The Gnome says "Me Too"

WAAYYY back at the end of 2007 – we did a blog post on Priceline announcing that they would be dropping their booking fees for airline tickets. At time we stated:

Don't look for other OTAs to match, because they've invested too much in pitching their service proposition to throw away that revenue stream. Unless Priceline is able to make up some ground in share of course, which may be unlikely, but actually could happen. Especially through savvy partnership with meta's.

Well, Priceline WAS able to make up some market share and it looks like the big boys have had enough. Expedia announced they would drop their booking fees last week, and today the Gnome has also joined the bandwagon. Actually, the Gnome plays marketing catch up in two aspects:

1) They counter the “No Booking Fee” move by Expedia and Priceline, and

2) They counter the “Orbitz Price Assurance” gimmick:

Travelocity also is expected to launch a long-term price guarantee of sorts on vacation packages, promising to refund a price difference, from $10 to $500, if a different Travelocity customer buys the same package for a cheaper price at a later date. The "PriceGuardian" program is similar to an offering competitor Orbitz.com makes on airline tickets called "Price Assurance."

This is well played since it ups the ante by throwing in the holy-grail of “Vacation Packages” as the teaser. So what's this all mean? Here's our takeaways:


- If you wanted to see the short term affects of the recent Meta-Search space growth with Trip Advisor and TZoo, here you go (on top of Yahoo getting out). It really ups the pressure on OTAs along with the incumbent meta's. We think it’s going to start to be a brawl because the entrance of these two is comparable to another Hotwire and Priceline entering the OTA Market.

- FMV starts the betting on March 23rd as the Over / Under for Orbitz to announce dropping their booking fee. They will take the weekend to look at how this affects their bookings, then they'll make a deck and discuss it, but they will eventually need to take action.

- FMV could never really figure out why travelers use OTA’s and pay the fee in the first place. Yes – some OTA’s do provide value and we understand that (especially for flights using different carriers not in the same alliance); but for simple, roundtrip flights, it’s always been a mystery. [Note: That's why the PCLN commercial showing NoFee breaking vases is so perfect].

- Finally, the Gnome's latest moves may also be a tacit admission that 1) the real money is basically in hotels and cars, thus 2) selling airline tickets is now simply a necessary cost of doing business and loss leader for other travel transactions.


In clsoing, back to that service mark, "Price Guardian". Really? That's all you've got? Hopefully no AIG-sized bonuses handed out for that creative gem. Unless they show him slugging it out with Shatner and NoFee in a commercial.