AOL's service, which will search airline, hotel, and online travel agency sites, is part of AOL's larger effort to attract Web visitors beyond its 23 million subscribers. Dubbed "Pinpoint Travel," it will be available Web-wide, with no AOL branding on the site and no special incentives for AOL members.
The service is designed to appeal to consumers who have become sophisticated in airline pricing policies, thanks to the Internet.
"As the online travel business grew, we essentially gave transparency into pricing," said Jeffrey DeKorte, vice president-general manager of AOL's travel properties. "We taught the consumer that when you sit on an airplane, the person next to you probably has a cheaper seat."
The idea behind meta search engines is that by searching vast numbers of airlines at one time, the engine will return the best available price at that moment. Yahoo! last year also became involved with a similar service, buying meta-search engine FareChase.
Consumers who search using the meta engine must leave the site to make a purchase at either the airline's, hotel's, or travel agency's site. Marketers pay AOL on a cost-per-click basis for the referral, and hoteliers can also bid for higher placement in the results.
The service will search more than 500 airlines, including all major carriers except Southwest; and more than 85,000 hotels, which includes all major hotel operators except Marriott and Hilton, as well as online travel agencies.
AOL's new service is likely to shake up the online travel market, said Diane Clarkson, an analyst with Jupiter Research. "Travel is an extremely competitive environment. It's extremely price-sensitive, and there's not a lot of loyalty," Clarkson said. "Given that marketplace, another player coming in is really going to be increasing the competition." Jupiter Research estimates that online travel was a $54 billion industry in 2004, and will grow to 91 billion in 2009.
Among the competitors will be online travel agency Travelocity--which also has a relationship with AOL. Through March 2006, Travelocity is contracted as the exclusive travel listings provider for the AOL Travel Channel. Kayak does not include listings from Travelocity--or online travel agency Expedia--in its search results, at the request of those companies.
Travelocity spokesman Joel Frey criticized Kayak and other travel search engines for encouraging consumers to focus solely on price. "We're not convinced that any of the meta search engines are good for consumers, suppliers, or us. We see these engines as commoditizing travel at a time when we're working hard with suppliers to go in the opposite direction," said Frey in an e-mail statement.
AOL representatives maintain that Travelocity--used by 8 million AOL members--will appeal to different consumers than Pinpoint. DeKorte says that consumers who prefer one-stop shopping will continue to use Travelocity, while those who currently scour the Web looking for the best deals will choose the Kayak-powered site.
But Clarkson said she expects that consumers who have used Travelocity in the past for its "one-stop shopping" features won't think twice about trying out another service, such as Pinpoint Travel, instead. While it's true that some consumers just go to one travel site and others go to several, those who visit just one won't necessarily stick with that brand, she said.
For now, the AOL service is limited to round-trip airfares and hotel stays, with no options for trips that include more than one city or other extras, such as car rentals. The company hopes to add such services by the end of the year, said spokesman Brian Hoyt. AOL intends to use its search engine to promote the new service.