Travelocity on the horns of a pricey dilemma
September 25, 2007
I used to have a quilt in the spare room and whenever a visitor toured the house I’d say, “See that quilt. It should have been $200 but I got it for twenty.” Somebody at Macy’s in New York priced it incorrectly in the Columbus Day sale and the cashier was prepared to give it to me at the printed price.
Good for Macy’s, but I have to say if the the response had been “Sorry sir, that’s a mistake, let me correct that,” I would have probably shrugged my shoulders and walked away. I doubt if I would have written to the papers, started a blog or taken Macy’s to court over something that was clearly human error. Any fool could see it’s worth more than $20.
$35 at least.
I am pretty sure I would have felt the same about the Travelocity Fiji debacle. When the online travel agent posted a $51 fare to Fiji - or more precisely a nil fare with $51 tax - the news bagatelled round FlyerTalk and people snapped it up as if they had just spotted a dropped $1000 bill.
If I had been one of their number and Travelocity had subsequently told me it was an honest mistake, again I would have accepted that and moved on.
However Travelocity decided to honour the price and BusinessWeek has an article about how they came to that decision. Better yet, they have a video interview of their CEO laying out the facts (she’s smiling, but you can tell she’s bitter). I recommend watching it.
An important point is that many of these customers did not actually want to fly to Fiji - just as I had never been in the market for an American quilt. They were just chancing their arms and rather than calling their bluff and wishing them a fun 10 hour flight or whatever, Travelocity responded by offering them vouchers for domestic flights instead.
This whole situation was further complicated by a recent in-house training programme concerning the OTA’s service guarantee which had only just stopped short of telling everybody in the company that if Travelocity accidentally posts a nil fare to the moon they should honour it. Travelocity, understandably decided it couldn’t say one thing and then act as if this was some sort of special case, existing outside the rule.
Was it worth taking the suggested $2m hit by meeting these costs? I can absolutely see the PR case. However I’d like more proof that - at the final weigh-in - it made good corporate sense. Did they do enough to get customers and the media on their side? And have they subsequently done enough to get maximum coverage for the Travelocity position? If I had spent $2m I would want Travelocity to be celebrated as the OTA which kept its word.
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