January 12, 2001, 4:03 PM — Straight out of Orlando, we bring you eTravelWorld confidential -- the unexpurgated tale of an industry trying to figure out exactly how technology will make everyone rich.
Speaking of money, Orbitz CEO Jeffrey Katz created the biggest buzz in his first public appearance by referring to his company as "a small Internet start-up." True enough, Orbitz does have only 50 employees to its name, but its airline owners are on the hook for a $300 million down payment to see if the company can engineer a significantly better travel-booking engine than anything that has come before it. Many audience members took umbrage at Katz's David-and-Goliath comparison. "It's kind of hard to trust him on anything else after he says that," one observer remarked.
Yet Katz can be somewhat forgiven because his company is challenging a decades-old travel technology system. Airlines and computer reservations systems run on Transaction Processing Facility mainframes that can bang out transactions like nobody's business. Orbitz is hoping its PC farm model will be the equivalent of cracking a previously unsolved differential equation in a world that has put a lot of money on the people who can figure out 2+2 the most times in a given day. Jeremy Wertheimer, founder of Cambridge, Mass.-based ITA Software's fare search engine, which holds the key to Orbitz's ability to search more fares and find lower prices than the establish travel technology players, faced a fair amount of skepticism during his presentation at the conference. It was clear that a belief in a better search engine is a religion that has yet to catch on with the masses.
The gap was particularly noticeable among the marketing folks and the techies. Some of the self-professed geeks in the trade show area admitted to secretly rooting for Orbitz. Why? "It's kind of like Revenge of the Nerds," one tech-side guy said. "The beautiful people are terrified some guy with horn-rimmed glasses is going to steal the homecoming queen."
Richard Barton, CEO of Redmond, Wash.-based Expedia Inc., downplayed Orbitz's potential impact, intimating that its new technology is little more than the flavor of the week.
"Right now, there's infinite demand for that product, but when reality sets in, I think they'll find something quite different. . . . Everything looks good on paper," he said.
And you might want to listen to Barton, because the Big Five airlines backing Orbitz have decided he's one of their main competitors. Despite the fact that Expedia and its main rival, Fort Worth, Texas-based Travelocity.com Inc., probably won't see a profit until 2002 at the earliest, Orbitz is spending three times more than its takes to get elected president, just for a shot at competing with those two online travel agencies. Katz minced no words when asked about his airline owners and the potential for them to monkey around with the distribution market.