Three years ago, some $26 billion of leisure, unmanaged business and corporate travel were purchased online worldwide. Latest forecasts by Internet specialists, such as U.S.-based PhoCusWright, see global online travel sales reaching more than $80 billion this year.
While about 70% of those sales will come from North America, the majority of the remainder will come from European buyers.
And next year, when the tourism, travel and hospitality industry has nowhere to go but up, the big shift toward online purchasing is expected to continue unabated.
Companies that have a powerful brand name, at least on a national level, are the ones that will profit most. PhoCusWright notes that in travel none of the pre-Internet travel agency brands, such as American Express and Thomas Cook, is a strong Internet contender.
Instead, one hundred percent of the top market share in today’s growth area, the online travel sector, is exclusively enjoyed by new entrants. Online entities such as Expedia, Travelocity, Orbitz and Hotels.com play a significant role in the way things are bought and sold.
Their customer relationships are considerable, as is their influence on travel distribution, including vacation packages and cruise sales.
Another surprise for most takes in direct selling. Most predicted the online era would usher in a wave of supplier-direct sales.
For sure, airlines have been successful in this area and in particular low-cost airlines, but hotels, which account for 23% of the online travel market at the moment, have not done so well on their own. It seems hotel sales rely heavily on online merchants, and it’s here where online brand names come into play.
Many travel wholesalers, retailers and technology companies have historically been cynical about branding.
Too many in the travel agency sector have viewed this time-honored discipline as fluff, overkill or a luxury, says PhoCusWright.
And it admits that although this approach was not a wise one, it seems to have worked over the years, but not any more. It says the Internet is the future for sales and those with an accepted brand name will succeed.
Another survey, by Forrester Research, says that despite the bursting of the dot-com bubble, Internet e-commerce remains on a strong growth track, By 2008, predicts the market research firm, e-commerce in the U.S. alone will reach nearly 230 billion dollars. It noted that in four categories -computer hardware and software, tickets, books and travel- online sales already account for more than 10 percent of sales. Other categories, such as toys, video games and consumer electronics, are approaching 10 percent on line, and that even apparel sales on the Internet are expected to reach four percent this year, despite many doubters.