Online travel sites challenge Microsoft's Expedia

Priceline.com, Travelocity.com and Preview Travel today said they plan to form a broad marketing alliance to offer users access to each other's travel services on their Web sites and through their affiliates.

"This is a clearly a direct reponse to the combination that we are already providing on our site," said Suzi LeVine, a product manager at Expedia, which offers retail airfares as well as a "name-your-price" service for hotel room reservations. "We feel it is one thing to have a marketing alliance and another thing to deliver the entire set of services to customers on one site."

With many Internet companies washing away their profits because of advertising campaigns costing upwards of $100 million to draw users to an already crowded market, consolidations either in marketing efforts or outright mergers are becoming increasingly common.

In October, Travelocity, owned by Fort Worth, Texas-based Sabre Holdings, moved to merge with rival Preview Travel, based in San Francisco. Meanwhile Stamford, Conn.-based Priceline is embroiled in a lawsuit against Microsoft alleging that the Redmond, Wash.-based software giant treaded on Priceline's patented business model by introducing a similar "name your price" service on its Expedia travel site.

Under today's alliance, which still needs final approval by the companies, the companies plan to share their combined user base of more than 20 million travelers, generating incremental revenue each time they facilitate the sale of each others' products. The companies said their combined member base is nearly twice the size of any other Internet travel site.

New York-based research firm Jupiter Communications projects that the online consumer and business travel market will grow to $16.6 billion in 2003 from $4.2 billion this year.

Travelocity.com and Preview Travel customers will now be able to name their own prices through the Priceline service, while Priceline's customers will have access to Travelocity.com's and Preview Travel's retail fares.

"The nature of this agreement will allow each partner to better serve the needs of their customers, while enjoying the economic benefits associated with this alliance," Jim Hornthal, chairman of Preview Travel, said in a statement.