Online Travel Expected to Fly High

The online travel industry is on the rebound after a late 2001 decrease, according to Jupiter Media Metrix. Jupiter analysts forecast that online sales of travel (air, car, cruise and hotel) will grow to $64 billion by 2007 – more than double the $24 billion transacted in 2001.

The January 2002 Jupiter Consumer Survey revealed that 77 percent of consumers who research and/or purchase their travel online visit more than one Web site to compare prices. The Internet will account for 22 percent of all travel bookings (i.e., channel share) in 2007 – up from 11 percent in 2001.

“While the travel industry took a strong hit in the wake of the events of September 11, the Internet as a channel for booking travel is not only growing stronger, but actually becoming the method of choice for many consumers and businesses for both bookings and information,” said Jupiter analyst Jared Blank. “A tight economy for the past year, coupled with the aftermath of September 11, is pushing consumers to the Web for travel deals in penny-pinching times. Travel companies must point out good values to their customers, such as packages or cruise specials that customers may not have thought of or found otherwise.”

Jupiter analysts attribute the jump in channel share to the anticipated growth in corporate travel bookings. According to Jupiter analysts, cost-containment concerns will push companies to allocate budget for corporate online booking solutions, which will enable business travelers to actually purchase their travel online, as opposed to just use the Web for travel research and information. Managed online travel – with airline tickets accounting for the bulk of all online bookings – will grow more than 400 percent to $27 billion by 2007 – up from only $5 billion in 2001. Channel share for the managed business travel sector will quadruple from seven percent in 2001 to 26 percent by 2007.

Additional findings include:

• Airline tickets will account for the largest portion of online travel sales in 2007: $40 billion, or 28 percent channel share (up from $16 billion and 15 percent in 2001).
• Online car rental bookings will grow from $2 billion in 2001 (13 percent channel share) to over $7 billion in 2007, representing 24 percent of all car bookings.
• Jupiter analysts forecast that the percentage of hotel reservations booked online will double between 2001 and 2007; from seven percent ($5 billion) to 16 percent ($15 billion).
• Although cruise and tour sales booked online will only account for $1.8 billion in 2007, Jupiter analysts expect investments in online marketing initiatives for those products will boost off-line bookings.

“Online sales of cruise and tours are a great case study for the way in which the Web will be used more and more as a tool to influence off-line purchases. Because leisure cruises and tour vacation packages are high-consideration products, the Internet will mostly serve as a sales lead and information channel. Cruise lines must plaster their Web sites with their phone numbers and email addresses, so customers can easily reach them with questions,” Blank said.

Although U.S. online travel browsers and buyers often decide the duration (73 percent), dates (81 percent) and destination (89 percent) of their trip prior to starting their travel research online, only 41 percent had made a decision about their trip budget. According to Jupiter analysts, these findings suggest that travel companies should use the Internet to up-sell travelers on vacation options such as packages, cruises and other deals.

The Jupiter survey also indicated that 69 percent of leisure travelers and 49 percent of business travelers expect to travel the same amount this year as last, although it is more likely to be by car or a short distance trip. In fact, an October 2001 Industry Report from the National Tour Association’s (NTA) Research and Development Council indicates that 54 percent of leisure trips are weekend getaways of less than four nights with travelers not venturing that far from home.

The Jupiter findings are good news for the travel industry, a sector that was dramatically affected online and offline by the events of Sept. 11. Optimistically, a March 2002 Industry Report from the NTA cites the results of a Conde Nast Traveler poll:

• 71 percent of their readers have flown since Sept. 11 for a leisure trip
• 71 percent have booked a leisure trip to take place in the next six months
• 78 percent stated that nothing will stop them from traveling