The worldwide online travel market is expected to increase from $5 billion in 1999 to $30 billion by the fourth quarter of 2001, according to projections by GartnerGroup Inc., which also warned leisure travel companies without an Internet presence of difficult times ahead.
“For most leisure travel firms that are not yet successfully online, it’s already too late,” said Lou Marcoccio, research director for GartnerGroup’s e-Business Transformation Service. “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. 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.”
Companies that are not yet selling most of their services online may have to develop a plan for transitioning out of this business or attempt to be acquired, according to Gartner Group, which said it may also be possible for such firms to partner with other online services that are already established.
“Middle-tier companies are at most risk and must take more immediate action, while lower-tier companies may be capable of selling some services through online auctions or reseller sites,” Marcoccio said. “Companies that are already successfully providing services online should be aware that this success may have made them attractive candidates for acquisition.”
A GartnerGroup study of Internet users found that 75 percent of respondents said they research schedules, flights, and discounts and travel packages (a 400 percent increase from the fourth quarter of 1998). In addition, 16 percent book flights and pay for tickets online (an 800 percent increase since the fourth quarter of 1998).
According to GartnerGroup analysts, the respondents to the survey cited two key reasons for not purchasing flights on the Internet. The respondents said one reason was that they had further questions to ask a booking agent regarding special needs. The other reason was a perception that they needed a more flexible ticket and ordering process.
More than 70 percent of respondents indicated they would buy all personal travel tickets over the Internet if more choices were available–such as showing all possible rates and conditions for each flight, providing more seat assignment choices, and providing the ability to handle special meal and boarding requirements online–or if the entire transaction process was easier to complete. Nearly 30 percent responded that the process to buy tickets is too complicated or they are not yet comfortable with Internet security.
A Technographics® Report by Forrester Research has found that travel Web sites suffer from many of the same problems as online retailers, specifically, a lack of customer loyalty. Forrester’s research found that online travel consumers rely upon convenience, abundant information, and low prices, and they are willing to research multiple sites for the best deals.
“Forrester found that nearly 70 percent of bookers use multiple sites when arranging travel on the Net,” said Christopher Kelley, associate analyst in Technographics Data & Analysis. “Web travelers can’t resist the convenience of booking during off-hours, comparing competitor rates, and ultimately, finding the best fares online.”
Even with an overwhelming majority of disloyal travel bookers (those who research and book at multiple sites), some sites attract more loyalty than others, Forrester found. The one-stop-shop nature of online travel agencies effectively attracts bookers that rely on one site for all their booking needs. Suppliers, on the other hand, have a hard time attracting loyal bookers, but they successfully lure disloyal bookers away from agencies with special fares and mileage perks available exclusively online. Although portals have the greatest reach of all travel sites, they get the lowest percentage of bookers from all three segments.
“We see little changing in the way of online travel loyalty, with the exception of disloyal travel bookers eventually settling down and booking at only three or four sites, versus the current eight or more,” Kelley said. “Conversely, both loyal and curious bookers will be tempted to stray as they become more experienced and are used to travel deals from other sites.”