Online travel sales continue to rise

20th Feb 2006

The trend for booking travel and holidays online continues to rise and the
major travel groups are reporting double-digit growth figures in passenger
numbers.Expedia is now the fifth largest Air Travel Organiser’s Licence
(ATOL) holder with a 36% growth in sales. Expedia, Freedom Flights and
Flightbookers say that passenger sales will rise by 19%, 84% and 188%
respectively. ATOL-protected bookings by major online operators, says, also show a 60% rise in online passenger sales.

A further improvement of 50% (1.53 million in 2006) is anticipated,
although 32% less air travellers are covered by the ATOL scheme. Even so
the market for the scheme’s protected holidays rose by 4%, equating to
sales of $14 billion.  In fact a total of 27.3 million passengers bought
such vacations and flights in the year leading up to September 2005. There
are also 1,100 travel agents and small tour operators who have managed to
obtain Small Business ATOLs of a total of 2,440 businesses holding an ATOL

In the USA, a survey by Accenture of 550 business travellers shows that 75%
of businesses make their travel bookings online. The trend here is again
going upwards with only 22% of the respondents calling an agent to organise
their travel requirements and bookings. In contrast during 2003 around 36%
preferred the telephone to the Internet. The vast majority, 87%, of
business travellers are also using airport kiosks to check in due to its

Overall, in both the consumer and business travel markets, there is a big
push to book directly with airlines and hotels at the expense of the online
agents. There is also a shift back to the major airlines from the low-cost
carriers. TravelMole quotes an anonymous spokesperson who says:

“Major network carriers and hotel companies should be keenly aware that
aspects beyond price, such as convenient schedules, are deciding factors
for many business travellers’ service and convenience - from the website to
the aisle seat, to the hotel room - remain the top concerns for


Furthermore, since 1999 travel and holiday reservations through travel
agents have remained static according to a report by Mintel. More and more
holidays, which is also suggested by US market figures, are being booked
independently. In another TravelMole article entitled, “The Internet offers
compelling advantages over agents”, the research company’s head of
research, Paul Rickard, comments:

“For an increasing number of travellers, being in control of creating their
own itineraries and do their own booking creates a compelling advantage
over the services of the travel agent. Indeed, today, some 34% of adults
like to travel independently.”

Around 18% of those surveyed want to get off the beaten track, and some are
even worried by the impact of mass tourism on the environment and local
communities. There are a number of factors that have stimulated the rate of
growth in the industry. The Internet is playing a major role in this,
particularly as more and more of us are able to access the web from home
and therefore book our holidays online. Most of us, Rickard believes, are
better off and this has led to more people taking more holidays and ever
more independently from the major tour operators and travel agency outlets.

So, like with every business, if you want to win your company needs to
provide the best quality service, a high level of flexibility, with the
most convenience for the business or even leisure traveller, and at the
right price. With the increase in online sales it also important to have a
website that provides the right level of usability and accessibility to
information, which makes booking online easy and intuitive.

Sharron Robbie, Marketing Manager of GOSS - the Enterprise Content
Management Company - says that the trends are similar in all of the main
travel sectors. GOSS client Brittany Ferries, for example, has seen an
online growth in sales. Steve James of Brittany Ferries says, “Year on year
cumulative growth has been spectacular. Visitor sessions are up by over
100%, unique visitors by over 250% and ferry bookings by over 80%. The
facility to book holidays online for 2006 went live in December and we are
exceeding our ambitious targets. Brittany Ferries was the first travel
company to provide complete online management of bookings and more and more
customers are using the facility to recall and amend or cancel their
There is also the issue of information communications technology (ICT)
integration with call centres, mobile telephony, airport kiosks, search
engine technology, the Internet, and other channels. At the recent Travel
Technology Show in London, for example, most of the firms exhibiting
focused on content management, digital asset management (DAM) and more
specifically global distribution systems (GDS), a reservations system that
is perceived as another sales channel in the travel industry.

With regards to integration there are, for example, more than 60 million
active mobile phone handsets in the UK, and at least one is owned by 85% of
the country’s households. Although it is suggested that most people will
only make low value transactions using their mobile phones,
reports travel purchases of around £4,000 via such devices. The importance
of this channel is also shown by its growth in sales, which between 2003
and 2004 grew by 2000%, with average sales totalling £200 per transaction.

Experts at the London show also believe that search engines demonstrate
great potential for the travel industry as a sales channel with only 9% of
search terms overlapping between Opodo and eBookers. Of 17 searches for a
destination, about half of them were for an airport claims Hitwise’s
director of research, Heather Hopkins.

Meanwhile, Google’s vertical market manager, Daniel Robb, advised the
delegates to get the right mix between quality keywording and cost per
click: the word ‘flights’ might cost 10p per click, but if you are more
specific with, say, ‘flights to Majorca’ then the cost could drop to as
little as 5p per click. No matter what the cost, albeit an important
consideration, Arjo Ghosh - the managing director of search engine
marketing company, Spannerworks - cites that 73% of all online travel
purchases begin with a search using one search engine or another.

Another potential case study is that of the Great Hotels Organisation,
which talks about the Power Law curve of search in a PowerPoint
presentation entitled: “Is search the new distribution channel” - It claims
that, within the next 3-5 years, more than 50% of all travel bookings will
be made and sold online. It also claims that 20% of all natural search
phrases get 50% of the searches and 20% of the group’s bookings. The
remaining 80%, it says, get 50% of the search and 80% of its bookings.
Natural search can be risky though, so Great Hotels also uses pay per

So the message here is that companies shouldn’t be half-hearted about it;
the focus should be on the value of the search, the whole process is
getting slower and so it should be viewed as a long-term exercise, and you
need to keep working at it continually. Controversially, the company also
suggest that Google is a ‘fickle friend’ and it advises that no one should
rely solely upon it to achieve the desired commercial results, but adds
that Google is the only search engine that counts when it comes to natural
search. It also thinks that natural search is the most effective Search
methodology, the one that provides the best value.

Sharron Robbie adds: “All of the best travel websites will have invested in
search engine marketing (SEM). The management of a site’s content is
therefore crucial, and it should be where possible achieved in a structured
and logical manner. From compliance perspective there is also a lot of
unstructured data that must be managed and handled appropriately. So travel
companies need to invest in the right technology, knowledge and expertise.
Without these there will be many lost commercial opportunities and

Meanwhile, the latest figures demonstrate that there are many opportunities
within this market for both the ICT vendors and their clients, the players
within the tourism industry. To stay ahead of the game, and to attract and
retain customers, travel companies must innovate and incorporate the
application of technology into their marketing strategies in a
customer-centric fashion. This is because in today’s increasingly
multi-channel marketing world, you cannot necessarily communicate with
customers through just one channel. Customers are also demanding more
flexibility and choice of how they talk with travel companies, and with
regards to the holiday or travel products and services they wish to
purchase. Beyond this, there are still many opportunities in the market
that have yet to be tapped.


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