Published on Tuesday, October 16, 2007

Online travel growth: stalling?

Falling numbers of travelers who use the internet to both research and buy are declining in what is being called a “wake-up” call by Henry Harteveldt, vice president and principal analyst at Forrester Research.

“What we’re seeing is an early warning signal: fix the problem or else,” he said. He added: “To keep online consumers interested in online booking, travel companies need to overhaul their systems to sell the way people want to buy.”

This marks the first time since 9-11 that the fast-growing online travel market has seen a decline.

Forrester’s most recent study this month found that the number of US leisure travel bookers fell 9% from 2005 to 2007.

But what is even more telling to Mr Hardeveldt is the fact that there’s been a noticeable decline in the number of people who do both research and bookings online.

“What’s particularly alarming to me is the growth in this group we call the sideliners. That’s the biggest cause of concern,” he said.

That number has declined from 30% to 20%, he added.

There is no one reason for the slowdown but several factors are involved.

“It’s the combination of things that include the difficulty people have buying travel online...how confusing it can be...how much time it takes...the lack of control people may have and navigating the web sites,” Mr Hardeveldt said.

Travel companies will have to find ways to make the booking experience easier and more consumer-friendly. “And that’s no easy feat and not going to be fixed tomorrow,” Mr. Hardeveldt said. He said it would also cost a lot of money to improve systems.

He uses the example of airlines' booking sites.

“Very few airlines provide context to customers about trade-offs, and about terms and conditions associated with rates or prices. Some airlines like Southwest and American and Air Canada are taking steps in this direction,” he said.

Online travel bookings will continue to grow, though not at its past torrid rate, according to Mr Hardeveldt.

“I’m not worried about online not growing. In fact, bookers are traveling more and spending more, so even though the numbers are stalled at 59% buying on line, budgets are bigger, so there’s continued growth,” he said.

He compares online booking to aging athletes.

“The Web is now maturing. It’s like taking a look at an athlete when he’s 25 and when he’s 35. When he’s 35, he has wisdom and experience but maybe he doesn’t move as quickly as when he’s 25,” he said.

Report by David Wilkening

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  • Participate or become irrelevant

    The trend is real, it is accelerating ... and the enterprise is in danger of sitting on the sidelines. Check out my post on the subject; http://www.eliweir.com/dotshift/2007/10/travel-and-soci.html

    By Eli Weir, Tuesday, December 4, 2007

  • This trend is normal and expected

    Internet transactions have been growing at 25% or more in all industries selling on the web for a number of years but there is a saturation point. That’s the point at which online reaches equilibrium with offline. The purchase of books, tickets, office Supplies etc. are all slowing down. According to Forrester and Price Waterhouse they will continue to drop until they reach a growth rate of about 8% in 2011. This is still a very good growth rate. As travel sellers, we will always have to reinvent ourselves to remain relevant – the slowing online growth trend favors retail, high-touch and personal interactions in all industries—balance is good. Russ Baker, VP Marketing Triton Distrilbution

    By Russ Baker, Tuesday, November 6, 2007

  • Why do we need a complicated explanation?

    It's simple, there is, and will always be, a finite maximum to the proportion of the populace who will buy anything entirely (or at all) on-line. Travel grew fast and early in the on-line world, so it is reaching that maximum early too. Of course there are things that can be done to make travel purchase simpler, more convenient, clearer etc. But even so, there is some maximum. There will ALWAYS be some who prefer dealing with a human, in travel as in all else. In that space, the usual principals of good value and good service apply. But none of that is going to seduce significant proportions of business back from the on-line world.

    By David Dingley, Tuesday, November 6, 2007

  • The post should be more elaborated

    The report does not indicate which time period is concerned (or % by market segments worldwide). It does neither refer to general economical context in the US (housing market, CAR sales slump, week dollar etc.). The high volume impact (on such generic statistic) of US consumer is probably the main factor. Another factor is likely linked to the reports core message, which was also reflected by recent google comments.

    By Herrmann Hannes, Thursday, October 18, 2007

  • Does the Consumer know this?

    Just proves what we have been saying for the last two years but how do we get this to the consumer? The media is not interested in such 'boring' stories. Suraj Zutshi, CTC, CTIE

    By Suraj Zutshi, Thursday, October 18, 2007

  • Inevitable?

    It comes as no surprise to me to read comment about a slowdown. Clearly consumers (and the web) are maturing, and social networking/web 2.0 is but an example of those same consumers taking control of what they want to do online. Online agents who nothing but look for quick revenues were always going to hit trouble. The golden rules and marketing and customer service are now finding them out. Though we have an established online presence in www.beatthebrochure.com, this is supported by excellent call centre customer service. Even though our site is bookable we still find customers wish to make the final payment offline. I'm not convinced this spells the decline of bookable websites, and our intelligence is that increasing numbers of customers use traditional agents to research their trips, call a couple of contact centres, then open 6 Explorer windows for price comparison before making a promiscuous purchase decision on price! That booking is still effectively originating from a website. The companies who will survive will be the ones who support online bookings/enquiries with excellent offline service, in my view irrespective of the advent of social networking and a maturing audience. But we shall see!

    By Simon Thorp, Tuesday, October 16, 2007

  • Online Travel Growth Stalling

    The analyst Harteveldt has the trend correct -- declining U.S. bookings and searching on the Internet, but not the reason. Airline travelers faced massive airport delays this year and many of them booked their travel on Web sites. When delay problems happen, those site offer Zero service. Consumers have slept for hours in airports and now wish to go back to human travel agents who they can call in a pinch and get something everyone thought was finished: Human Customer Service. Welcome back Americans to Live Travel Agents with real names. John STone

    By John Stone, Tuesday, October 16, 2007

  • Is Social Media Bogging Us Down?

    Mr. Harteveldt's comments are interesting. Does he, or anyone else, think that the proliferation of social media venues is causing people to do their research in places other than travel sites before booking? In our blog, The Innkeeper's Resource, www.innkeepersresource.com, we continually explore the impact of social media, especially on the unique, small lodging industry.

    By Peter Scherman, Tuesday, October 16, 2007

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