How Well Is Orbitz Doing?

22nd Jun 2001

An initial assessment has been made by Compete Inc., of Orbitz`s entrance into the online travel market.
Their findings show that while Orbitz did well at attracting travel shoppers to its site, it did poorly at turning traffic into bookings. Orbitz outdrew by 300,000 visitors in its first week, but less than 1% of its visitors made a reservation. By comparison, Travelocity converted 4.3% and converted 1.9% of their respective visitors. One reason for Orbitz`s low conversion was that many users either didn`t find the best fares or were simply comparing fares—half the users who didn`t book with Orbitz left the site after viewing results of their flight search. Given the notable number of Travelocity and Expedia visitors who tested Orbitz in its first week, however, the door is open for Orbitz to threaten the industry leaders.
“The Orbitz buzz created a tremendous sense of curiosity which drove people to the site, but the key question will be whether Orbitz can convert and retain customers,” said Man Jit Singh, CEO of Compete. “If travelers find that this newcomer really does deliver the most options at the lowest prices, then more lookers will become bookers. Travelocity and Expedia, on the other hand, must enhance their product and service offerings to assure their customers there`s no reason to leave. The recent launches of Expedia Packages and Travelocity`s new last-minute booking service show that they`re taking these concerns seriously.”
The threat is real. Between June 4 and 10, 12% of Travelocity visitors and 9% of Expedia visitors tested Orbitz. If each of these multi-site shoppers were to defect to Orbitz, it could cost Travelocity and Expedia more than $10 million in lost revenue each week (assuming an average booking of $800). Moreover, 5.3% of recent Expedia customers and 4.2% of recent Travelocity customers visited Orbitz.
A sizable number of these multi-site travel shoppers bounced between the sites directly, further indicating that many travelers comparison-shop for the best deals. Five percent of Orbitz visitors arrived at the site directly after exploring either Expedia (2.7%) or Travelocity (2.3%). Orbitz drew more direct traffic only from Yahoo! (9.6%) and MSN (4.0%).
A big reason for Orbitz`s success in attracting Yahoo! visitors has been banner ads promising free travel. Forty percent of Orbitz visitors entered the site via an ad, on Yahoo or elsewhere. Orbitz`s free travel promotion has been an effective way not only to draw people to the site, but also to build a customer base. To be eligible for the hourly giveaways, visitors must register with the site. Nearly half (48%) the people who visited Orbitz during launch week signed up for its Free Travel giveaway.
“That`s nearly one million people to whom Orbitz can personalize product offerings and demonstrate its `proactive customer care.` But have they attracted the right people?” questioned Marc Engel, Director of Analytics at Compete. “People who click banner ads in pursuit of freebies are generally not your A-list customers. One reason Orbitz`s first week conversion rate was so low was that so many people came just to win free travel. But will these people actually book travel online?”
Orbitz could potentially improve conversion by pursuing a slightly younger demographic. Travel shoppers between 25 and 44 tend to be the best converters—50% percent of Orbitz visitors fall in this age group, compared with 59% for Travelocity and 56% for Expedia. Compared to its competitors, a higher percent of Orbitz visitors were 45 and older, but this group is generally less likely to convert than its younger counterparts. Income levels were similar across sites.
“Orbitz understands that they came late to the game and has a big hurdle to clear to convince people to switch loyalties,” said Singh. “The true test of their success lies in the months ahead.” The full report is available from Compete.


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