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ECommerceTimes.com

Online Travel Set To Take Off

By Paul A. Greenberg
Jan 11, 2000 12:00 AM PT

The growth of the online travel industry is unprecedented among online businesses, and will explode from $5 billion (US$) last year to $30 billion by the end of 2001, according to a new study from GartnerGroup.

Online Travel Set To Take Off

The study predicts that most, if not all, leisure travel companies will be coming online this year. "By the second quarter of 2000, airlines that do not offer easy-to use online reservations and ticketing will not remain profitable and will not have a competitive position in the leisure travel ticket sales market," said Lou Marcoccio, research director for GartnerGroup's e-business transformation service.

Marcoccio also observed that middle-tier companies are at the highest risk and will need to make their online presence known as soon as possible. Lower tier companies may still exercise their option to sell services through online auction sites or resellers.

Online Holiday Travel Boom

Results from the holiday season seem to support the report's conclusions. According to tracking firm PC Data, for example, the recent holiday season saw especially vigorous activity on online travel sites. Priceline.com was the clear winner in the competition, with 3.2 million unique home visitors during November, 1999, and the most Internet users shopping for information about air travel.

In a related PC Data Online survey of 4,101 home-based Internet users, age emerged as a factor in whether Internet users booked flights online. Sixty-eight percent of users between the ages of 18 and 34 booked their flights online or by telephone to an airline company, compared to 56 percent between the ages of 35 and 65.

PC Data's survey suggests that direct bookings by consumers via Internet or phone are virtually eliminating the middleman in these transactions. "Air travelers want information, but more importantly, want to know the shortest, easiest and least expensive path to book their flights," said Jeff Moulton, Internet analyst for PC Data Online.

Online Attraction for Travelers

The process of bidding on airline tickets online has proven to be attractive to travelers. Travelocity, Bestfares.com and priceline.com all let customers bid on what they will pay for a ticket to their chosen destination.

Online services that sell remaining seats on planes, trains and rooms in hotels are also attracting a lot of attention. LastMinuteTravel.com provides comparisons and links to 50 global travel and leisure providers, including 12 major airlines.

The service is now poised to begin the same offerings with bed and breakfast inns and various entertainment venues. Services like LastMinuteTravel.com rely on customers' needs for immediate bookings.

Users who find that they need to travel the same day or the next day are the target market for such services, which allow them to centralize their comparison shopping and make travel arrangements at the last minute. These sites are likely to draw increased attention due to the convenience factor.

Travel Industry of America reports that 10 percent of all family vacations are booked within three weeks from the time of travel.

Offline Agencies Could Be Left Behind

According to Marcoccio, it may already be too late for some travel companies to join the online community.

"For most leisure travel firms that are not yet successfully online, it's already too late," he said. "By the second quarter of 2000, nearly all leisure travel companies that do not offer competitively designed online reservations, ticket sales, and customizable travel information will be driven out of the business or acquired."

The key to designing the best travel Web sites? According to GartnerGroup's respondents, the main reasons for abandoned online bookings were no service agent to answer spontaneous questions and a perception that they needed a more flexible reservation and ticketing procedure.


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