TravelTek

Published on Tuesday, May 22, 2007

RX for success in $100 billion-plus US travel revolution

It’s being called a “travel revolution” as online sales are expected to exceed $100 billion this year, with US online bookings surpassing offline bookings for the first time in history.

eMarketer estimates that 41.3 million US households will book travel online this year, representing 52.5% of all US online households. New travel are sites proliferating almost on a day-to-day basis.

“Many of these new sites chip away at the expertise that drives people to online travel agencies, which already feel pressure from travel supplier sites like those run by airlines and hotels,” reported eMarketer.

“Current industry players must stay alert, otherwise they risk being blindsided by new competitors that fall under their radar,” according to the group’s report US Online Travel: The Threat of Commoditization.

The report estimates sales to remain strong this year until 2010, though the growth rate will steadily decline.

A tighter market is expected to exacerbate the fierce competition between online travel agencies and travel suppliers.

"To succeed in the brave new world of online travel," said Jeffrey Grau, senior analyst and author of the report. "Industry players must be willing to reinvent themselves to keep up with consumer, technology and competitive forces." He added:

“Young people coming of age during the dawn of the Internet have different expectations of the businesses that serve them. They like businesses to come to them, with the right product, at the right time, in the right way. "

This will challenge travel providers to transition from a service model based on mass consumption to one centered on creating customized packages for groups of travelers with unique interests and needs, he said.

Just how far has the internet penetrated into the travel business. Consider this:

Travel is bay far the No. 1 activity among internet consumers. In some weeks, more travel is purchased online than every other category combined.

The typical consumer making travel arrangements online, while edging towards the mainstream, remains slightly upscale, according to Forrester. The average individual is 44 years old and lives in a household with an income of $76,000 a year. Fifty-three percent are male, 60% are college graduates and 55% hold professional or managerial jobs.

At the same time, analysts agree the resilient brick-and-mortar travel agencies that are willing to provide a real service will always be around. Competitive forces will only crush those travel agents who have limited their services to mere order taking, they say.

"The agent who can get you on that sold-out flight, or who can knock US$4,000 off that international business class ticket, will not only survive, but will prosper because they know how to add value,” Forrester senior analyst Henry Harteveldt told the E-Commerce Times. He added:

"The 'order takers' are as relevant to today's travel industry as the 707 is to airline transportation. [They] drag down the whole travel agency industry.”

Report by David Wilkening

 

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  • Founder of Rezzline

    I agree that the current environment is crowded with online agencies/distributors/merchants. I lump them together because they fundamently function the same way, the model's principle revenue or driver is transactional based in one form or another. This model is rooted from the brick and morter agency but the model creates multiple dysfunctions in the online world. So while the online market is attractive due to its size, the models that are currently in play are very dangerous and many face catastrphic changes. But, thats just what i think! :)

    By Pete Patel, Sunday, June 24, 2007

  • Tools for success

    As we work with agents and adventure tour operators to partner in bringing sales online we find it is not just the new technology that is the tool to succeed but also the foresight into the market trends. Participants have to positively value both going online and creating new products/value for their clients. Articles like this one which highlight the critical importance of being a part of this revolution are key. Thank you for continuing to highlight the trends.

    By amber hayes, Sunday, June 17, 2007

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