Orbitz Worldwide CEO Barney Harford says the company is engaged in a second arbitration proceeding with Kayak, and this one involves Travelocity hotel bookings on Kayak.com.
Kayak currently offers a Book Kayak.com feature for hotels, where consumers book hotels on Kayak.com instead of being referred to a third-party website for completing the transactions. Kayak gets this hotel inventory through a private label partnership with Travelocity.
Harford, speaking today during the company's first quarter earnings call, said the Kayak-Travelocity deal is "absolutely inconsistent" with exclusivity provisions which Orbitz says it contracted for with Kayak.
"We do see this as a concerning development," Harford said, referring to Book Kayak.com.
Harford said the arbitration is in progress and, without specifying a timetable for completion, Orbitz expects "substantial progress" to be made during the second quarter. Travelocity says it is not a party to the Orbitz-Kayak arbitration proceedings.
Kayak declined to comment on Harford's statements.
Orbitz and Kayak already were in arbitration over their 2009 promotion agreement.
Orbitz believes the agreement gave it the right to be the exclusive online travel agency displayed in certain Kayak.com search results.
Kayak, meanwhile, has displayed Expedia ads without pricing in search results and now is taking hotel bookings from Travelocity.
The initial arbitration also involves what Kayak believes are over-payments to Orbitz.
The Orbitz-Kayak row is a key issue for both companies, but probably more so for Orbitz.
Orbitz blames part of its lackluster performance in its U.S. consumer businesses on decreased referrals from Kayak. Harford explained that Orbitz is more heavily reliant on metasearch companies than are other online travel agencies.
Harford also said Orbitz referrals have also declined from an unidentified "travel research site," and Orbitz has reduced its marketing spend there.
And, Kayak obviously would like to clean up the dispute so there are no more distractions -- with the Google-ITA Software acquisition now complete -- and adverse publicity as it gears up for its initial public offering.
Another IPO-hopeful company, HomeAway, also is involved in some litigation, but the TravelStorm lawsuit likely wasn't considered material to HomeAway and thus was not mentioned in its S-1 registration statement.