- Answer the following two questions from the case study below:
- The answer should contain 50-100 words each. Not more than 1 ½ page.
1. What business model does Orbitz adopt? Explain how business model works.
2. What is Orbitz's business strategy? By applying Porter's competitive scope, please describe what strategic position Orbitz has focused on?
3. Do you agree or disagree with the statement "Orbitz has a sustainable competitive advantage"?
When it comes to mobile apps and gauging their impact on consumers and business, the onlinetravel industry and its airline and hotel reservation systems are probably the best place to look.And there's no better company in this industry in developing mobile apps than Orbitz WorldwideInc. Orbitz connects consumers to plane tickets from 400 airlines, hotel rooms from 80,000 hotelsworldwide, as well as rental cars, cruises, and vacation packages.
Orbitz was launched in 2001 by five major airlines- Delta, United, Continental, Northwest, andAmerican, to compete with Internet travel companies such as Priceline, Travelocity, and Expedia,which were upending the travel industry. These companies have remained formidablecompetitors.From its very beginning, Orbitz distinguished itself as a leader in mobile technology. In 2006, itbecame the first Internet travel company to offer a mobile Web site where users could checkflight status for 27 airlines, search for hotels in the US and Cancun, Mexico, and access apersonal page with itineraries for Orbitz-booked trips.
During the years that followed, Orbiz made many enhancements to its mobile services. Itenabled mobile users to view average wait times for airport security lines, locate available Wi-Fiservices at airports, compute check-in delays and taxi line wait times, and view weather andtraffic conditions. In 2010, Orbitz redesigned its mobile Web site so that users of anyWebenabled device could access capabilities similar to any full-screen e-commerce site,including the ability to purchase flight tickets, book car rentals, and obtain hotel reservations. Likethe standard Orbitz Web site, the redesigned mobile site offers a Price Assurance service, whichguarantees customers an automatic refund if another Orbitz customer books the same servicefor less. Orbitz also developed apps that ran on iPhones, iPads and later Android devices thatcould perform the same functions.
Orbitz went first-to-market with an m-commerce site designed specifically for business users.The opportunity was huge, since most business travelers carry smartphones or tablets.
Corporate travelers typically must adhere to company rules specifying preferred vendors, costlimits, mandatory services, and expense documentation. Since each company has its ownbusiness "rules" for travel, the Orbitz m-commerce platform needed to be customized for eachfirm. Orbitz constructed a mobile Web site that could be accessed from any Web-enabled device.
The Orbitz for Business mobile Web site delivers the same set of tools enjoyed by the consumermarket while incorporating features that enable business travelers to adhere to companyguidelines-the ability to enter and modify the purpose of the trip, search results that giveprecedence to preferred vendors, and access to companyspecific reference data.
In 2011, the m-commerce site was again upgraded to respond to swiping gestures, expeditetouch screen transactions, and accommodate the small screen size of any Web-enabled mobiledevice. Orbitz's new proprietary global online travel agency platform creates mobile HTML5 Webpages on the fly from standard e-commerce Web pages. Mobile users can book vacationpackages, view the savings from simultaneously booking a flight and hotel room, and create anonline profile linked to their credit card to expedite the checkout process. GPS and improvedsearch capabilities enable consumers to locate nearby hotels and conduct price, distance, andrating comparisons; to compare flights and car rentals based on various criteria, includingtraveler type; and to access customer reviews. Orbitz also instituted mobile exclusive same-daydeals, called Mobile Steals, available both on the m-commerce site and through the Hotels byOrbitz app available for iPhone and Android devices. Proprietors are able to fill rooms that mightotherwise remain vacant, and consumers save up to 50 percent of the standard rate. While only12 to 14 percent of traditional e-commerce Web site shoppers want to reserve a room for the dayon which they are searching, smartphone and other mobile users book for the same nightbetween 50 to 60 percent of the time because they are more likely to be traveling and need aroom at the last minute.
Orbitz touts the ability to book a hotel room in just three taps. The new mobile Web site hasproduced a 110 percent increase in visits, a 145 percent increase in the conversion rate, and fourtimes the number of transactions compared to the original Orbitz m-commerce site. Orbitz hasbeen focusing on lodging because hotel bookings are more profitable than airline reservations.Priceline.com, the largest and most profitable online travel agency, generates approximately 90percent of its sales from hotels. Orbitz only had 27 percent of revenue from hotels in 2011.
Orbitz further enhanced its iOS and Android apps to cut down the number of steps required tosearch for and make reservations so that the entire process can take place on the mobile devicewithout redirecting the user to hotel, airline, or car rental Web sites to complete the transaction.
Orbitz now has apps for the iPhone, IPad, iPod Touch, Kindle Fire, and Android devices.Does all this investment in mobile technology make a difference? Chris Brown, Orbitz vicepresident in charge of product strategy, believes that although mobile transactions in 2012accounted for less than 10 percent of total Orbitz bookings, the ability to be a major player in therapidly escalating m-commerce market will pay off. Increased transaction speed provided byOrbitz mobile apps will attract new customers, especially those trying to book same-dayreservations, which account for about 50 percent of Orbitz's mobile car rental purchases.But the other online travel players also believe consumers will increasingly move to mobile tomake their travel plans, and they also have been making large investments in mobile Web sites,search tools, and apps. Priceline and TripAdvisor have rated highest in providing an engaging,enjoyable experience on their sites, and both continue to enjoy much stronger growth in uniquevisitors and visits than Expedia and Orbitz. Travelers are increasingly planning trips on sites suchas TripAdvisor, which aggregate offerings from a number of different online sources in one place.(TripAdvisor offers more than 100 million traveler reviews and obtains most of its revenue fromads and referrals to other travel sites.) TripAdvisor recently redesigned its Web site to showcustomers all the rates offered by online agents like Expedia, Priceline, and Travelocity in asingle list on its site. By using this"metasearch" capability, customers are able to find the lowestprices on a single screen without having to click on several links.