The online travel category is still rolling along, but there may be trouble ahead.
Like other e-commerce markets, travel is expected to boast double-digit sales growth this year in the US, but unlike other major segments, this one is actually losing customers. According to a recent survey of more than 60,000 Internet users in the US by Forrester Research, a technology consulting firm, 9 percent fewer people booked travel online this year than in 2005. It is the first time since Forrester began tracking Internet spending a decade ago that a category has lost shoppers.
"This is a wake-up call for the industry," said Henry Harteveldt, Forrester's online travel analyst. "Customers are tired of spending two or three hours trying to find the airline or hotel or vacation package that meets their needs."
Of the four major online travel agencies contacted -- Expedia, Travelocity, Orbitz Worldwide and Priceline.com -- only Orbitz and Travelocity disclosed statistics about their domestic customer bases. Both said they had increased, but neither would disclose the extent of the growth.
Forrester's findings were echoed by research that was expected to be published this week by PhoCusWright, a travel consultancy based in Connecticut. PhoCusWright found that among travelers with access to the Internet, the percentage who usually book travel online dropped to 62 percent at the end of last year from 68 percent in 2005, while those who say they usually arrange travel offline increased to 31 percent from 25 percent during the same period.
Industry revenues are still strong, mostly because those consumers who book travel online are doing more of it. According to the Forrester survey, the average online booker said he or she would spend 50 percent more on travel this year than in 2005. Fans of the bottom line may not be alarmed, then, that some customers have lost their taste for online travel agents, especially if serving the remaining customers proves more profitable. Customers who never call the company for help, for instance, are considerably more valuable than those who do.
But Harteveldt said companies that relied on a shrinking base of customers would lose ground if they did not help online travel bookers overcome some longstanding hurdles. In particular, he said, online travel agencies and sites from airline, hotel and rental car suppliers rely on the same approach they used a decade ago: They require shoppers to type in their travel dates and locations and wait for a list of options that may or may not fit their budgets or needs.
The search engines of travel sites do not do enough to take other factors into consideration, Harteveldt said.
"Nowhere can you say, `I have this amount of money to spend on a trip. These are my interests. This is where I live. Show me my options,'" he said. "Whereas online retailers have done a much better job of improving the shopping experience in recent years, the travel industry has been standing still."
Online travel executives say part of the reason for the dearth of innovation is that the online travel reservation systems are largely extensions of technology built in the 1960s. Those systems were intended to quickly execute searches and transactions by handling small bits of information at a time, rather than including many bits of data about someone's travel preferences, for instance.
Travel sites have, for years, spoken about their quest to offer more personalized trip ideas and bookings based on such preferences, but with few tangible results. Now, independent technology companies are starting to enter the market with their own services.
Last week, for instance, LeisureLogix, based in Southlake, Texas, a technology company led by veterans of the online and travel industries, introduced a personalized search product for road travelers called the "Road Trip Wizard."
The service made its debut on Travelocity (travelocity.roadtripwizard.com) and is to appear on other travel Web sites in the coming months. It asks travelers to select attributes that best describe their interests and trip preferences, and it returns an itinerary, including maps, driving directions, tourist attractions and hotels. Hotels can be booked through the service. Tickets to tourist attractions are to be added as the attractions improve their online booking systems.
Michael Hulley, the chief executive of LeisureLogix, said the service was among the first to tailor a trip to a traveler's interests and needs.
"This is based on the entire travel experience," he said. "It's not just about the destination, but the things you do along the way."
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