michelle, Mitch and Jeffery: My message is simple (and maybe you will call it simple-minded). When it comes to offering hotel rooms on your Web sites and in your call centers, you need to embrace the future and provide a breakdown of taxes and fees.

Online shoppers are becoming savvier and will increasingly demand better information. This is an area where travel start-ups can add value and carve out a niche.

New features from FareCompare

Recently heard from Niel Banton regarding some new FareCompare site features. From Niel, "we added in international and a new search path with the ability to check inventory and deep link into a carrier's site."

Usability of the new search path breaks the mold of the traditional OTA and TSE experiences. Curious if users will find it intuitive.

He also shared a new fare graphing feature that's in production. At first glance, it appears to offer a similar display to FlySpy (see my post and techcrunch post) however my guess is that Niel and the FareCompare team have a much better shot at making it real, based on their experience with complex airfare pricing data.

Check out FareCompare's FireFox extention if you haven't already, an easy way to monitor the lowest fares from your selected airport.