Internet becoming indispensible to European travel industry

March 12, 2007 | Online Travel

European travel agencies are ceding a rising share of their business to the Internet, as consumers grow accustomed to less personal service but more flexibility.

About 36 percent of tour operators in the European Union offer online reservations, 40 percent of package operators and a full 62 percent of hotels, according to figures compiled by the European Commission.

And 28 percent of companies using the Internet receive more than a quarter of their reservations online.

In a sign of the times, Europe’s leading travel and tourism group TUI has skipped the world’s biggest tourism fair, the ITB, in Berlin which closes on Sunday. Its giant stand has been replaced by online tour operators.

“There are clear advantages with the Internet, such as the possibility of making a reservation 24 hours a day, seven days a week,” the marketing director at the German unit of online travel service Expedia, Juergen Seiler, said.

“When making travel plans I can also compare different offers with complete transparency.”

Expedia was born in the United States in 1996 and today boasts units in several countries and 17 billion dollars in turnover.

Making reservations on the Internet saves time, says Anne-Katrin Guenther of German competitor weg.de, a start-up with about 15 employees launched in Munich a year and a half ago and now active in the British market.

“It is obvious that online services provide less consultation but you don’t have to go into a travel agency,” she said.

“Both sides win,” added Joerg Menno Harms, vice-president of the German IT, telecommunications and new media industry lobbying group BITKOM.

“While clients can review the various offers at their leisure, the companies cut distribution costs.”

The Internet has also helped fuel the boom in no-frills airlines such as easyJet, Ryanair and Air Berlin, which rely almost entirely on online reservations.

Online services are also feeding a new trend called “dynamic packaging” in which travelers move away from the traditional all-inclusive packages that have been offered for decades by travel companies.

Rather, tourists can create their own packages a la carte, choosing the flight, hotel and local services themselves—a process made easier on the Internet.

Expedia launched its dynamic packaging service in Europe in 2002. In Europe’s largest market, Germany, it now represents 40 percent of the company’s business and is expected to reach 60 percent in the next three to five years, Seiler said.

He acknowledges, however, that the German market is a bit behind the times because of a lingering mistrust of credit cards and wariness about data security.

But the Internet has become a platform in the travel business that neither tourists nor companies can afford to ignore.

TUI plans to tally more than 25 percent of its turnover online in the next three years versus 18 percent today.

Europe’s number two in the sector, Thomas Cook, has just merged with Britain’s MyTravel and plans to create a European online travel agency that also features offers from competitors.

But will the Internet kill off the bricks-and-mortar travel agency? Developments in the market indicate that the answer is no.

The German service weg.de has created eight neighbourhood franchises and plans to keep expanding the network.

Guenter said there was still a “real need” for human faces and glossy brochures, particularly among pensioners and other less technically savvy clients.

Source: AFP