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Complete Travel GuideOnline Travel Bargain
by:
yatin patel
Are holiday bargains for true or have catches hidden?
REMEMBER YOUR LAST Speech WITH THAT family relative who couldn’t talk enough of how more they saved on their last holiday package deal? Or that colleague bragging just about his $59 round- trip flight to Las Vegas and his stay in a 5-star building at $89 a night? Have you found yourself staring wistfully (and suspiciously) at a $399 package deal for two for Hawaii?
Just because your email seems flooded at times with apparently impossibly priced travel offers, and you find Computer network search engines are flooded with 1000’s of sites merchandising computer network travel besides big building brands and proprietary
distribution sites don’t discount them all.
Who can you count on?
Just four or five years ago, once
you looked for travel discounts you could choose between a travel agent, the airline offices and the hotels themselves, and maybe, if you were lucky, several travel guru down the street. Today, there’s a massive range of things you can do online, and a lot of them can save significant amounts of money.
The reality is:
• Nine out of 10 online travelers now have several history of buying for travel online, and nearly 15% of all Americans purchased travel online last year - that’s five times the penetration rate of 1998. (PhoCusWright User
Travel Trends Survey)• Nearly one-third of online travel buyers say the Computer network was responsible for their travel purchases last year.
• In 1998, six million consumers bought travel online in the U.S. Jump ahead to 2002 once
30 million Americans purchased travel online in the last year. Half of them only buy their travel online. (PhoCusWright User
Travel Trends Survey)
• Online travel bookings exceeded $23 billion in 2001, and are expected to reach $63 billion by 2005.
• Computer network bookings in the 1st three quarters of 2002 accounted for over 23% of rooms oversubscribed in New York, and over 15% in Los Angeles, Chicago, and San Francisco. Anecdotally, for several properties, building managers are coverage Computer network bookings travel from 30% to 50% of all room nights in 2002. (Smith Travel Research and TravelClick)
What makes this mean?
This means that online distribution channel is extremely booming in reaching buyers and buyers are finding it more verifiable to shop online. They are seeing a broader range of travel options and variety of products and packages. And its more likely that user
wants to control that dealing through access to more competitive pricing. Evaluation is becoming key factor to determine the sale.
Key factors: Why travelers prefer to book online
• Competitive Price
• Ability to compare product and Prices
• Ability to plan last minute
• Handiness of Range of options
Online travel shoppers are not really loyal on wherever
they shop—65 percentage of online travelers do not view themselves as brand-loyal. As more as they love to shop online and spend their time researching what suits their needs, they are not loyal to the companies from which they buy.
The above scenario indicated that the travel suppliers have no select but to participate in this online distribution channel. The suppliers are realizing that the traditional channels like GDS (Global Distribution System)/travel agent and call center/reservation office is somewhat inefficient and expensive, especially once
the economy is weak. Ignoring online distribution channel and concentrating only on traditional distribution channels wish result in lower occupancy, and higher distribution and operational cost for travel suppliers. As online channels become more popular among suppliers their participation is increasing.
How Evaluation and Distribution Become Key
9/11 caused a dramatic shift in how consumers engaged their travel. The instability caused a large drop in demand for airlines, hotels and car rentals leading to ever-lower prices. This low demand factor forced travel suppliers to introduce new discounts. Travel suppliers struggled to sell seats, rooms, car rentals to a importantly
shrunken leisure and business travel market. Every air seat, room and car not engaged cost their companies money. Better to sell dirt cheap than not to sell at all. But how to get the word out?
Smart, active
suppliers adopted the Wal-Mart business model—sell low and distribute inexpensively and efficiently. But how?
The Computer network allowed them to reach consumers, sell inventory outstrip their less progressive competition. Those suppliers who had no clean Computer network strategy or understanding of how the Web and online distribution works suffered.
Discount building sites attract millions of buyers with their special rates leading to stratospheric sales through these channels. They thrive on hoteliers merchandising their distressed inventory at a fraction of their normal rates. Occupancy is the lowest its been in years, hoteliers continue to activity with leading online retailers to come inventory at lower price.
The $6.3 billion in online building sales (2002) with are split roughly equally
between discount agency sites and building Web sites. PhoCusWright projects that about 75% of discount agency building site sales are via the merchandiser model, wherever
the agency typically takes a 20-30% “margin” on the building net rate (instead of the usual 10% commission). This approach has helped profits at Expedia and Hotels.com, who have roughly 60% of online discount agency building sales. Travelocity and Orbitz are instituting the same booming approach. Another notable players thriving in this arena are Hotwire.com, http://www.hotels-and-discounts.com , Lodging.com and Travelweb.com.
What is the Future?
Online travel growth wish continue to grow in 2003-2005, but it wish slow down year by year compared to the record gains see so far. However millions of travelers haven’t yet ready-made their 1st purchase so the market is not near saturation. Technological improvements wish shortly do it possible to more easily dynamically package vacation deals including air, building and car leading to even as lower prices but higher average sales. So growth is projected to come from customers purchasing more, higher-ticketed products online.
The growth of the online distribution channel wish prove beneficial to the end user once
the suppler finds it easier and more cost-effective to distribute their inventory there than over the traditional distribution channels. As technology becomes mature in the online distribution sector, it wish become more effective and user friendly for the Buyers and thus wish attract more Suppliers. Due to its low cost of distribution and emerging ability to package and cross sell inventory, prices wish be attractive for years to come, until this channel eventually becomes a commodity.
By Yatin Patel
Published in http://www.siliconindia.com
July 2003
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