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The Future of the Online Travel Industry

The online travel industry is one of the most competitive of any that I think exist online or offline today.  In a market previously dominated by two or three players, the rise of travel aggregator sites such as Kayak and Sidestep has made travel an even greater price-driven commodity.  These aggregation sites are increasingly becoming a first point of call for experienced online travel deal seekers looking for the best deals on airfare, hotels, and car rentals.  Despite efforts from the big three (Orbitz, Expedia and Travelocity) to bring out enhanced content (often through partnerships with content providers like Frommers), the majority of site visitors are still task oriented and highly price conscious.   

Adding pressure to these OTAs (Online Travel Agents) is the growing prevalence of low price guarantees which have been announced by most large hotel chains, including Hilton, Marriott, and Starwood — which are taking hotel bookings away and leaving only airfares and car rentals (both lower margin).  As a result, the opportunity for any of the many competitors in this space is increasingly concentrated in two areas:

  1. Corporate travel (exclusive deals, recurring sales, full price tickets, etc.)
  2. Package deals (last minute deals, book everything at once, specials)

The big three know this.  Each has last minute deals (sourced through Site59 – one of the few successful online travel models out there) and dedicated corporate travel areas.  Yet amidst all these challenges, there is hope in the fact that the passion for travel and travel deals is strong and driving the popularity of consumer driven discussion sites such as FlyerTalk.  The site has thousands of posts from travellers helping others, trading discount certificates, and talking about customer service experiences.  TripAdvisor is one of the most frequently trafficked sites from search engines due to its high rankings for just about any location or hotel-based keyword search.  Each of these sites is hugely influential because they feature real voices sharing real insights.

My view is that the opportunity in the online travel industry is for a single travel site to emerge as the authority in pulling these two types of sites together, to follow a user through from browsing to buying.  An OTA focused on including real voices of consumers to review hotel properties, share deals and frequent flier tips, and even trade discount certificates … what would that look like?  It’s an intriguing possibility, and one that I think will describe the online travel sites which are still around after a few years.

17 thoughts on “The Future of the Online Travel Industry”

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  2. Hi Rohit,

    I get the sense that you and many of your readers may travel internationally, so I wanted to share with you a new online air travel search engine that is offering a different way to find inexpensive international flights. We’re in beta right now and would love your feedback.

    The company is called cFares, http://www.cfares.com. By using a new continuous search capability called “cAgent,â€￾ the online site is offering its users huge savings in cost and in search time.

    If you’re planning a trip soon either international or domestic, give it a look. I’ve also created an account if you want to try it out. The login name is cfaresgold@yahoo.com, password is cheapflights.

    Cheers,

    Sue Ellen

    Reply
  3. Dear Rohit,

    Since the topic of my Bachelors-Thesis is “Online Travel Websites” I found your article very interesting and definetely pointing in the right direction.

    Your idea has become known as “Travel 2.0”, where merging “traditional” travel website with folksonomies, tagged- and meta searches will produce a complete new challenge for the online travel companies: From “Push”-Marketing principle (“Best Offer for flight”) to the “Pull”-Marketing principle (“Best flight for the offer?”). The users are in control again and so far the big companies are only reacting slowly to the market change.Only Expedia with its TripAdvisor website and travelchannel with their “guaranteed reviews” have seen the signs of time and have reacted before the trend became reality.

    Another good example of a company quickly responding to the developments of Travel 2.0 is KLM. The airline recently updated its booking website. Showing the fares as coloured calendar dates seems to be a carbon-copy of websites such as Farecast and makes the booking of a flight very simple.

    One of the potential key factors in the future for travel websites might be the so called “look-to-book” rate. Formerly only known as the figure which related page impressions to the number of bookings, it has now also become a figure to measure the efficency and cost-reduction ability of webportals.

    The reasons for this change is explained with the fact that users visit travel websites more and more just for information purposes about their future trips; this generates a lot of extra traffic and thus raises costs of hardware, service etc; furthermore usability of a website is key to it´s sucess and avoiding unnecessary traffic costs through repeated and aborted user search requests has become pretty much imperative.

    So who will be left over at the end of the day? Most likely only the “Big-Three” since other sites will either be bought over or simply go out of business due to the higher costs.

    Regards from Austria

    Fritz Oberhummer

    Reply
  4. As part of the push towards travel 2.0, online travel companies can take advantage of geographic databases, which contain longitude and latitude, to help their clients locate global features like cities, churches, beaches, etc, in an area that they would like to travel to. For example, say you have a customer who would like to go scuba diving in Bali. With our water features database, or a combination of a few sub-sets of those databases, you could show them near by reefs, bays, cays, beaches, etc that may have scuba diving within say 10 miles of the location that they will be staying. While this is only an example of such a use, you can see how our data can help you provide your clients with a customized travel plan. If they find points of interest in the desired area, then you could offer additional services to help fulfill those needs (book scuba trips, excursions to castles, hiking adventure, etc), thus increasing the travel company’s revenues and repeat business.

    Meridian World Data, the leader in Geographic Global Databases, can provide your online travel company the information and expertise to build such features into your website. Please visit us at https://www.meridianworlddata.com or email us info@meridianworlddata.com to find out more. See our complete list of Global Datases

    Reply
  5. Excellent information about online travel industry. Now-a-days every one are preferring online booking for their needs. People wanted to do their work from any part of the world. The information provided is on online travel industry is very much helpful for every one. Almost all the businessmen are using this online travel industry for their business marketing. There is a huge competition for this.

    Reply
  6. I get the sense that you and many of your readers may travel internationally, so I wanted to share with you a new online air travel search engine that is offering a different way to find inexpensive international flights. We’re in beta right now and would love your feedback.

    Reply
  7. Graha Wicaksana, the head of Community Development for Kuta, Bali’s most famous beach area, has confirmed that the Kuta Karnival returns for nine days from October 18-26, 2008. Initially organized as a response to the Bali terrorist attack of October 2002, the event has now become a regular fixture on Bali’s busy calendar of yearly events. This year’s event has been given the motto of “A Celebration of Lifeâ€￾ reflecting the nine days of traditional art performances, sunset dances on the beach, sports activities, and an entire bazaar of culinary kiosks located in tents up and down the beach.

    Reply
  8. Excellent post on online travel industry.I agree with you, with rise of travel sites has made travel an even greater price-driven commodity.Now many online booking sites are offering interesting packages and deals.

    Reply
  9. Love this post, feels like a lot of these aggregators need to get back to marketing 101 and find out what REALLY differentiates them from the rest. Looking forward to that ‘one site has it all model’ coming soon!

    Reply
  10. Rohit:

    A lot of your post was right on. We are addressing this market in a whole new way; matching online customers with off-line travel specialists. At http://www.tripology.com, we take your detailed trip request, run it through our algorithm and connect you with up to three travel specialists whose expertise matches your request. It is free to consumers and I encourage anyone looking for a travel value to try us out.
    Thanks,
    John T. Peters
    CEO Tripology

    Reply
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