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.