CastleCops® - Online Travel Sites Fight to Build Brand Loyalty

Online Travel Sites Fight to Build Brand Loyalty
By Meredith Grossman Dubner

CHICAGO (Reuters) - When Shira Zigler needs to buy an airline ticket, she hunts for fares at online travel agencies Travelocity, Expedia and Orbitz -- in no particular order.

It's really just which one do I happen to type in and which one is up (on my screen) when I decide I'm tired of looking further, said Zigler, 26, a Chicago media buyer who travels about once a month. I don't really distinguish between them.

That is exactly what executives at the top online travel sites are afraid of.

And that is why many of them are launching new advertising and marketing campaigns early next year and dedicating more money to building brand identity.

Consumers don't see a lot of differentiation between the brands -- in particular Orbitz, Expedia, Travelocity, Travelocity Chief Executive Sam Gilliland said in an interview with Reuters. I'll hear from people, 'Hey, saw your ads on TV, they look great.' And it's a competitor's ad.

Gilliland said the fight for brand loyalty is even more fierce on the Internet, where shoppers are just a mouse click away from the competition. Travelocity, the No. 2 online travel company, is owned by Sabre Holdings Corp. (TSG.N: Quote, Profile, Research) .

InterActiveCorp (IACI.O: Quote, Profile, Research) , owner of the No. 1 travel site Expedia, said earlier this month it would spend $100 million more on operating expenses and $50 million in capital expenditures on marketing and branding next year to confront growing competition.

While many online travel companies said they could not yet specify what their advertising and marketing budgets would be next year, most said they planned to spend more money than they did in 2003.

Priceline.com (PCLN.O: Quote, Profile, Research) , which recently expanded its strategy to sell traditional air fares, as well as allow customers to bid for fares, is gearing up to launch a new ad campaign in the first quarter.

Cendant Corp.'s (CD.N: Quote, Profile, Research) Cheap Tickets and InterActiveCorp.'s Hotwire also plan to beef up marketing dollars and roll out new ads next year.

Now that fledgling Web travel companies have mastered the basics of creating their sites, the relatively young companies have moved into a new phase, executives said.

That makes building allegiance to a brand more important now than ever, said Jeffrey Katz, chief executive of No. 3 Orbitz, which has plans to go public soon.

Enhancing customer loyalty has to become a bigger priority and is probably the most important matter before the Web travel industry, Katz said at a recent travel industry conference in Orlando. The image of the big brands is ill-defined at best in the eyes of travel buyers.

Customers will always be motivated by a great deal, executives said. But travel sites, most of which tout low fares, have attempted to differentiate themselves in other ways -- through customer service perks, improvements to their Web sites and travel package offerings.

Hotwire, which CEO Karl Peterson described as an infant from a brand perspective, recently redesigned its logo as part of its push to expand its corporate identity.

This is a category that is becoming established in terms of who the long-term household names are, Peterson said in an interview with Reuters. The good news is there's no pre-existing dominant brand.

Over the long term, branding is critical because it helps reduce customer acquisition costs, said Paul Keung, an analyst at CIBC World Markets.

If one site is better at generating loyalty, it will cost them less to have that customer come back and to get new customers, Keung said. You have to make your application sticky enough that they become comfortable, they want to come back, and they don't want to use anyone else.

Source: Reuters


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