Online Travel Planning, Booking Continue to Rise

The number of online travelers has grown 190 percent from 29 million in 1996 to 85 million in 1999, according to a report by the Travel Industry Association of America (TIA).

The report, “Travelers’ Use of the Internet,” also found the correlation between the online population and travel is so strong that almost all Internet users are also travelers, with 93 percent of Internet users (91 million US adults) responding that they took at least one trip of 100 miles or more, one-way, away from home in 1999. More than 52 million online travelers used the Internet for this purpose in 1999, an increase of 54 percent from 1998. Internet travel planning has increased a remarkable 1,500 percent since 1996, the report found.

Online bookings have increased as well, with 32 percent of online travel planners making reservations online. This translates to 16.5 million online travelers, an increase of 146 percent from 1998. Nearly half (8.2 million) are frequent travelers, making five or more trips during the past year. Most travelers are satisfied with their online travel experience, with nearly one-half (45 percent) saying they would use the Internet more next year for travel planning or reservations, according to the report.

“It’s obvious from the increased use by American travelers that the Internet and online services have become a powerful part of the travel experience,” said William S. Norman, president and CEO of the Travel Industry Association. “The convenience of the Internet and its 24-hour accessibility offer travelers flexible options for researching, planning, or booking the travel product.”

The TIA’s report found that Internet usage is higher among travelers (53 percent) than all US adults (45 percent). While pleasure travelers’ Internet usage mirrors that of all travelers, business travelers are much more likely than total travelers to use the Internet (70 percent vs. 53 percent). When compared to all travelers, online travelers are more likely to be younger, have an annual household income above $75,000, to be college-educated, and work in a professional/managerial occupation. Among online travelers (85 million), 62 percent consult the Internet to get information on destinations or to check prices or schedules.

Sites Used by Online Travelers
Planning Travel Booking Travel
Search engines 62% Company sites 51%
Destination sites 51% Commercial sites 39%
Company sites 48% Search engines 32%
Commercial sites 36% Destination sites include cities, towns, etc.
Company sites include airlines, hotels, airlines, etc.
Commercial sites include Expedia, Priceline, etc.
Source: Travel Industry Association of America

The most popular type of Internet sites for travel planning are search engine Web sites such as Yahoo, Excite, or Lycos, which are used by most (62 percent) of online travel planners. Half of all online travel planners (51 percent) use destination sites for specific cities, states, or countries. Nearly half (48 percent) use company sites such as airline, hotel, rental car, or packaged tour sites. Commercial sites such as Microsoft Expedia, Travelocity, Priceline.com, and Sidewalk.com are used by more than one-third (36 percent) of all Internet travel planners.

While 52.2 million online travelers use the Internet to plan travel, only 16.5 million (32 percent) actually make travel reservations online, according to TIA’s report. Online travel reservations include actually booking or paying for an airline ticket, hotel room, rental car, or package tour. This is up from 6.7 million in 1998 and 5.4 million in 1997, representing a 206 percent increase over a two-year period.

While many travelers use the Internet to plan their trip, most are still hesitant to purchase their travel products online. In fact, 69 percent of online travelers look but don’t book online. This conversion rate is rising, however. It now stands at 31 percent, up from almost 20 percent in 1998, according to TIA. The top reasons for not booking travel online are security and customer service.

Among the 85 million travelers who are online, 38 percent say they do not currently use the Internet for travel planning or booking, yet 51 percent say they are likely to start using it next year.

The report is based on a telephone survey conducted among a representative sample of 1,200 US adults conducted in August of 1999.

According to Bear Stearns, which sponsored a panel discussion on Internet travel at the American Gaming, Lodging, and Leisure Summit, Internet travel sales will approach $30 billion by 2003. Online travel is already the largest Internet commerce category, but the projection for 2003 will still represent only a fraction of the $3.7 trillion estimated to be spent on worldwide travel sales.

“The potential for growth is staggering,” said James Kissane, Bear Stearns senior managing director and computer services analyst. “If you can capture even a fraction of the overall spending numbers, you can do extremely, extremely well.”

The battle for supremacy continues in the online travel market, according to Bear Stearns, and there is no category killer such as an eBay or Amazon.com. Companies that can build consumer recognition and consumer confidence are likely to do well because customers new to online commerce look for brands they know.

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