28 August 2008

Online travelers shrinking, turning to agents

The number of travelers booking online is down, says eMarketer, but perhaps not for the reason you suspect: economic uncertainties.

ââ¬ÅâœThe fact that fewer travelers are booking online is not due to economic concerns ââ¬' online travel bookers are an affluent demographic ââ¬' it is caused by frustrations related to the planning and booking capabilities of online travel agencies,ââ¬~ said Jeff Grau, senior analyst at eMarketer.

He is author of the new report, ââ¬ÅâœU.S. Online Travel: Planning and Booking.ââ¬~ He adds: ââ¬ÅâœThis, in turn, is spurring a renewed appreciation for the expertise and personalized services offered by traditional travel agents.ââ¬~

eMarketer, a digital media research and analysis firm, says US travel sales booked online will reach $105 billion, up 12 percent from 2007.

Furthermore, from 2007 to 2012, sales will increase at an 11.6 percent average annual rate. Even though online travel sales are growing, fewer travelers are booking their trips online.

In other words, online travel sites are steering customers back to offline travel agents -- a complete turnaround of what has been happening in the category for the last decade, says the study.

ââ¬ÅâœCustomer dissatisfaction with online travel agencies (OTAs) stems specifically from unfriendly booking engines and navigation tools. With few points of differentiation, OTAs have a hard time building customer loyalty and have driven travelers right into the open arms of traditional travel agencies ââ¬' and new online competitors, travel websites built around user generated content,ââ¬~ says the site.

Research by PhoCusWright, projecting through 2011, documents how agents are not only here to stay -- but also precisely how important their role will be in a growing travel industry.

In the cruise segment, the market research firm predicts, travel agent sales will grow from $9.6 billion to $10.9 billion from 2007 through 2011. Agents will continue to sell a majority of all cruises.

In hotel/tours, travel agent sales will grow from $13.3 billion to $17.2 billion, PhoCusWright says.

In car rentals, agent sales will remain stagnant at about $1.3 billion per year.

Only in air will agents see a further decline, eroding to $9.7 billion by 2011 - even as air travel grows in actual dollars.

The drop in airline bookings by agents as a percent of total air dollars is predictable and largely by choice. But the report also projects that while agents will still be dominant in cruise bookings by 2011, their sales as a percent of total cruise dollars could soften.

Direct sales by suppliers, the research predicts, could increase.

Report by David Wilkening

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