A wake-up call for the travel industry

The NY Times publishes this week an article that tries to understand why are some indicators for online travel purchase in the United States dropping, for the first time in the short e-commerce history.

This article is definitely worth reading for anyone who works in the online travel segment, but what we liked most about it is the variety of problems it is able to flood to the surface, in an industry many insiders believe to be heading straight up.

First, are the figures: while number of total online travel spending has increased in 41% in the last 3 years, the number of online travel purchasers has dropped 9% in 2006.
Forrester research was made with 60.000 US respondents but it may give a good representation for the future of European and Asian markets as well, which are considered to be trailing behind the U.S. in ~3 years.

Second, the time of search factor: “This is a wake-up call for the industry,” said Henry Harteveldt, Forrester’s online travel analyst. “Customers are tired of spending two or three hours trying to find the airline or hotel or vacation package that meets their needs.” We can identify at least 3 reasons for this phenomena:
A. Customers don’t always know what is it exactly that they are looking for.
B. Customers do not appreciate the hassle of search through multiple sources. A problem that travel search engines are not solving, as we identified earlier this year.
C. Customers prefer to use specialists to help them make difficult travel choices.

Third, some more figures: PhoCusWright found that among travelers with access to the Internet, the percentage who usually book travel online dropped to 62 percent at the end of last year from 68 percent in 2005, while those who say they usually arrange travel offline increased to 31 percent from 25 percent during the same period.
This trend is not good for the industry, and it emphasizes the problem: travel information is available, but purchasing travel online is now becoming less worthwhile.

Among the solutions the article claims that there is a need to change the way travelers search for travel products. While today customers can only look for a specific product (on a specific period of time), Mr. Harteveldt asks for a different type of solution: “Nowhere can you say, ‘I have this amount of money to spend on a trip. These are my interests. This is where I live. Show me my options”.

The problem for stealth on innovation is marked in the fact that travel reservation systems are still laying on the fundamentals they were built upon in the 1960s. We can add to that notion and say that most of the travel suppliers still work based on the same fundamentals, which explains the problem grounding once again.

The article sees the solution with independent technology companies that are entering the market with their own products. LeisureLogix’s RoadTrip wizard is one solution. It helps road travelers find accommodation and venue tickets that match their road plans. We recognized Tripit, a travel booking organizer as another one. Our own solution, Etrip: Travel Reservations Gateway- would first try and solve the hassle of searching for online travel products, and then combine specialized assistance for it, when solutions such as Tripit and RoadTrip are likely to be added to the entire offering in a cooperation method.

What’s on travelers minds?

Tripadvisor’s annual travel trends survey, TravelCast was published this week with few interesting findings, and few findings that reflect opinion diversities between travelers from different destinations.

The picture on the right is of a place called ‘Ksar Soltane’ in Jerba, Tunisia. This town is, according to an analysis of the search activity of TripAdviosrs users, the next hot tourist spot for 2008. Only 3 low cost airlines in Europe are ready for the challenge, with direct flights of JetairFly from Liege starting at €149 for a return trip in November, according to Skyscanner’s database search results.

Green and Terror on top of the concerns. Its interesting to see how two subjects that are so different can be easily brought up into a discussion about travel choices. Terrorism surpasses natural disasters and cost drivers as the most important external factor to choose a travel destination, which is perhaps its strongest victory in the battle on public’s opinion.

The environmental concerns are the most eye-catching evidence in this survey. Only 26% of the respondents said they “Will be more environmentally conscious in their travel decisions in the coming year”, but this figure drops even lower to 19% when British participants were asked about the same statement. Not very much aligned with the stands of the UK ‘green air taxes’ that were imposed earlier in 2007, but perhaps reflect better the debate on the need to impose such taxes at all.

Some airlines seem to be fueling this debate more than others, taking into account that ‘Dirty old aircrafts’ are causing a significant portion of the pollution, which is a chance for more efficient airlines to win a small yet important battle against their older competitors who usually operate an older fleet. Easyjet and Ryanair use the same terminologies in this debate, which so far results in a ₤5-₤10 tax on flight tickets bought in the UK, and a plan of the European Union Emissions committee to add flights into the Emissions Trading Schemes, which will result in significant costs for airlines.

Back to the survey we begun with, other concerns of travelers were cleanness, which somehow made it to the first place in the general concerns of the participants; Apparently 28% of the travelers find airplanes to be polluted, which could eventually result in airlines marketing themselves as: ‘World cleanest airplanes’ or present the ‘Vacuum your row’ programs for dedicated cleaners.

Last winners: Schiphol, Amsterdam’s airport is the favorite airport in the world, While British Airways is the most favorable airline outside of the U.S,. One last note: 34% of the Americans are planning to visit Europe in the coming year, which is quite a staggering figure if we take into account the US Dollar current currency exchange rate, and the fact that 100M Americans might be planning their way to Europe in this very time…