Craig Eisele on …..

June 27, 2012

On Orbitz, Mac Users Steered to Pricier Hotels

Filed under: Uncategorized — Mr. Craig @ 6:05 am

Orbitz Worldwide Inc. (OWW) has found that people who use Apple Inc.’s (AAPL) Mac computers spend as much as 30% more a night on hotels, so the online travel agency is starting to show them different, and sometimes costlier, travel options than Windows visitors see.

The Orbitz effort, which is in its early stages, demonstrates how tracking people’s online activities can use even seemingly innocuous information—in this case, the fact that customers are visiting Orbitz.com from a Mac—to start predicting their tastes and spending habits.

Orbitz executives confirmed that the company is experimenting with showing different hotel offers to Mac and PC visitors, but said the company isn’t showing the same room to different users at different prices. They also pointed out that users can opt to rank results by price.

Orbitz found Mac users on average spend $20 to $30 more a night on hotels than their PC counterparts, a significant margin given the site’s average nightly hotel booking is around $100, chief scientist Wai Gen Yee said. Mac users are 40% more likely to book a four- or five-star hotel than PC users, Mr. Yee said, and when Mac and PC users book the same hotel, Mac users tend to stay 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 said.

The sort of targeting undertaken by Orbitz is likely to become more commonplace as online retailers scramble to identify new ways in which people’s browsing data can be used to boost online sales. Orbitz lost $37 million in 2011 and its stock has fallen by more than 74% since its 2007 IPO.

The effort underscores how retailers are becoming bigger users of so-called predictive analytics, crunching reams of data to guess the future shopping habits of customers. The goal is to tailor offerings to people believed to have the highest “lifetime value” to the retailer.
Orbitz first confirmed Mac users’ preferences in October and began working them into the complicated mix of factors that determine its search results. The effect isn’t always obvious. In tests performed by The Wall Street Journal, search results for hotels in cities including Las Vegas, Orlando, Philadelphia and Boston were the same for both Macs and PCs. A New York search turned up more expensive hotels for Mac users, but only after the first 20 listed.

Other searches showed more significant differences. A Mac search for a hotel in Miami Beach for two nights in July displayed costlier boutique hotels on the first page of results, such as Sagamore, the Art Hotel and the Boulan South Beach, that weren’t displayed on the PC’s first page. Among hotels appearing in both searches, some pricier options (such as the $212 Eden Roc Renaissance and the $397 Fontainebleau) were listed higher on the Mac. Overall, hotels on the first page of the Mac search were about 11% more expensive than they were on the PC.

Similarly, hotels on the first page of results for Baton Rouge, La., appeared in different order for Mac and PC and were 13% more expensive in aggregate for the Mac search.

Rival travel sites Expedia Inc. (EXPE), Priceline.com Inc. (PCLN) and Travelocity, which is a unit of Sabre Holdings Corp., don’t use a person’s computer operating system when suggesting hotels, spokesmen said. Apple declined to comment.

Neil Sazant, president of Sagamore, reacted with a mix of admiration and concern to the algorithm. “That’s incredible, but I wouldn’t want to miss out on PC users,” he said. Mr. Sazant says about 15% of rooms at the 93-room hotel are booked through a mix of online sites like Orbitz and that appearing on the first page of results is important in those searches.

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