At first blush, the Orbitz IPO seems likely to benefit from the success of Expedia and other online travel players. But Orbitz is losing money. A look at where it gets its revenues tells the story:
AGENCY FEES AND COMMISSIONS
Orbitz' IPO filing shows that the per-ticket fees it gets from
airlines will fall in coming years. Orbitz hopes to make that
up with new businesses, such as running Web sites for airlines.
ORBITZ: 72%, EXPEDIA: 45%
RESERVATION FEES FROM CONSUMERS
In December, Orbitz added a minimum $5-per-ticket fee on air
travel, up to $10 per reservation. The fees often make tickets
from Orbitz more expensive than those from Expedia, undercut-
ting the marketing message that it is the low-cost travel site.
ORBITZ: 19, EXPEDIA: 0
Expedia makes most of its money by buying hotel rooms and
vacation packages at a bulk rate and reselling them at a
higher price, leading to much higher profits. Orbitz hasn't
gotten into this part of the business yet.
ORBITZ: 0, EXPEDIA: 50
Figures are the percent of revenues in the first quarter of 2002
Data: Securities & Exchange Commission filings