The
Advent of Online Agencies
While traditional travel agencies have declined, online agencies such
as Expedia, Travelocity and Orbitz have flourished. By offering
the lowest fares on flights and low prices on hotels and cars,
online agencies have captured approximately half of the online
travel market. These online agencies are able to offer lower
prices through wholesale booking: they book a block of seats or
rooms at wholesale prices, then resell via the web at a profit. A
September 2004 survey by Harris Interactive showed that 28% of
respondents planned to book their next vacation through an
online travel website. This was closely followed by travel
supplier websites at 24%.
Direct from Supplier Purchasing
Due to the success of online agencies, many travel suppliers have made the
switch to online sales. By selling direct to customers,
airlines, hotels and car rental companies cut operating costs
and appeal to Internet users who spend time hunting for the best
deal. Plunkett Research reports that some discount airlines such
as Southwest sell exclusively off their site (they do not sell
to travel websites) and generate much of their revenue this way,
saving millions annually due to reduced operating costs.
Other Countries
While most available research is based on US statistics, other surveys and
research indicate that online travel booking is increasing
worldwide. According to The Centre for Regional and Tourism
Research, Denmark, European sales increased by 40% from 2003 to
2004, from 12.65 to 17.7 billion Euros. An increase of 26% to
22.2 billion Euros in 2005 is expected. Of all European Union
countries, the UK makes up 37% of online travel bookings,
followed by Germany at 20% and France at 12%. Canada seems to
trail behind, with only 24% of Internet users booking leisure
travel online (compared to 47% in the US), resulting in $2.8
billion CDN worth of sales (Forrester Research). |
Sources:
Centre for Regional and Tourism Research, Denmark:
www.crt.dk
eMarketer: www.emarketer.com
Forrester Research: www.forrester.com |
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