The Insighter—Online Travel: An Oasis In An E-Economy Desert

As boom turns to gloom at economic sectors everywhere, here`s one prediction for 2001: Internet travel will zoom.1. There`s no tangible product to ship.
Even the industry`s notorious stream of paper documents has dissipated with electronic transmission. No children left disappointed because of a delayed holiday shipment from eToys. No Christmas gift backordered till December 26. That`s because there`s no distribution points, no shipments, no warehouse, no inventory, no delays. Well, there are delays, but by time that happens it`s usually too late for a refund.
2. There`s little competition from equivalent national brands.
Thomas Cook, American Express, Liberty Travel - they have the solid business models and healthy balance sheets, and could have controlled the online world. But while they sat around contemplating e-commerce, the Internet brands - Travelocity.com,Expedia.com, priceline.com - moved right in. This is contradictory to other industries where the brick and mortars have made it difficult for new players to emerge victorious. Eight of the ten fastest-growing retail sites during the holiday season are traditional offline brands, according to Media Metrix, including Wal-Mart (which failed dismally in its online travel venture), Barnsandnoble.com and .com.
3. The online experience offers a wealth of advantages.
ASTA tells us there`s nothing like a human travel agent, but consumers tell us differently. While travel agencies are still the main way online travelers buy travel, use of travel agencies has declined 29% while online usage has grown 170% in two years, according to The PhoCusWright 2000 Travel E-Commerce Survey. Consumers are motivated by price, and they think the Internet - with its special discounts, last-minute inventory, consolidator fares and price comparisons - offers the best deal. That`s not to mention the other advantages of technology - instant fare change alerts, targeted offers, flight delay warnings, saved itineraries, 24/7 availability, the list goes on. That`s why over 20 million consumers will purchase over $20 billion in online travel next year.
4. Travel e-commerce leaders are corporate-backed as opposed to venture-backed.

That means an evaporating well of venture financing won`t kill the leaders. Online travel sugar daddies include Sabre (Travelocity.com), Microsoft (Expedia), Carl Icahn (Lowestfare.com), Galileo (Trip.com), Rosenbluth (biztravel.com) and Amadeus (OneTravel.com).
5. Travel is the single largest repeat discretionary expense.
Sure, housing, autos, education cost more, but how many times do we buy a house in our lifetime versus fly on a plane? Consumers of all types and nationalities continue to defy the skeptics with an insatiable appetite for anything and everything online travel. Traditional travel agencies must radically upgrade their entire service offering in order to secure sufficient market share for generations to come.
No industry is immune to a recession, and, if the U.S. falls into one, it will hurt online and offline travel. Corporate cutbacks and fewer family vacations will affect travel in general. The online travel industry has never lived through a recession - it was born in the boom and that`s where it grew into a $13 billion business. But it will survive a slowdown because it offers a convenient, efficient and cost-effective way to buy and sell travel. What more could you want in tough times?
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