Orbitz, Hotwire Strike Customer-Sharing Deal

Mega-travel site Orbitz and online discount travel firm Hotwire, both backed by a consortium of the largest airline carriers in the U.S., said Thursday they have inked a marketing agreement that will provide each company’s customers direct access to the other’s fares and hotel rates.

As part of the deal, Orbitz will link to Hotwire’s directory of “opaque fares,” which are discounted wholesale tickets that conceal the airline’s identity and flight times until they are purchased. In return, Hotwire customers who want to select precise flight times, as well as choose among multiple carriers and flight options, will be able to access Orbitz via a link on its site.

According to the companies, the reciprocal link partnership will be a boon for both sites, allowing them to benefit from each other’s market strengths and target new customers.

Time and Money

“The agreement enables Orbitz to enhance its offerings to appeal to all kinds of travelers, from the most time-sensitive to the most price-sensitive,” said Orbitz chief executive officer Jeffrey Katz. “Our agreement with Hotwire means that consumers will find it fast and easy to shop and compare the best deals on the Web for both published and non-published prices.

Both companies said they will continue to function independently. Specific financial and revenue-sharing terms of the arrangement were not disclosed.

Filling a Gap

As the latest salvo in the escalating battle to capture a greater share of online travel sales, Orbitz’ deal with Hotwire to expand into opaque fares fills a critical gap in its offerings and stands to give the company an even greater competitive edge.

In a bid to stand out from online opaque fare pioneer Priceline.com (Nasdaq: PCLN), Hotwire allows users to receive a fixed-price discount fare before submitting their credit card data and making a purchase.

Niche rivals Travelocity (Nasdaq: TVLY) and Expedia (Nasdaq: EXPE) also have jumped on the opaque fare bandwagon, displaying the anonymous listings alongside their normal-priced fares. In addition, the two Internet travel agencies have recently stepped up their efforts to supply other exclusive low fares that they can negotiate with carriers.

Dog Fight

Although its service launched just one month ago, Orbitz — which is controlled by five airlines that account for a combined 85 percent of the U.S. airline market — has already had a major impact on the industry, besting even its own expectations for sales during its first few days of operation.

The Chicago-based company’s competitors, however, have mounted their own aggressive campaigns to steal some of Orbitz’ thunder.

Days after Orbitz went live, Travelocity announced an alliance to allow customers to make last-minute bookings. The company has also unfurled a national advertising campaign and beefed up customer service, moving the operation in-house instead of outsourcing it.

For their part, airlines such as Northwest and American have stepped up their use of the Internet to reach customers directly.