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Travel Web sites regroup as bookings fade

InfoWorld
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By Ashlee Vance

(IDG) -- Several travel Web sites were already beginning to see sharp drop-offs in online reservations this week, as the troubles affecting the U.S. airline industry carried over to its online counterparts.

As many expected, U.S. carriers were punished Monday when the financial markets opened, with investors sending the companies' stock prices into a tailspin. Obvious concerns arose as to how airlines would cope with immediate losses suffered as a result of airport closures after last week's terrorist attacks against the U.S. and how the companies would fair in the long term if customers shied away from flying.

These issues affected travel Web sites, pushing reservation numbers lower and, conversely, call-center help requests through the roof.

Orbitz, a Web travel company backed by several of the country's largest airlines, began feeling the cutback in consumer spending the day of the terrorist attacks.

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"Traffic on the site has been down dramatically, and that started almost immediately last Tuesday," said Dawn Doty, a spokeswoman at Orbitz.

While site traffic has fallen, Orbitz customers have flocked to the company's customer service call centers, looking for help with everything form re-booking flights to locating helpful logistical information. Like many travel-oriented Web sites, Orbitz has updated its homepage with information such as airline contacts, emergency phone numbers and advisories from the U.S. Federal Aviation Administration (FAA).

On Monday, the company was posting the average hold time for a customer service representative on its Web site. At 11 a.m. Central time, it estimated customers would have to wait approximately 35 minutes to talk with an Orbitz staffer, Doty said.

Expedia shed more light on its recent troubles, announcing that new reservation bookings declined between 60 percent and 65 percent when compared to numbers in the week before the attack, according to a statement.

The company took less of a hit Monday as new bookings fell 55 percent below the same day a week earlier -- before the terrorists hit.

The figures did not include a significant number of cancellations caused by disruptions to travel services caused by the recent incidents, the company said.

"Any negative impact on American travel, we hope, will only be in the short term," a company representative said. "As far as the business, we are still assessing what impact these despicable acts are having and will on our business."

Priceline.com had temporarily shut down part of its service last week, hesitating to book any flights in the near term for customers, said Brian Ek, a company spokesman.

"If you wanted to book a flight that departed anywhere, we were not accepting that request up until (Sunday) at midnight," he said.

The company declined to comment on current reservation volumes.

While some companies were reluctant to discuss the immediate impact of the attacks on their business, one industry analyst has already seen a marked decline in bookings.

"The sites are running at about one-third their normal volume," said Thomas Underwood, vice president of equity research at Legg Mason.

Even though the sites appeared to be struggling, Underwood was confident major sites such as Expedia and Priceline.com would be able to weather the storm given their relatively strong financial position.

"They have very strong balance sheets, unlike the airline industry, and were all profitable heading into the event," Underwood said.

As the airlines battle to regain their stability, they may turn to their online partners for help in keeping costs as low as possible, Underwood said.

"The airlines will likely want to work with their distributors very closely and improve on routes and scheduling," he added.

Travelocity.com already has found many of the airlines more flexible than usual with refunds, cancellations and re-booking procedures, according to a company spokeswoman.

"The airlines have relaxed their restrictions on tickets, where in the past they (might) not have been refundable," the spokeswoman said.

Shares of many major airlines were punished in Monday's trading, as carriers such as Continental Airlines faced massive layoffs and announced large cutbacks in their flight schedules. Continental's shares fell almost 50 percent to $20.05. UAL Corp. -- the holding company for United Air Lines -- also saw its stock plummet 43 percent to $17.50. Both airlines trade on the New York Stock Exchange, which opened Monday after being shut down for the longest period in its history.

The online travel specialists did not fare much better, with Expedia dropping 33 percent to $24 per share, and Travelocity slumping almost 43 percent to $12.56 on the Nasdaq exchange.




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