Online Business Travel Booking Soars To $20.3 Billion By 2004, According To Forrester Research

Starting now, the driver of US online business travel will be corporate policy, versus individual travel. According to a new Report from Forrester Research, Inc. (Nasdaq: FORR), companies eager to save travel and processing costs will mandate the use of Web-based corporate booking engines. The few remaining unmanaged business travelers will buy their business travel online as leisure bookers do.
“In 2000, managed travel will already account for 57% of the $4.9 billion businesses spend on travel online,” said Henry H. Harteveldt, senior analyst at Forrester. “By 2004, however, corporate policy will dictate the spending of 77% of the $20.3 billion of business travel booked online.”


Business travel will grow due to new corporate policies that will require travelers to use company-approved online booking engines. Firms will experience cost-savings through booking engines. These engines achieve savings through directed use of a company’s negotiated fares with their preferred suppliers, as well as reduced service charges for making employee travel reservations. Once clients use online booking engines, travel agents will thrive on scalability, improved employee productivity, and additional customers. Due to the self-service nature of online business travel booking, companies and travel suppliers will increase efforts encouraging continued use.


The Net’s cost-efficiency appeals to companies that currently manage travel offline, and it will actually increase the number of companies that manage travel overall. Companies with larger travel budgets will be the first to shift their travel buying online through the installation of a booking engine, with 70% of Fortune 1,000 companies making this migration by 2002. Larger unmanaged accounts will adopt managed travel and shift their travel buying directly online. Smaller firms will move their business travel online as well, first encouraging individuals to use any Web interface, then gradually adopting services that target smaller businesses.


Online booking will be made simpler with the advent of user-friendly booking enhancements. Each managed traveler’s company computer will include a desktop icon that, after entering a user name and password, links directly to a personalized profile within the travel site. Once business travelers sign on to corporate travel sites, entire trips will be booked with one click on the desktop icon, eliminating the need to reenter login information. On the road, managed travelers will use company-issued wireless Web devices to research upcoming trips, check on late flights, or change an existing hotel reservation.


A sizable but secondary opportunity will remain for sites that attract unmanaged travelers. To capture the online business of this sector, aggregators will target small businesses by buying business tickets on high-volume routes in bulk or reselling tickets at a markup. Public Web sites will offer incentives like cash rebates or travel credit based on a combination of total revenue paid and levels of fares purchased. Suppliers will capture more customers by allowing small businesses to auction unused, nonrefundable tickets purchased from the supplier’s Web site.

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“Unmanaged travelers can benefit from many of the same features offered to managed accounts, but they will have to sign up for it one person at a time at the travel Web site of their choosing,” added Harteveldt.

For the Report “Online Business Travel’s Boost,” Forrester surveyed nearly 10,000 American and Canadian members of Greenfield Online’s panel of online consumers. The survey focused on consumer adoption and behaviors regarding booking leisure and business travel on the Internet. The Report also drew from Forrester’s Technographics® 1999 Benchmark Study of nearly 100,000 American and Canadian members of NPD’s consumer mail panel.


Forrester Research is the leading independent Internet research firm, analyzing technology change and its impact on business, consumers, and society. Forrester’s “Whole View” of the Internet economy enables clients to weave together Internet commerce initiatives with eBusiness technology to satisfy customers’ changing needs. Clients receive continuous research and analysis through Forrester’s unique eResearch? Reports, an array of advisory services, bit products, and topical events. Established in 1983, Forrester is headquartered in Cambridge, Mass. Forrester’s European Research Center is located in Amsterdam, Netherlands, and its UK Research Centre is located in London. Additional information about Forrester Research can be found at www.forrester.com.
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