Can Orbitiz SQUEEZE More Blood from These Rocks?

  • Like on Facebook
  • Share on Google+
  • Share on LinkedIn

Orbitz Worldwide (NYSE:OWW) came under heavy fire Tuesday after an article by the WSJ revealed that the online travel agency is starting to show Apple Inc. (NASDAQ:AAPL) users different, and often costlier, travel options than those provided to people using Microsoft Corp. (NASDAQ:MSFT) Windows. Now, Orbitz’s CEO is defending the controversial strategy.

After conducting research, Orbitz found that people using Macs to book travel accommodations spend as much as 30 percent more per night on hotels. On average, iFans spend $20 to $30 more each night. In fact, they are 40 percent more likely to book a four- or five-star hotel than PC users. Furthermore, when Mac and PC users booked the same hotel, Mac users usually stayed in more expensive rooms. “We had the intuition, and we were able to confirm it based on the data,” Orbitz chief technology officer Roger Liew told WSJ.

Although Orbitz is not marking up prices on the exact same hotel room for Mac users, but rather steering those users towards higher priced recommendations, the company still received a heavy dose of backlash. People tend to get upset when they feel manipulated to spend more money. Who would have thought, right? Orbitiz’s Facebook (NASDAQ:FB) page received a flood of comments ranging from “this practice is deceptive” to “screw you.” Late Tuesday, Barney Harford, chief executive officer, appeared on CNBC to clear the air.

Don’t Miss: Is This the Catalyst Microsoft Investors Have Been Awaiting?

Harford explained, “We feel really good about what we’re doing. We’re using technology to learn from what we see millions of customers doing on our websites to make better recommendations, and we know our customers get really confused when they see hundreds and hundreds of different hotel options. Fundamentally, our recommendation algorithms are just trying to find customers great deals by showing customers hotels that similar customers have booked.”

He also appeared on CNN, where he said, “I want to be really clear, there’s no way we are charging Mac users more for the same hotels. That would be absolute nonsense, we love Mac users.”

Orbitz’s data mining efforts have been sparked by chief executive Barney Harford who recruited analysts with backgrounds in Google (NASDAQ:GOOG) and eBay (NASDAQ:EBAY). The agency first confirmed user preferences in October, though distinctive results are not yet fully evident across the site. Other traditional factors, including location and history on the site, as well as the hotel’s popularity and promotions, also have an influence over results.

Rival travel sites Expedia (NASDAQ:EXPE), Priceline.com (NASDAQ:PCLN), and Travelocity don’t use a person’s computer operating system when suggesting hotels, spokesmen told WSJ.

Investor Insight: Is Facebook’s Rally a SHORT SQUEEZE?

More Articles About:

To contact the reporter on this story: staff.writers@wallstcheatsheet.com To contact the editor responsible for this story: editors@wallstcheatsheet.com

Yahoo Finance, Harvard Business Review, Market Watch, The Wall St. Journal, Financial Times, CNN Money, Fox Business