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Travelocity Bundles Airfare, Hotel Rooms

The online travel service offers lower rates if trip components are booked as part of a package.

June 30, 2003|Jerry Hirsch | Times Staff Writer

Travelers are finding that, in some instances, the less they know about the cost of a specific hotel or flight, the bigger the discount.

That's because new services being offered by the large online travel companies reward consumers for bundling typically separate hotel and air bookings rather than purchasing the components of a trip a la carte.

Travelocity.com, the nation's second-largest online travel company, will launch such a service today, joining market leader Expedia Inc., which offers a similar program.

Both companies are using the programs to attract traffic to their Web sites in an increasingly competitive travel market that has seen online bookings reach about $22 billion annually and has captured about 15% of all domestic travel reservations.

This pricing strategy plays off the willingness of airlines and hotels to offer lower prices when they can hide the actual charges from consumers.

The opaqueness of this formula gives hotels and airlines access to a massive distribution network without having to discount the entire store, said Michelle Peluso, chief operating officer of Fort Worth-based Travelocity.

And it protects the airlines and hotels from one of the most common gripes in the travel industry -- knowing that the guy in the next seat paid $100 less for his ticket.

Such a system also helps hotels get guests to book reservations well in advance. Travelers typically book air travel first and then wait to find a hotel room, Peluso said.

The savings from a package deal can be significant, depending on the airline and hotel and what their inventories look like at the time of travel.

In one Travelocity test, two people traveling from Los Angeles to Hawaii, picking United Airlines and the Marc Maui Vista Resort together, would pay $1,329 for a Labor Day weekend trip. If the hotel and air travel were booked separately on Travelocity -- using the same resort and American Trans Air, the lowest-priced airline for that itinerary -- the vacation would total $1,596.

Hilton Hotels Corp., the Beverly Hills-based owner of multiple lodging brands, including Hilton, Doubletree and Embassy Suites, has looked at finding airline partners with which to bundle room sales but has decided to hold off for now, instead hoping that an uptick in the economy will increase room reservations and nightly rates, spokesman Marc Grossman said.

"For now, bundling is an experiment," Grossman said. "But a lot of different pricing systems have been looked at in this industry."

About 10% of Hilton's business is booked online, mostly through its own Web sites, he said.

Although discount packages are nothing new in the travel industry, consumers typically had little choice over which airline they flew and which hotel they stayed at when purchasing the package, said Teri Franklin, product manager for online travel company Expedia.

But consumers like the combination of choice and discounts, Franklin said. Sales of Expedia packages tripled after the company launched its bundling program last year, she said.

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