Airlines Staking Claim to Burgeoning Online Travel Market

By 2003, online travel buying will generate $25.6 billion, according to Gomez, Inc., representing a fivefold increase since 1999. It also means that travel sites will need to work hard to attract, satisfy and retain existing customers.

A separate Gomez study found that, of the 92.7 million U.S. adult active Internet users, 54.7 million are online travel buyers, and there are an additional 2.9 million consumers poised to begin purchasing travel online within the next six months.

The leading industry players such as Expedia, Travelocity and Southwest Airlines have been successful in attracting consumers, eliciting purchase decisions and creating an overall experience that leaves customers satisfied with the process, thus generating customer loyalty and repeat purchase behavior, Gomez found. But only four of the top 10 sites visited by participants in the study achieved a satisfactory rating from customers in terms of their online experience. With 30.9 million Web users currently using the Internet to research their travel plans — but going offline to complete their purchase transactions — there remains an enormous untapped opportunity for online travel distributors.

“The online travel industry, for the most part, is leaving consumers unfulfilled,” said David Provost, senior travel analyst for Gomez. “In fact, survey participants were satisfied with less than half of the top sites they used to purchase travel services. There’s a major disconnect between consumer expectations and the service they’re receiving from many players in this still maturing industry.”

The biggest winners among online travel providers appear to be the airlines. According to data compiled by Jupiter Media Metrix, airline sites are growing faster than travel sites overall and are even narrowing the lead of online travel agencies. Unique visitors to all travel sites increased 23.5 percent from 24.4 million in February 2000 to 30.1 million in February 2001. Unique visitors to airline sites increased 26.1 percent, from 8.2 million to 10.4 million, while visitors to online travel agencies increased 7 percent, from 14.4 million to 15.4 million.

The top airline sites of February 2001, according to the Jupiter Media Metrix data, were Southwest Airlines, with 2.9 million unique visitors in February 2001, followed by United Airlines (2.5 million) and American Airlines (2.4 million). Compared to February 2000, these sites had traffic increases of 19.8 percent, 40.6 percent and 126.2 percent, respectively.

In contrast, the top online travel agencies of February 2001 were Travelocity with 6.9 million unique users, followed by Expedia Travel (6.8 million) and Priceline (3.0 million). Compared to February 2000, Travelocity was down 3 percent, Expedia was up 10.2 percent and Priceline was down 21.9 percent.

Travel agencies accounted for 90 percent of the online ad impressions served by the travel industry in February 2000, but decreased their share of impressions to 63 percent in February 2001, according to Jupiter Media Metrix’ AdRelevance division. Advertisers from the airline, destination and lodging industries increased their share of online ad impressions from 10 percent to 22 percent.

Unique Visitors to Travel Sites
Category Unique Visitors Percent
February 2000 February 2001
Travel Agencies 14,437,000 15,453,000 7.0%
Airlines 8,251,000 10,408,000 26.1%
Total Travel 24,378,000 30,112,000 23.5%
Source: Jupiter Media Metrix

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