Online Agencies (Expedia, Travelocity, Orbitz, etc.) do one thing really well, allow you to shop for the best price. I would be interested to find out, however, how much money these agencies leave on the table from consumers who shop price on the agency site but then buy direct from the supplier.
I can’t remember the last time I actually booked on one of the big agency sites; but I regularly use Orbitz to shop for the best airline prices. Orbitz has some great tools, like one that allows you to search all the rates in any given 30-day period. For me, that tool allows me to plan travel when the rates are lowest and has saved me hundreds of dollars. However, as soon as I find the rate I always go to the airline’s own site to book the ticket, which then saves me enough money for a Starbucks in the terminal. I understand that there’s not much margin available on stand-alone air tickets for the agencies, but I also have similar methods for hotel rates and rental cars. And very seldom to I buy packaged offers, which puts in the majority along with 60% of of all travelers (according to JupiterResearch).
These seem like big challenges to me… Are agency sites going to go away as supplier sites get more sophisticated? Probably not. If you combine the fact that package purchases are on the rise (JupiterResearch) and that consumers are much more likely to use an agency for combination purchases than supplier sites (PhoCusWright Consumer Travel Trends Survey Eighth Edition), it appears that agency sites are in a good place if they can continue to offer packaged products at unbeatable prices.
But it’s not going to be easy, especially if supplier sites catch up with them from a technology standpoint (ability to build and buy packages with products from different suppliers). And, they HAVE to compete on price. All of the research points to this as being the number one factor – over brand, selection, convenience, loyalty programs or pretty colors.
comScore just released a new analysis of the online travel market based on data from 2005. Here are some of the highlights:
- Nearly 150 million consumers visited a travel Web site in 2005, a 35-percent increase over the previous year.
- Annual online travel revenues exceeded $60 billion in 2005, representing a 20-percent increase versus 2004.
- Consumers have been slowly migrating from online agencies to branded airline, hotel or car rental supplier sites. However, both online agency and supplier sites are growing, with agencies posting a 19-percent gain versus 2004 and suppliers recording 21 percent growth.
- Branded supplier sites captured approximately 57 percent of online travel dollars in 2005, up from 55 percent in 2004.
- Supplier sites, which accounted for 53 percent of airline ticket sales in 2003, have grown in popularity in recent years to capture 58 percent of airline ticket sales in 2005. A similar pattern has emerged in the hotel segment, where supplier sites have grown from a 52 percent share in 2003 to 59 percent in 2005, with the growth from 2004 to 2005 being particularly strong.
- When people begin the process of researching travel services online, 46 percent indicated that the first site they visited was either Expedia, Travelocity or Orbitz — nearly double the proportion of people who reported starting their research at a branded airline, hotel or car rental site (24 percent).
For more information:comScore Study Finds 35-Percent Increase in Number of Consumers Visiting Travel Sites
