Travel Industry Boosted by Bargain-Hunters

Global discord, a sluggish economy, and high unemployment rates have not deterred Internet users from grabbing online travel bargains, a survey by Forrester Research finds.

An online survey of nearly 9,000 households in the U.S. and Canada revealed that nearly 26 million U.S. households – 43 percent of Web travel households – will book leisure travel online in 2002, 12 percent more than in 2001. In 2002, when Web travelers will spend just under 30 percent of their leisure travel budgets online, leisure travel will drive $22.6 billion in revenue. By 2007, 32 percent more households will spend 39 percent of their travel budgets online, generating $49.7 billion.

“Without the Internet, the travel industry’s financial performance would be even worse than we’re now seeing,” said Henry H. Harteveldt, senior analyst at Forrester. “More than six in 10 U.S. households research their leisure travel online today because they know that’s where they’ll find the best deals.”

Online travel shoppers are leaving loyalty at home, as 65 percent of online travelers do not view themselves as brand-loyal. Harteveldt comments, “As much as online travel bookers love the Web, they are not loyal to the companies from which they buy. Travel companies are faced with the challenge of making the Web as functional as offline options and ensuring that the best values are always online.”

Forrester also found that 40 percent of travelers feel they are receiving too much email, so messages need to be relevant, and more than 40 percent of business travelers say that they want broadband Internet access in their rooms.

Dr. Suzanne Cook, senior vice president of research for the Travel Industry Association of America (TIA), comments on the bargain-shopping, “Travelers are continuing to find ways to economize on their vacations by taking shorter trips, traveling shorter distances and participating in less expensive activities.”

A telephone survey conducted by the TIA of 1,300 U.S. adults found that American travelers plan to take 157.8 million person-trips (one person traveling 50+ miles, one-way, away from home or spending one or more overnights on a trip) during September, October, and November 2002, resulting in the highest fall 2002 travel intentions in six years.

According to the TIA, 79 percent of all past year travelers say they will travel this fall. In addition, 17 percent say they will travel more this fall than last, slightly higher than fall 2001 travel intentions (14 percent); 53 percent say they will travel the same amount as last fall; 84 percent say that they are planning a leisure trip; 19 percent plan to travel for business or convention purposes; and 9 percent will travel for some other reason.

“These numbers send a powerful message about the popularity of the U.S. travel product,” remarked Cook. “But while travel volume looks strong this fall, travel spending is likely to remain depressed, as consumers remain concerned about their personal finances and finding time to travel.”

The TIA’s September Travel Price Index (TPI) – a system that tracks U.S. travel prices for lodging, gasoline, airfares, and other segments – measured a 2.1 percent decline in September 2002 from August 2002. Airfares were a major factor in this decline, with prices falling 5.2 percent in September 2002 compared to September 2001. While lodging prices in September 2002 were stable compared to one year ago, they declined 5.6 percent from August 2002.