Concerns about a bummer summer are forcing sites like Expedia and Priceline to offer creative, if risky, new incentives

by Christopher Palmeri

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Worried that rain may spoliation that long-overdue summer vacation? Priceline.com (PCLN) is oblation "Sunshine Guaranteed." The Norwalk (Conn.) online travel agency announced on June 2 that it will give customers 100% of the purchase price in the rear if it rains more than half an inch on at least moiety their holidays days. The offer is good for trips purchased through July 17 and taken by Sept. 7.

More than 100 destinations qualify, including like notoriously rainy places as London and Seattle. "They are afflicting to address grief points," explains Caroll Rheem, director of careful search in quest of PhoCusWright, an online travel careful search firm. "They’re trying to eliminate reasons consumers have for not booking a trip."

It’s already looking like a bummer summer without ceasing account of the travel industry. At the fit of the season the Travel Industry Assn. predicted a 1.2% decline in trips domestically, still that since looks overly optimistic. Since then, elastic fluid prices have continued to climb and airlines wish cut back without ceasing flights, raising fares and baggage handling fees to make up in spite of rising jet fuel costs. That’s forcing online excursion agencies to get even more aggressive, rolling back booking fees and offering passengers more guarantees. "We’ve eliminated fees on airline tickets, reduced fees on hotel rooms," says Priceline.com Chief Executive Jeffrey Boyd. "We think customers are concerned about high prices and we’re trying to give them a little bit of a reduction."

On June 16, Chicago’s Orbitz Worldwide (OWW) announced it would give customers cash back if the price of a trip dropped between the date of force and the departure. A bet, essentially, that airfares won’t falling for the rest of summer. Rival Expedia (EXPE), based in Bellevue, Wash., is offering $50 in free elastic fluid to anyone booking three or more hotel nights on its seat in a cross-promotion with MasterCard (MA).

The online agencies are in a bit of a stitch and cover. Not only are they wrestling by cash-strapped consumers, they’re furthermore competing against airline, sail about line, and hotel companies that have accelerated their online marketing efforts in recent years. These "supplier" sites offer premium frequent-flier miles and other perks for booking directly with them. According to market researcher comScore (SCOR), 59% of online travel shoppers stop at the agency sites at the outset, presumably to comparison shop. But the majority of online travel revenues go to sites such as Marriott.com (MAR) and Continental.com (CAL). Last year the suppliers’ share of the $77 billion in online travel expenditures was 64%, up from 53% in 2003.

In recent months, the agency sites have been rolling out their own frequent-flier programs. Travelocity customers who sign up for its Rewards credit card earn points by reason of somewhat purchases. Rack up 20,000 points and you get a $400 credit towards a Travelocity bargain for. Using that could be easier than trying to cash in airline miles, because the airlines have been increasing their blackout dates and raising the point levels needed for free trips. Expedia and Orbitz offer similar cards. "We’re restoring rewards to a world that feels less rewarding," says Jeffrey Glueck, chief marketing officer at Travelocity.

There are signs these efforts are winning new customers. Visitors to the online agencies as a total were up 8% in May, according to comScore, while traffic at hotel sites was flat. Priceline.com saw the cost of travel booked on its site vault 76% in the first quarter, to $1.7 billion, as new promotions generated more business. And while shares of Expedia and Orbitz have lost altitude along by the rest of the travel industry in the past year, Price­line.com has seen its stock price hollow to a recent $131 a partake. Nobody wants rain on a intermission.