online travel market changing

Filed in archive Technology on December 22, 2004

Seems there is some interesting change in this pioneer area of online business.

First IAC is about to restructure their online travel business:

"In a conference call this morning, Mr. Diller hinted that more transactions are on the way. "Consolidation is just the way of the world...this is going to continue, probably in every area, it certainly is happening in travel," said Mr. Diller. "To the extent that it is applicable to Expedia it will be able to act accordingly."

"Today's announcement also simplifies what many had criticized as one of the Internet's most complex corporate contraptions. IAC had snapped up a motley array of businesses during the Internet bust. While IAC had long promised to build synergies between businesses as diverse as online travel, concert ticket sales, and a dating service, analysts said it has struggled to meet its early targets. "The company was plagued by somewhat of a complexity discount with all these moving parts," said Sanjay Ayer, an equity analyst with Morningstar, Chicago."

Also kayak.com one of the new breed of online travel comparison agents like mobissimo.com has announced Series B funding with US$ 7 million. While I certainly like the simplicity and features of both sites - I wonder why so much money pours into these companies. Sophisticated travel comparison engines have been out there since 1999 and work pretty efficiently (although their data is somehow limited to back office booking engines). I wonder what makes these new start ups so valuable. Am I the only who does not get it?