Click Here
for more articles |
|
|
Online Travel Bargain |
by:
yatin patel |
Are holiday bargains for true or have catches hidden?
REMEMBER YOUR LAST CONVERSATION WITH THAT family relative who couldn’t talk enough of how much they saved on their last holiday package deal? Or that colleague bragging about his $fivenine round- trip flight to Las Vegas and his stay infive-star hotel at $eightninenight? Have you found yourself staring wistfully (and suspiciously) at$threeninenine package deal for two for Hawaii?
Just because your email seems flooded at times with seemingly impossibly priced travel offers, and you find Internet search engines are flooded with onezerozerozero’s of sites selling internet travel besides big hotel brands and branded distribution sites don’t discount them all.
Who can you count on?
Just four or five years ago, when you looked for travel discounts you could choose betweentravel agent,airline offices andhotels themselves, and maybe, if you were lucky, some travel guru downstreet. Today, there’smassive range of things you can do online, andlot of them can save significant amounts of money.
The reality is:
• Nine out of onezero online travelers now have some history of shopping for travel online, and nearly onefive% of all Americans purchased travel online last year - that’s five timespenetration rate of oneninenineeight. (PhoCusWright Consumer Travel Trends Survey)• Nearly one-third of online travel buyers sayInternet was responsible for their travel purchases last year.
• In oneninenineeight, six million consumers bought travel online inU.S. Jump ahead to twozerozerotwo when threezero million Americans purchased travel online inlast year. Half of them only buy their travel online. (PhoCusWright Consumer Travel Trends Survey)
• Online travel bookings exceeded $twothree billion in twozerozeroone, and are expected to reach $sixthree billion by twozerozerofive.
• Internet bookings infirst three quarters of twozerozerotwo accounted for over twothree% of rooms sold in New York, and over onefive% in Los Angeles, Chicago, and San Francisco. Anecdotally, for some properties, hotel managers are reporting Internet bookings ranging from threezero% to fivezero% of all room nights in twozerozerotwo. (Smith Travel Research and TravelClick)
What does this mean?
This means that online distribution channel is extremely successful in reaching buyers and buyers are finding it more confirmable to shop online. They are seeingbroader range of travel options and variety of products and packages. And its more likely that consumer wants to control that transaction through access to more competitive pricing. Pricing is becoming key factor to determinesale.
Key factors: Why travelers prefer to book online
• Competitive Price
• Ability to compare product and Prices
• Ability to plan last minute
• Availability of Range of options
Online travel shoppers are not very loyal on where they shop—sixfive percent of online travelers do not view themselves as brand-loyal. As much as they love to shop online and spend their time researching what suits their needs, they are not loyal tocompanies from which they buy.
The above scenario indicated thattravel suppliers have no choice but to participate in this online distribution channel. The suppliers are realizing thattraditional channels like GDS (Global Distribution System)/travel agent and call center/reservation office is somewhat inefficient and expensive, especially wheneconomy is weak. Ignoring online distribution channel and concentrating only on traditional distribution channels will result in lower occupancy, and higher distribution and operational costs for travel suppliers. As online channels become more popular among suppliers their participation is increasing.
How Pricing and Distribution Become Key
nine/oneone causeddramatic shift in how consumers booked their travel. The instability causedlarge drop in demand for airlines, hotels and car rentals leading to ever-lower prices. This low demand factor forced travel suppliers to introduce unprecedented discounts. Travel suppliers struggled to sell seats, rooms, car rentals tosignificantly shrunk leisure and business travel market. Every air seat, room and auto not booked cost their companies money. Better to sell dirt cheap than not to sell at all. But how to getword out?
Smart, proactive suppliers adoptedWal-Mart business model—sell low and distribute inexpensively and efficiently. But how?
The Internet allowed them to reach consumers, sell inventory outstrip their less progressive competition. Those suppliers who had no clear Internet strategy or understanding of howWeb and online distribution works suffered.
Discount hotel sites attract millions of buyers with their special rates leading to stratospheric sales through these channels. They thrive on hoteliers selling their distressed inventory atfraction of their normal rates. Occupancy islowest its been in years, hoteliers continue to work with leading online retailers to move inventory at lower price.
The $six.three billion in online hotel sales (twozerozerotwo) with are split roughly evenly between discount agency sites and hotel Web sites. PhoCusWright projects that around sevenfive% of discount agency hotel site sales are viamerchant model, whereagency typically takestwozero-threezero% “margin” onhotel net rate (instead ofusual onezero% commission). This approach has helped profits at Expedia and Hotels.com, who have roughly sixzero% of online discount agency hotel sales. Travelocity and Orbitz are institutingsame successful approach. Other notable players thriving in this arena are Hotwire.com, http://www.hotels-and-discounts.com , Lodging.com and Travelweb.com.
What isFuture?
Online travel growth will continue to grow in twozerozerothree-twozerozerofive, but it will slow down year by year compared torecord gains see so far. However millions of travelers haven’t yet made their first purchase somarket is not near saturation. Technological improvements will soon make it possible to more easily dynamically package vacation deals including air, hotel and car leading to even lower prices but higher average sales. So growth is projected to come from customers buying more, higher-ticketed products online.
The growth ofonline distribution channel will prove beneficial toend user whensuppler finds it easier and more cost-effective to distribute their inventory there than overtraditional distribution channels. As technology becomes mature inonline distribution sector, it will become more effective and user friendly forBuyers and thus will attract more Suppliers. Due to its low cost of distribution and emerging ability to package and cross sell inventory, prices will be attractive for years to come, until this channel eventually becomescommodity.
By Yatin Patel
Published in http://www.siliconindia.com
July twozerozerothree
AboutAuthor
None |
|
