Hotel Industry Makes Room for Online Bookings

Cost-conscious travelers are not only surfing for low airfares, but reduced-rate hotel rooms as well, research has indicated. According to the Travel Industry Association of America (TIA), 57 percent of online travel bookers purchased accommodations on the Internet in 2002 — that’s exactly halfway between airline tickets (77 percent) and rental cars (37 percent). Furthermore, Jupiter Research (a unit of this site’s corporate parent), predicts online hotel bookings to surge from $5 billion in 2001 to $14.8 billion in 2007.

While this online revenue may seem like bad news to travel agents, Jupiter analysts believe that consumers are often overwhelmed and confused by the rate differentials and choices that are available online, often preferring to call the hotels directly or rely on the expertise of a travel agent.

In fact, Jupiter found that in 2001 for each $1 that the travel industry realized directly online, travel companies selling hotel products online garnered an additional $5 of booking revenue in traditional channels as a direct result of research that consumers did on the Web. A 2002 Jupiter study of 1,845 online travel buyers and browsers indicated that nearly half (48 percent) of those surveyed conducted research and purchased from an agency site, while 34 percent conducted research and purchased from a supplier site.

Jared Blank, senior analyst, Jupiter Research, theorizes that an experienced Internet population will increasingly take advantage of the hotel industry’s reduced rates that were created to spur sagging occupancies. Additionally, online consolidators have been proactive in garnering reservations. Blank adds, “These low rates, and the ease of booking at most online agencies and consolidators, have brought new consumers online who otherwise would have reserved their lodging directly with the hotel.”

PhoCusWright supports the predictions of increased Web bookings, expecting traditional travel agencies to represent just 18 percent of hotel sales in 2005 — down from 21 percent in 2001 — as hotel sales move online. The firm forecasts a 49 percent increase in online hotel sales in 2002, reaching $6.3 billion.

Vendors that can successfully capture the online hotel bookings market would serve the 64 million travelers who used the Internet to make travel plans in 2002, according to the TIA. Of those that use the Internet for travel planning, 41 percent actually made travel reservations online in 2002, translating to 39 million people — up 25 percent over 2001.

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