The Timeshare Beat: The Net Is Saving The Travel Industry's Financial Hide, According to Forrester Research

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The Net Is Saving The Travel Industry's Financial Hide, According to Forrester Research

Expedia Unseats Travelocity.com In Latest Web Travel Winners List

Press Release: Forrester Research
October 22, 2002
CAMBRIDGE, MA -- Despite the sluggish economy, an increasing number of travelers are flocking to the Internet to snap up great bargains, fueling the competitive battles between travel suppliers and Web agencies to gain consumers' attention and dollars. According to the latest Consumer Technographics® survey by Forrester Research, Inc. (Nasdaq: FORR), more online households traveling year over year will contribute to the sustained growth in Web travel.

This year, nearly 26 million US households -- 43 percent of Web travel households -- will book leisure travel online, 12 percent more than in 2001. In 2002, when Web travelers will spend just under 30 percent of their leisure travel budgets online, leisure travel will drive $22.6 billion in revenue. By 2007, 32 percent more households will spend 39 percent of their travel budgets online, generating $49.7 billion.

"Without the Internet, the travel industry's financial performance would be even worse than we're now seeing," said Henry H. Harteveldt, senior analyst at Forrester. "More than six in 10 US households research their leisure travel online today because they know that's where they'll find the best deals."

From its online survey of nearly 9,000 households in the US and Canada, Forrester is able to determine how online leisure travel will grow over the next five years, as well as to find out which sites win over consumers and how people divide their dollars between the Web and offline purchasing channels.

If they don't like what they see, consumers look elsewhere. Responding to an increasingly demanding and savvy audience, the industry has aggressively developed or enhanced the products it sells to Web travelers. Aided by new technologies and a hotel product in which it consigns hotel rooms at a "wholesale" rate and resells them to consumers at a retail price it sets, Web travel agency Expedia took the top slot from perennial leader Travelocity.com on Forrester's annual Web Travel Winners list. Value and innovation helped American Airlines and Southwest Airlines move up the ranks, and they landed both United Air Lines and Hilton Hotels on the list for the first time.

"As much as online travel bookers love the Web, they are not loyal to the companies from which they buy," added Harteveldt. "Travel companies are faced with the challenge of making the Web as functional as offline options and ensuring that the best values are always online."

Based on the results of the survey, Forrester makes several recommendations:

Web agencies should prepare to battle suppliers for the 65 percent of online travelers who do not view themselves as brand-loyal.
Travel providers should be aware that inconsistent pricing drives Web consumers to offline channels in search of better rates.
Travelers are apathetic about email marketing -- four out of 10 Web travelers feel they are receiving too many emails -- so it's imperative that email messages become more relevant.
Technology has been found to alleviate stress while traveling. Airline check-in kiosks are gaining in popularity, and more than four in 10 business travelers want broadband Internet access in their rooms.

Forrester Research identifies and analyzes emerging trends in technology and their impact on business. Forrester's WholeView(TM) Research, Strategic Services, and Events help $1 billion-plus clients understand how technology change affects their customers, strategy, and technology investment. Established in 1983, Forrester is headquartered in Cambridge, Mass. For additional information, visit www.forrester.com

(c)2002, Forrester Research, Inc. All rights reserved. Forrester, Forrester eResearch, Forrester Wave, WholeView, Technographics, TechStrategy, and TechRankings are trademarks of Forrester Research, Inc.

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Contact: 
     Forrester Research, Inc.
     Mariko Zapf, 617/613-6255
     press@forrester.com

Source: Forrester Research, Inc.