Yahoo Tests Travel Search Engine

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Yahoo began testing a new travel search engine Tuesday night that can be used to book flights, hotels and cars from more than 50 travel sites.

The travel search engine comes two months after Yahoo acquired FareChase, a New York-based travel search site. The new Yahoo FareChase site works similarly to travel search engines such as SideStep and Mobissimo. After users enter their travel information, FareChase scours sites to find the best deals, then links to those sites.

Yahoo said the travel search initiative would not affect its lucrative deal with Travelocity to power its travel section.

"This prototype will be a strong complement to the Yahoo Travel property, for which Travelocity continues to be our exclusive provider," said Stephanie Iwamasa, a Yahoo spokeswoman.

Yahoo and Travelocity have worked together since 1997, renewing their deal in June 2002 to make Travelocity the exclusive provider of flight, hotel and car booking services for Yahoo Travel. In return, Travelocity committed to buy $100 million of advertising and other services from Yahoo. Under terms of the deal revealed in a regulatory filing, Travelocity is obliged to make $63.7 million in minimum payments to Yahoo in 2004 and 2005. The deal expires at the end of 2005.

Travel search engines have arisen to act as alternatives for travelers who might visit Travelocity, Expedia and airline sites when planning a trip. According to Jupiter Research, consumers visit an average of 2.5 Web sites before making an online purchase.

Iwamasa said Yahoo viewed travel search similarly to Web search in that it strives for comprehensiveness, not just providing results from marketing partners. This approach has gotten FareChase into some trouble. Last year, it settled a case brought against it by American Airlines claiming FareChase took information from its site without permission. The settlement allowed for FareChase to search the site with some restrictions. FareChase now removes travel sites' information from its search engine on request.

Yahoo will compete with more established players in the space, like SideStep. Since its launch nearly four years ago, SideStep reports its travel search Internet browser plug-in has been downloaded nearly 7 million times, and the company has raised $17 million in venture capital. It has partnerships with nearly 100 travel providers that let it search their sites to compile results.

Phil Carpenter, vice president of corporate marketing for SideStep, Santa Clara, CA, said Yahoo's entry into travel search would bring welcome attention to the area and expressed confidence that SideStep could compete.

"Can they really be all things to all people?" he asked. "They're trying to do everything. We're focused on one thing and one thing only, and that's travel search."

FareChase is the latest example of Yahoo's drive to integrate search into many parts of its portal, from news to images to careers. The travel search engine resembles the approach Yahoo has taken with its shopping section. In September 2003, Yahoo turned Yahoo Shopping into an e-commerce search engine. Online travel is a highly lucrative vertical, projected to generate $52.8 billion in sales this year, according to travel consultancy PhoCusWright.

FareChase will stay in beta testing for an undetermined time, Iwamasa said. It only works for users with Internet Explorer browsers. The site does not contain display advertising or paid listings.


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