AOL Rides With Kayak for Travel Search

AOL plans to release a travel search site in mid-2005 through a partnership struck with Kayak Software, another move by the Internet service to delve deeper into search and online advertising.

AOL and Kayak said last week that they reached a multiyear marketing and technology agreement for Kayak to power a travel search engine. AOL took a minority stake in the 10-month-old company. Kayak, Norwalk, CT, aggregates travel information from both agencies, like Expedia and Travelocity, and airline and hotel Web sites to let consumers compare options.

The travel search service will operate as a standalone site. AOL also will integrate it into its search feature for its 22.7 million members and on a revamped for non-subscribers. Travelocity will remain the exclusive provider of booking services for AOL's travel section.

Kayak, which launched its Web site in October, lets users search various travel sites to find the best deals on flights, cars and hotels. After users enter their travel information, Kayak scours sites to find the best deals, then links to those sites, where users book their trips.

Travel search engines, like Kayak competitors SideStep and Mobissimo, have arisen to act as alternatives for travelers who might visit Travelocity, Expedia and airline sites.

Yahoo is testing its own travel search engine developed through its acquisition of FareChase. For now, the site contains no display advertising or paid listings. Kayak displays advertising on its travel details page, both on a cost-per-click and cost-per-action basis. The company declined to disclose its advertisers.

Kayak hopes to gain an advantage on competitors by providing both comprehensiveness and related content. It lets users rate travel services and write reviews. Kayak also has deals with Fodor's, Digital Cities and others for travel-related content.

A Jupiter Research report released last week projected the online travel market to reach $91 billion in 2009. The researcher found that search is the No. 1 driver of traffic to booking Web sites.

However, travel search engines face challenges in giving comprehensive results. Unlike Web search, travel search needs to plumb airline and agency databases for information. Some travel search engines, like Kayak, crawl travel sites without their permission. This has led to accusations that such engines are “screenscrapers” that violate travel sites' terms of use.

Travelocity, which serves as the travel-booking engine on Yahoo and AOL, has clashed with travel search engines, which it tends to view as competitors that drive down prices and take traffic.

Last year, FareChase 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.

Kayak has agreements with more than 60 air and hotel Web sites as well as a relationship with Orbitz. Travelocity, Expedia and Southwest all have asked Kayak to stop scraping information from their sites. Kayak's policy is to stop crawling sites upon request.

“We really hope when they see the traffic that we can drive that they will want to advertise,” Kayak spokeswoman Dana Galin said.

While AOL has relied on Google for its Web search technology and paid listings, it has moved to enter so-called vertical search categories. In September, it entered the comparison-shopping area with InStore, an e-commerce search engine powered by BizRate, now known as Shopzilla.

AOL spokesman Brian Hoyt compared the unease of agencies in particular to the early days of comparison shopping, when big retailers like Best Buy viewed shopping search engines warily.

“I think you'll see the suppliers warming up to travel search engines,” he said.

AOL also has multimedia search technology thanks to its November 2003 acquisition of Singingfish. And it has a local search function called “In Your Area” that connects searchers with information on things such as local plumbers or pizzerias.

The moves come as AOL looks to make up for a declining subscriber base with a larger presence in online advertising. The Time Warner unit reshuffled its management structure earlier in the week, putting AOL vice chairman Ted Leonsis in charge of an “Audience” division responsible for continuing recent momentum in AOL's online ad sales.

Third-quarter ad sales rose 44 percent from a year earlier to $257 million, thanks to sales from paid search and AOL's direct response ad network.

Hoyt said AOL has identified four areas to develop further services: retail, travel, autos and real estate.

“Those are the four key areas where we want to eventually do something,” he said.

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