Online Travelers Look for Price Breaks

According to research by Cyber Dialogue, 27 million adults shopped online for travel and leisure services in 1999, doubling 1998’s total of 13.4 million.

Online travel shoppers now comprise more than one-third of the total online population, and nearly half of all men online (44 percent) turn to the Web for travel and leisure purchases. These consumers, who spend $500 more per year online than the general online user, are currently the focus of a battle involving T2, the code name of a collaborative travel portal proposed by four major airline carriers.

The issues surrounding the airlines’ proposed travel portal are amplified by Cyber Dialogue’s finding that more than three-quarters of online travel shoppers agree or strongly agree that brands are more important online than offline. Specifically, online travel shoppers are twice as likely as the general online population to make a different airline purchase based on information found on the Web.

“Established travel-centric Web properties such as Travelocity, Expedia and Priceline must focus on understanding their customers to overcome the brand equity the major airlines will be able to collectively leverage online,” said Qaalfa Dibeehi, director of Cyber Dialogue’s Internet Consumer Practice. “With the online travel shopping segment growing so rapidly, having the ability to establish lifelong customer relationships will be the key factor in reaching this affluent, brand-sensitive and shopping-intensive group.”

A survey by PhoCusWright found that among online travelers, price, above all, is the motivating factor for purchasing airline tickets online. Sixty-one percent of online travelers responding to the survey cite “price” as the most important factor in buying an airline ticket, while only 15 percent cite “getting the best connections” and another 15 percent, “using a preferred airline.” Nine percent cite “other.”

Most Important Factor
When Buying Airline Tickets
Price 61%
Getting best connections 15%
Using preferred airline 15%
Other 9%
Source: PhoCusWright

According to PhoCusWright, because of the consumers’ tendency to gravitate toward price, travel agencies have the edge over suppliers when it comes to serving the online customer. More than 70 percent of the online travelers express confidence that booking through an online travel agency or an offline travel agency will get them the best price. But only 47 percent think they can get the best deal going direct to the carriers.

“These figures do not necessarily mean the consumer always expects a lower price when buying travel online,” said Lorraine Sileo, vice president of information services for PhoCusWright, Inc. “It simply means that consumers expect to get the comprehensive information they need online to make an informed decision based on price and value.”

The PhoCusWright survey also found that price is the best means to attract new customers. When travelers who haven’t bought online are asked what could encourage them to do so, 64 percent say saving money would make them much more interested. No other benefit — saving time, getting bonus miles, taking control, obtaining better information — gets anywhere close to that level of response.

Cyber Dialogue found that online travel shoppers spend $2,517 in online purchases a year, which is $500 more than the average online adult shopper spends. In addition, online travel shoppers spend an average of $705 per transaction, which is nearly$200 more than that of the general online user ($517).

Other Cyber Dialogue findings include:

  • 4.2 million online adults participate in travel-oriented online reward programs
  • 59 percent of Internet users go online for travel or recreation content; third to only news (74 percent) and any entertainment content (70 percent)
  • Online adults make an average of 3.3 online travel arrangement transactions per year

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