Travelocity Base Case

By David F. Carr  |  Posted 2006-09-06 Email Print this article Print
 
 
 
 
 
 
 

How improved Web site performance and customer service are helping to turn around this online travel service.

Travelocity Base Case Headquarters: 3150 Sabre Drive, Southlake, TX 76092
Phone: (682) 605-1000
Business: Online bookings of air, hotel and cruise reservations.
Chief Technology Officer: Barry Vandevier
Financials in 2005: Travelocity, a division of Sabre Holdings, contributed $830 million to Sabre's $2.5 billion in revenue. Sabre earned $196 million in 2005, but Travelocity had an operating loss of $2.8 million.
Challenge: Regain lost market share in the face of increased competition from other online travel agencies and the individual airlines, while trying to make up for reduced commissions.

BASELINE GOALS:

  • Return Travelocity business unit to profitability; it reported an operating loss of $2.8 million in 2005, down from losses of $100 million in 2003 and $20.5 million in 2004.
  • Improve Travelocity's revenue another 40% this year, to $1.2 billion.
  • Find the lowest airfare more reliably. The number of consumers who felt they didn't find a good price on Travelocity dropped from 18% in 2004 to 6% in 2005, a Keynote Systems survey shows.

    Travelocity: Rising in the Rankings

    Between 2004 and 2005, as Travelocity put a new version of its Web site software into production, it substantially improved its performance as measured by a Keynote Systems customer experience study.

    Keynote conducted its study of air travel booking Web sites, including those of the individual airlines, by recruiting a panel of 2,000 computer users to perform a series of common shopping tasks on each of the Web sites evaluated. In addition to polling users about their experiences, Keynote based its results on data gathered by a browser plug-in that let it track actual user behavior to detect, for example, problems such as confusing user interface or navigation schemes.

    2005 Rank Brand Impact* Conversion Impact** Customer Satisfaction***
    1 Orbitz Travelocity† Orbitz
    2 Expedia Orbitz Travelocity†
    3 Travelocity† Expedia Expedia

    † In 2004, Travelocity was ranked No. 6 for brand impact, No. 2 for conversion impact, and No. 4 for customer satisfaction.
    * Brand impact index: Based on metrics that indicate how positive or negative an image people have of the company, not the Web site. Keynote asks people to associate certain adjectives with the company for their impressions. Questions are asked before and after visting the Web site.
    ** Conversion impact index: Involves about eight metrics relating to how likely people are to engage with the site in the future (e.g., likely to return, likely to purchase, would recommend the site).
    *** Customer satisfaction index: Based on each quantitative metric used in the customer ratings process; essentially the quality of the site experience, as opposed to the impact of the experience measured by the brand and conversion indices.


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    David F. Carr David F. Carr is the Technology Editor for Baseline Magazine, a Ziff Davis publication focused on information technology and its management, with an emphasis on measurable, bottom-line results. He wrote two of Baseline's cover stories focused on the role of technology in disaster recovery, one focused on the response to the tsunami in Indonesia and another on the City of New Orleans after Hurricane Katrina.David has been the author or co-author of many Baseline Case Dissections on corporate technology successes and failures (such as the role of Kmart's inept supply chain implementation in its decline versus Wal-Mart or the successful use of technology to create new market opportunities for office furniture maker Herman Miller). He has also written about the FAA's halting attempts to modernize air traffic control, and in 2003 he traveled to Sierra Leone and Liberia to report on the role of technology in United Nations peacekeeping.David joined Baseline prior to the launch of the magazine in 2001 and helped define popular elements of the magazine such as Gotcha!, which offers cautionary tales about technology pitfalls and how to avoid them.
     
     
     
     
     
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