Evolution of the Online Traveler

May 04, 2003 |

Nine out of 10 online travelers now have some history of shopping for travel online, and nearly 15% of all Americans purchased travel online last year - that's five times the rate of 1998.

by Stacy J. Moran

In 1998, six million consumers bought travel online in the U.S. Most people researched vacation plans via advice from friends and relatives and then made purchases through traditional travel agencies.

Jump ahead to 2002 when 30 million Americans purchased travel online in the last year. Half of them only buy their travel online. The Internet is now the leading source for travel research, and online travelers usually purchase their travel on the Web. In fact, eight in 10 online travel buyers usually purchased their travel online last year.

So how did this evolution come about? A recent report from PhoCusWright Inc., The PhoCusWright Consumer Travel Trends Survey Fifth Edition, examines online travel shopping and purchase behavior as well as the factors that have turned many online lookers into online buyers over the past five years.

Nine out of 10 online travelers now have some history of shopping for travel online, and nearly 15% of all Americans purchased travel online last year - that’s five times the penetration rate of 1998.

Given the increased volume of online travel purchases, all the market players (online travel agencies, traditional agencies and suppliers) are battling to maintain or gain market share. Each of these channels has characteristics that entice usage and breed loyalty. Consumers laud online agencies for their low prices, broad selection and ease of use, while others prefer traditional agencies for their customer service and reliability.

Both online travel agencies and airline Web sites have won the confidence of online travelers for finding low airfares. Meanwhile, just to be sure, most online travelers (86%) shop multiple sites before buying. This provides a significant opportunity for online providers to build market share by reaching Web site “switchers.” For example, 39% of online travelers said a broader selection of hotel properties would inspire them to switch from one site to another.

Some additional survey findings include:

Travelocity is the Web site “most often used” for air purchases, but Expedia is “most often used” for hotel reservations.
Six in 10 online travel buyers have purchased a hotel room or rented a car online.
Nearly one-third of online travel buyers say the Internet was responsible for their travel purchases last year.

Even when buying doesn’t take place online, the influence of the Internet on travel plans is irrefutable. For example, among online travelers who took a cruise in the past five years, 43% used the Internet to research their last cruise in 2002 (versus 32% in 2001).

As online travel sites are jockeying for position, they are still competing mostly with offline processes, such as the telephone. But, considering the influence that the Internet has on travel research, whether the resulting sales occur online or offline makes little difference.

The PhoCusWright 2002 Consumer Travel Trends Survey provides valuable insight into which market segments and players are likely to land on top while others scramble for what’s left and some perhaps disappear from the online travel landscape.

For complete table of contents, visit PhoCusWright, Inc.