Yahoo expanded its FareChase beta travel search program yesterday to include hotels search, enhancing revenue opportunities when the program launches.
Hotel bookings are potentially a more profitable area of the online travel market, Internet analysts say, as the airline search market has grown increasingly crowded and competitive with major players Expedia, Travelocity, Orbitz and Priceline, the airlines themselves and a host of other sites.
“I don't think it's any surprise that Yahoo is expanding beyond air travel into an area that has become more lucrative: hotels,” said Scott Kessler, Internet equity analyst at Standard and Poor's, New York.
Online hotel bookings are expected to grow 31 percent this year, according to research firm PhocusWright, Sherman, CA.
While airline tickets were more lucrative for companies at the Internet travel market's inception, Kessler said there is “a lot of competitive and pricing pressure and not a lot of incremental benefits that could be captured by providers.”
The hotel market potentially can be more profitable because there are many more hotel companies, and they are fragmented, Kessler said.
Yahoo said its FareChase, launched in beta in August, now will let consumers search “multiple trusted hotel sites,” including hotel chains and online travel agencies, to find hotel and travel information. Users can search for hotel availability by city, airport or address. Results include a list of hotels along with ratings and reviews of specific hotels from Yahoo's 165 million active registered users.
FareChase is integrated into Yahoo's network, available through its Travel home page, Yahoo Search and Yahoo Shopping.
“This beta launch marks just the beginning of what we are capable of providing for travelers,” said Yen Lee, general manager of travel at Yahoo.
Yahoo executives refuse to say when FareChase will launch officially. Industry observers laud Yahoo's entrance into the travel market but warn of the difficulties in competing with established players such as Expedia and Travelocity.
“With the success in the online travel market, there could be tremendous revenue upside for Yahoo, although it is becoming increasingly competitive, and Yahoo is a late entrant,” said Laura Martin, an analyst with Soleil Securities, Los Angeles.
Christine Blank covers online marketing and advertising, including e-mail marketing and paid search, for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters