• What's ticked?
• Accolades
• Contact us

c o l u m n s

• Cheap Charlie
• ChrisCrossings
• Err Travel
• Leocha
• Travel Notes
• Archives

State of the Industry
Kirby's Korner · November 17, 2000

The approach of the holiday season in the United States -- with its general business slowdown, along with an increase in consumer and travel sales -- always provides a handy window for looking at the state of the online travel industry.

This year, a dispassionate look at the industry is especially useful. Face it: 2000 has not been kind to dot-com companies.

Online travel sales and research have been surprisingly resilient, particularly compared to what we've seen from other online segments. In a year that started with several dot-com retailers crashing following extensive advertising campaigns during last year's holiday season, the travel industry continues to grow unabated.

Over the long run, online travel sales have grown quicker than even those with the most vested interests predicted. Back in January 1996, New York-based Jupiter Communications said online travel sales would top $1 billion in 1997 and reach $3 billion this year.

But in April 2000, Jupiter reported that U.S. consumers had racked up $6.5 billion the previous year in online leisure and unmanaged business travel sales -- two segments of the travel industry that account for about three-quarters of total travel sales. It's fair to extrapolate the 2000 Jupiter's figure to at least $8.5 billion in online travel sales for U.S. consumers alone.

Expect to see the leisure and unmanaged business travel segments account for $28 billion in sales by 2005, representing 14 percent of all travel bookings, Jupiter said.

Forrester Research, Cambridge, Mass., said the same month that the other major travel industry segment -- managed business travel -- will represent a $15.5 billion industry by 2004. Combining the Jupiter and Forrester predictions, we should expect to see total online travel sales reach a minimum of $35 billion within the next four years.

A travel consulting firm, PhoCusWright, Sherman, Conn., said this week that a tenth of all American adults now buy travel online. Of the 21 million individual buyers in 2000, one-third of those use the Internet exclusively for their travel purchases, the company said.

What's more, online buyers travel more frequently than the general public, according to the PhoCusWright 2000 Travel E-Commerce Survey, and price seems to be a major factor when they decide where to buy. Ninety-one percent of online buyers choose their primary online travel retailer because "it seems to have good prices," PhoCusWright said.

Forrester also found pricing to be a key factor for choosing online retailers. Last January it said that 70 percent of online travel buyers search more than one Web site before deciding to buy; even buyers who are loyal to a single site say low prices is a major factor in bringing them back again and again.

Web sites such as Ticked should have a bright future in this brave new online world, according to PhoCusWright. Forty-four percent of online travel buyers use Web sites when researching personal travel decisions, with the Web topping any other type of research tool.

Many issues remain to be resolved, of course: Will online travel agencies continue to consolidate? How much of total travel sales will they garner? Will the airlines and other travel suppliers continue to capture a majority of the online business?

Despite these questions, the state of the industry is strong, and it should continue strong. Selling airline tickets online -- despite the criticism the practice gets from this Web site and others -- beats selling books at 20 bucks a pop any day.

David Kirby is the senior editor at the start-up dot-com company iJET Travel Intelligence and was the founding editor of Interactive Travel Report. His column appears on Friday. You can reach him at david@ticked.com.