CEO: Orbitz 'Needs More Money Than God'

Airlines ante up to help site break new ground


In his first public speech since taking the helm of Orbitz, the controversial ticketing Web site that's due to launch next June, CEO Jeffrey Katz last week said the online travel latecomer needs "more money than God" to make its grandiose technical plans work.

And Orbitz needs to break new technical ground, because the first movers in the online travel business moved long ago, he said.

"For his model of doing business, he's right," said Michelle Peluso, CEO of New York-based online travel package supplier "They have a huge customer acquisition strategy, and that costs big bucks."

John Ackermann, CEO of Waltham, Mass.-based corporate travel supplier e-Travel Inc., an Oracle Corp. subsidiary, called the initial investment in Orbitz "staggering." He said, "It's hard to imagine who else would be willing to make that kind of investment on largely unproven technology."

Katz said an advanced search engine being built by Orbitz would have never seen the light of day were it not for the $300 million being pumped into the venture by United Air Lines Inc., American Airlines Inc., Delta Air Lines Inc., Northwest Airlines Inc. and Continental Airlines Inc.

The search engine - being built with help from ITA Software Inc. in Cambridge, Mass. - will quickly sort through every conceivable fare alternative and pump the information out to users of its Web site. That kind of capability has long been a goal of the companies that operate the big computerized reservation systems.

Katz himself looked at the idea of developing such a search engine when he was managing Sabre Inc.'s reservations system during the mid-1990s. At the time, Sabre decided the project would be "too complex" to tackle, he said. But now, he added, "it turns out you only need more money than God to make it work."

For example, Katz said, Orbitz plans to install a PC server farm that can handle volumes of users "on the scale of an Amazon from the get-go." Orbitz then plans to have at least 100,000 users try out the site during a beta-test period that's scheduled to start in February.

Still, as travel sites Inc. and Expedia Inc. each approach $2 billion in annual bookings, Orbitz's launch has been delayed until June.

"If the strategy was still [just to] get in fast, we'd already be dead," Katz said.

Copyright © 2000 IDG Communications, Inc.

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