E-Commerce Times Talkback
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As e-commerce shoppers have become as comfortable booking travel online as they are buying a book on Amazon.com, the competition in the online travel market has become brisk indeed. Although the sudden decline in travel after the terrorist acts of September 11th caused fiscal repercussions for travel companies long afterwards, the industry seems now to be looking at rosier days ahead. An increase in corporate travel spending and the push toward better comparison shopping will most likely reward companies that can do both well online.
I don't quite agree with the premise that the online travel consumer has made the travel companies change, rather the other way around. To be future winners in online travel, companies have to learn how to compete on value rather than price, a challenge in a retail eCommerce environment that so far has been totally price driven and transparent, e.g. Amazon.com vs. B&N.com etc.
The recent emergence of the merchant model and dynamic packaging are efforts by the online travel players to add a profit margin to the products they sell. This is only possible by bundling components such as air + hotel + car and sell them as a package, or to sell components on an opaque basis. However, the US travel consumer has traditionally been package averse precisely because it makes comparison shopping more difficult as most packages are not alike. This causes a catch-22 for the online travel industry and makes branding an essential factor to gain market share and acquire customer trust. As the article states, there is hardly any difference between the major travel sites as far as component sales are concerned and the lowest price provider gets that shopper. It will be interesting to see how the players cope with this complex situation, which is compounded by the large travel suppliers; airlines and hotel chains efforts to maintain price integrity and also to acquire customers directly on their sites without having them use the online travel agency distribution channel.