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Prediction: A $30 Billion Online Travel Biz by 2001

An Internet research firm is predicting that the worldwide online travel market will increase from $5 billion in 1999 to $30 billion by the fourth quarter of 2001.

Technology adviser Gartner Group Inc. made the prediction of explosive growth, but cautioned that leisure travel companies that do not have a presence on the Internet already will face difficult times ahead.

"For most leisure travel firms that are not yet successfully online, it's already too late," said Lou Marcoccio, research director for Gartner Group's e-business transformation service.

"By the second quarter of 2000, nearly all leisure travel companies that do not offer competitively designed online reservations, ticket sales and customizable travel information will be driven out of the business or acquired," he said in a news release.

"By the second quarter of 2000, airlines that do not offer easy-to-use online reservations and ticketing will not remain profitable and will not have a competitive position in the leisure travel ticket sales market."

Companies that are not yet selling most of their services online may have to develop a plan for transitioning out of this business or attempt to be acquired, Gartner Group said, although it may be possible to partner with other online services already established.

"Middle-tier companies are at most risk and must take more immediate action, while lower-tier companies may be capable of selling some services through online auctions or reseller sites," Marcoccio said.

"Companies that are already successfully providing services online should be aware that this success may have made them attractive candidates for acquisition."

A recent Gartner Group survey of people with Internet browser access showed 75 percent of the respondents indicated that before booking personal travel, they research schedules, flights, discounts and travel packages (a 400 percent increase from the fourth quarter of 1998). In addition, 16 percent book flights and pay for tickets online (an 800 percent increase since the fourth quarter of 1998).

Gartner Group analysts found that respondents cited two key reasons for not purchasing flights on the Internet. The respondents said one reason was that they had further questions to ask a booking agent regarding special needs. The other reason was a perception that they needed a more flexible ticket and ordering process.