Channel Switching Now Integral Part of
Shopping Process
In 2003, 45% of online travel buyers purchased
all of their travel online, according to The
Phocuswright Consumer Travel Trends Survey
Sixth Edition, a recently released tracking
report that annually documents online shopping
and purchasing behavior. In total, 35 million
Americans bought travel online in 2003, up
17% from 2002. Yet online travel buyers are
divided as to which type of site ultimately
gets the sale -- supplier or online travel
agency.
Online travel agencies are feeling the heat
from the supplier channel. Online travelers
are now almost as likely to purchase travel
from a supplier (online and offline) as an
online agency. In fact, The Phocuswright
Consumer Travel Trends Survey Sixth Edition finds
that nearly two-thirds of "online travelers" buy
personal travel from either online travel agency
or supplier Web sites. And, the majority of
online travelers usually check at least one
online agency site (88%) and one supplier site
(73%) before purchasing airline tickets online.
Price parity between online and offline channels
and erratic content availability across Web
sites are encouraging online shoppers to use
multiple channels for comparison shopping and
purchasing. In addition, half of all online
travelers continue to shop online but purchase
offline. Together, these underscore the slower
growth pace of the Internet as an exclusive
purchase channel due to the increased complexity
of online travel offerings, consumers' use
of offline support, and supplier success in
nurturing consumer-direct relationships in
the leisure segment.
Online Travel Agencies Dominate but Feel
Pressure
Consumers are driven to online agencies due
to lowest prices, broad product offerings and
ease of use -- areas where this channel performs
head and shoulders above its competitors. Report
findings about this channel include:
-Online agencies rate better than suppliers,
in general, in lowest price (56% vs. 24%),
broadest air and hotel choices (60% vs. 14%),
and ease of use (43% vs. 32%).
-Online travelers who are loyal to several
Web sites are more likely to check online agency
Web sites (95%) than those with single site
(75%) or no purchase loyalty (81%).
-Forty percent of online travelers usually
purchase personal travel from online agencies
vs. 19% from supplier sites.
The Supplier Channel Gains Momentum
Consumers often turn to suppliers for reliability
and customer service. In fact, per the report's
findings, suppliers are now considered to offer
better customer service than even traditional
travel agencies.
Through aggressive brand promotion, increased
inventory availability and online channel discrimination,
supplier Web sites now "own" more than one-third
of the air and more than one-fourth of the
hotel reservation markets.
Since 79% of online combination purchasers
(air, car and/or hotel) create their own packages
by buying components separately, dynamic packaging
options and tools will be critical to success
for players in all channels. Also important
are upselling and cross-selling strategies
for vacation packages since 59% of those surveyed
for The Phocuswright Consumer Travel Trends
Survey Sixth Edition said they are interested
in purchasing pre-bundled packages online in
the future.
It is expected that online agencies will place
greater strategic emphasis on customer loyalty,
booking engine capabilities and ease of use
to counteract supplier momentum in the marketplace.
Report findings are based on interviews with
504 "online travelers" in the U.S. in fall
2003. Online travelers are adult Americans
who have flown by commercial airline in the
last year and used the Internet in the last
month. There are 54 million online travelers
in the U.S. -- one-fourth of the U.S. adult
population. Of this group, 65% purchased travel
online in 2003.
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