Spurred by convenience and last-minute bargains, millions use the Internet to book travel:
- Statistics help tell part of the story: more than 61 million households in the United States will book travel online this year, according to Forrester Research, a technology consultant. They will spend roughly $20 billion on those bookings, or 10 percent of the travel industry total. At $13.2 billion, airline bookings make up by far the greatest share of that figure, but hotel bookings are growing fastest.
And those numbers will arc ever higher; Forrester expects online hotel bookings to more than double over the next four years, to $7.7 billion from $3.8 billion. Already, travel is by far the No. 1 activity among Internet consumers. According to ComScore Networks, travel-related purchases accounted for about 43 percent of online consumer spending in the first half of this year. In some weeks, more travel is purchased online than every other category combined.
The typical consumer making travel arrangements online, while edging toward the mainstream with every passing year, remains slightly upscale, according to Forrester. The average individual is 44, and lives in a household with income of $76,000 a year. Fifty-three percent are male, 60 percent are college graduates, and 55 percent hold professional or managerial jobs.
While numbers help show the current state of the industry, they fail to convey the multitude of subtle and not-so-subtle behavioral shifts the Web has brought to consumers — and foisted on travel suppliers and travel agents.
Mr. Carey said he had to invest an evening of Internet surfing to find his fare four years ago, which he booked on Expedia. Until buying that ticket, Mr. Carey said he relied exclusively on travel agents.
“I can afford to spend more time researching fares,” he said. “Travel agents have to get you out of the chain with a ticket as fast as they can.”
The self-serve generation has also become the last-minute generation. Analysts say online buyers have been “trained” by airlines, hotels and rental car agencies to be on the lookout for 11th-hour bargains, as companies scramble to fill seats.
Of course, there are others who resist online booking, but still rely on the Internet to find good fares. Sheryl Victorson, an office manager at the Veterans Administration in Boston, said that she regularly checked the Web for bargains, but that she called the airlines directly when she found them.
“I have a little bit of a hang-up, giving my credit card online,” Ms. Victorson said. “And I like having a one-on-one relationship with a place I’m doing business with. But I’ve definitely saved money by looking online.”
As for the impact of the Internet on travel suppliers, a typical case is that of Sanjiv Patel, who owns and operates the Red Carpet Inn in Albany. Like many of the 240 franchisees in the Hospitality International chain, it is a modest hotel, with rates typically $50 to $55 a night. Before this year, Mr. Patel said the franchise didn’t have the ability to accept reservations online, and lost considerable business to Marriott, Fairfield Inn and other competitors.
When the company started offering Internet reservations in January, through middlemen, the impact was immediate: the hotel booked 25 percent more rooms over the previous year’s level. This was a particularly meaningful number for Albany, Mr. Patel said, because competition there is high and occupancy rates hover around 73 percent; the national average is about 63 percent.
There was, however, a catch. When consumers book with the chain’s hotels online, Mr. Patel said, they are often offered discounted rates usually given only to members of AAA or AARP, so the hotel gets 10 percent less on the room price.
….”Used to be, airlines differentiated themselves with service, but technology will now become the big differentiator,” Mr. Harteveldt said. “Airlines and other sites will offer many more online options, like flight alerts, trip reminders.”
Perhaps more important, he said, consumers will probably find a larger number of Internet bargains in the future, as suppliers encourage customers to buy online. “Fares that used to be $20 cheaper online from the same carrier for the same route will be $30 or $40 less,” he said. “Companies will charge less per seat, or per room night, or per day for a car, because the consumer is using a less expensive sales channel.”
Perhaps no group has been affected by the Internet more profoundly than travel agents. Seven years ago, travel agents sold $73 billion worth of airline tickets, according to the American Society of Travel Agents. This year, they will sell $60 to $65 billion, while online travel agencies like Expedia, Travelocity and others will sell between $15 and $20 billion.
Agents who had eked out a living by selling airline tickets — as opposed to cruises or tours — were hit particularly hard. At the same time that airlines began cutting (and ultimately eliminating) commissions for selling tickets, travelers like Mr. Carey discovered they could do better without the agents anyway.
Does anyone see a parable here for the music industry?