Online Travel Market Largely Avoids Economic Slowdown

Total online purchases of U.S. leisure and business will more than triple in the next five years, from $18 billion in 2000 to $63 billion in 2006, according to Jupiter Media Metrix.

“Amidst a softening economy, both consumers and businesses are increasingly in search of value for their precious travel dollars,” said Heidi Kim, Jupiter analyst. “The Internet will continue to grow as an important channel for information, products and services precisely because of its ability to help travelers find the best possible fares and rates. To increase their share of the growing online travel market, travel providers must vigilantly focus on increasing loyalty and wallet-share from each of their hard-won customers, in addition to converting customers who research online but purchase offline.”

Jupiter analysts, said that travel providers must target different messages to customers who purchase travel options online versus customers who research online but purchase offline. Online purchasers seek good prices, ease of use and effective service, but those researching travel purchases also need reassurance from providers about data-privacy, transaction-security and hidden fees.

A Jupiter Consumer Survey conducted in February 2001 found that 29 percent of U.S. online consumers research and purchase travel on the Internet; 29 percent research leisure travel online but ultimately purchase offline; and 42 percent are not yet using the Internet for travel shopping.

Those consumers shopping for travel online report they almost always check more than one site before purchasing: 10 percent of airline-ticket purchasers online check one site, while 60 percent visit two or three and 25 percent visit four or more sites; 10 percent of hotel bookers visit one site, while 43 percent visit two or three and 22 percent visit four or more; and 13 percent of car-rental bookers visit one site, while 36 percent visit two or three and 13 percent visit four or more.

To find the best value for their leisure and unmanaged business-travel dollar, consumers will use the Internet extensively to find the best travel deals available. U.S. online consumers booked $14 billion of leisure and unmanaged travel online in 2000, a figure that Jupiter expects to grow to $32 billion in 2006.

Because corporations are curbing business travel and IT budgets, the growth of online managed business-travel bookings should temporarily slow in the coming years. But over the next few years, as companies reinstate IT budgets and investments in cost-saving online booking solutions, total online managed business-travel bookings will mushroom from $4 billion in 2000 to $31 billion in 2006.


Top Travel Sites by Customer Satisfaction
Rank Property Unique
Audience

(000)
Customer
Satisfaction
1. Southwest Airlines 3,954 8.62
2. Expedia 8,172 8.09
3. Continental Airlines 1,707 7.97
4. Travelocity 7,966 7.94
5. United Airlines 2,408 7.76
6. Delta Airlines 3,374 7.73
7. US Airways 1,725 7.66
8. American Airlines 2,817 7.54
9. Northwest Airlines 1,756 7.51
10. Priceline.com 2,811 7.38
Source: Nielsen//NetRatings and Harris Interactive

According to Media Metrix data from the fourth quarter of 2000, sites that had the highest composition of Web users at home who reported purchasing travel online in the previous six months were: CheapTickets.com, with 48 percent, followed by Boston.com with 46.5 percent and Southwest.com with 43.1 percent.

Southwest Airlines captured the top ranking in online travel customer satisfaction among major travel sites by scoring an 8.62 out of 10, according to Nielsen//NetRatings and Harris Interactive. Expedia followed Southwest, scoring an 8.09. Continental Airlines generated a 7.97 rating and had 1.7 million visitors.

“Online travel agencies and airline sites alike are competing for traveler dollars by offering an ever increasing range of options, including complete travel planning, vacation packages, last minutes flight promotions, and frequent flyer programs,” said Sean Kaldor, vice president of eCommerce, NetRatings.

An eCommercePulse study based on an online survey of more than 39,000 Web users by NetRatings and Harris Interactive found that spending for the online travel sector totaled more than $1.03 billion in March 2001, jumping 59 percent from April 2000. Offline spending generated by online travel shopping produced an additional $506 million dollars in revenue.

“Travel is continually the largest online shopping category. To maintain this high level of online spending and aggressive growth, the industry continues to entice shoppers with new innovations such as Hotwire and the impending launch of Orbitz,” Kaldor said.

Want to discuss online travel or e-commerce in general? Visit the CyberAtlas E-Commerce Forum.

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