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A Large World, After All
Kirby's Korner · March 3, 2000

The announcement this week that Galileo International is buying Trip.com brought the usual set of responses. Soon, analysts said, we'll see much more consolidation among online travel agencies. Soon, only a handful of Web sites will be handling reservations for travelers.

Don't believe it.

Even before Galileo -- which runs one of the huge databases used by travel agents for processing reservations -- said it would buy Trip.com, a Web site aimed at small-business and mobile travelers, the past few months had been busy ones for online travel industry mergers. The most important news, as reported here, is that online agency giant Preview Travel agreed to be acquired by Travelocity.com, a move that clearly will result in a powerful presence on the Web.

Just last week, Expedia said it is buying VacationSpot.com -- a Web site that tries to connect travelers with distinctive, non-chain hotel properties -- and Travelscape.com, a consolidator that has built a successful online presence through ubiquitious advertising.

"The amount of consolidation taking place in the market is making it nearly impossible for any but the top three online travel sites to earn significant revenues," Gomez Advisors analyst Krista Pappas told travel trade publication Travel Distribution Report.

Other industry observers fall into lockstep. As reported in the current issue of The Industry Standard, Frank Gens, an Internet research guru for Standard owner IDG, said 2000 will bring about "the consolidation of struggling [travel] sites."

But all this tells only half the story.

There will be consolidation. But there also will be expansion. And this is good news for travelers and travel retailers alike.

Three percent of travel was reserved online last year, industry consultant PhoCusWright said in December, a figure it expects to jump to 8 percent next year. Of people who both use the Internet and travel, 32 percent are making reservations online, according to a study released this week from the Travel Industry Association of America.

One-third of business travel reservations will be made through the Internet by 2003, according to the World Tourism Organization.

Anyone who expects all this added activity to be funneled through three or four Web sites is nuts.

On my desk at the moment are six news releases from companies announcing they will begin to take travel reservations through the Internet. Obviously, this does not include companies still in the planning stages or companies that haven't gotten around to telling me about their plans.

This also does not include traditional brick-and-mortar travel agencies that are moving daily to the Web for part of their business.

And this stack goes back only a week.

Will there be further consolidation among online travel agencies? Sure. Will there be a continual stream of new players in the market, some failing but some succeeding? Equally, sure.

In the real world, American Express, Carlson Wagonlit, Rosenbluth International, and Uniglobe may dominate retail travel sales. But smaller agencies, while facing increasing problems, continue to survive. In some parts of some cities, you can't walk two blocks without passing half a dozen storefronts.

During fits of depression, even I've thought otherwise, but the real-world situation won't be different in cyberspace. Travelocity, Expedia, and a couple others may get the lion's share of attention. But companies that are smart, offer good service, provide travel tips, and make themselves known will always find a market for what they have to offer.

David Kirby is the editor of Interactive Travel Report. His column appears on Friday. You can reach him at david@ticked.com.