Expedia Learns People Like To Hold a Fare Before Buying

It’s been about 2 and a half years since I wrote about Options Away, a company that allows people to lock in a fare for up to a week before purchasing. This service has now caught Expedia’s eye, and you can now use this service under the TripLock brand name on flights you book at the online travel agent’s sites. If there’s one thing Expedia is good at, it’s testing, testing, and testing again. Clearly it’s seeing positive results with this or this wouldn’t have rolled out. Expedia is keeping the numbers close to its vest, but I was given a couple of interesting little nuggets.

As a brief refresher, Options Away sets a price for someone to pay if they want to lock in a fare. Once people pay the fee, then Options Away takes all the risk. If the fare goes up, then Options Away eats the fare difference. (If it goes down, then the travelers gets the upside benefit and pays less.) Clearly since the company is still in business, this plan seems to be working.

What Options Away on its own lacked, however, was huge volume. Yes it has acquired other partners since then, but Expedia is the big fish. As mentioned, Expedia is a company that loves to test, so it’s particularly interesting to me to see how Expedia displays all this. Your version of the website might look different than mine at any given point in time since they do so much beta testing, but here’s what I know.

Expedia sent me a screenshot of the hold option that showed a “Hold” button in the flight results display but I don’t see that. Mine only says “Select” and then when I do, I have the option to put that flight on hold on the next screen. If I choose to hold, it gives me this:

Just as Options Away does on its own website, Expedia gives different pricing options depending upon how long you want to lock in the fare. These prices will fluctuate depending upon how far in advance you’re looking to book and how availability looks at any given time. In this case, it would seem awfully silly to me to spend $32 to hold a $135 fare for a week. Even paying $10 to hold for two days isn’t a great value since I can always cancel a ticket without penalty within 24 hours of purchase anyway. But this is just a bad example. Here’s one where there’s better value.

You won’t see this on every itinerary. My couple of international searches didn’t give the option to hold. And others gave me this error:

So clearly not all itineraries are eligible, but many are. With all this volume, I really wanted to know how well it was working. We can assume it’s doing well or Expedia wouldn’t have rolled it out, but how well? That’s hard to find out. Let’s think about this from a rational perspective.

It does make sense for Expedia. After all, the company is competing with airline websites. While Expedia doesn’t seem to really care all that much about selling airline tickets, it knows that getting someone in the door could very well result in hotel or package sales, where the big money is. So it does want to get people to buy airline tickets.

Offering the hold option makes sense psychologically. If people want to hold a flight, then they can do it on Expedia. At that point, they’ll be locked in to buying through Expedia instead of going directly to the airline website. It’s a sunk cost, and once it’s been paid, people could still book anywhere if the fare hasn’t gone up. But it will build a false bond to Expedia and people are more likely to book there.

What do the numbers say? I couldn’t get uptake numbers, unsurprisingly, but I could get something. Expedia did put out a little research report on this. Much of this is data from surveys, which don’t seem all that useful to me in this case. People will say they’ll do one thing but actually do something different. But there are some interesting tidbits showing that 20 percent of people who use TripLock do it within 10 days of departure. The average is 42 days out.

More interesting, perhaps, is what Expedia told me. The company says TripLock is “primarily being purchased by ‘Lookers,’ who previously abandoned their search. We also see good repeat customer rates as people become more accustomed to the process of holding a flight before purchasing. Of those that hold a flight, around a third end up booking that flight. Others will hold a different itinerary or date, or decide not to take the trip.”

Now we’re getting somewhere. If these are people who previously abandoned their searches, then that is good new revenue for Expedia. And that stat showing that a third of the people who hold flights end up booking is very telling. First of all, Expedia now monetizes the other two-thirds who don’t purchase the held fare. That’s more great revenue right there. But then there are the one-third who do book. You have to wonder how many of those people might have booked elsewhere if they hadn’t bought TripLock.

Though I can’t get exact numbers, it’s hard to see how this wouldn’t be a win for everyone.