By Kyle Peterson
The online travel search market is fast filling up with Web sites
offering the cheapest bookings, and experts warn that the smaller
entrants without partnerships with major service providers are sure to
fail.
Unlike full-service online travel agencies such as Expedia Inc. that
sell tickets and make reservations, travel search engines sniff out
bookings and direct users to Web sites where they can make
purchases. Some travelers use search engines to avoid booking fees
that travel agencies charge.
The newest breed of these businesses are the so-called meta-search
sites that present users with lists of bookings for comparisons.
The trouble is that too many sites are doing the same thing and too
few travelers care, according to Henry Harteveldt at Forrester
Research.
"There is a glut. They're not working," Harteveldt said. "Our research
indicates these meta-search sites just aren't gaining any traction."
Data from Forrester shows that only 6.5 percent of travelers who
planned trips online used travel search engines to plan a trip,
compared with 44 percent who used a travel agency.
About 27 percent of travelers researched trips using general search
engines such as Google and Yahoo!. And 25 percent looked at sites
hosted by travel service suppliers such as airlines and hotels.
"The truth is that meta-search really doesn't matter," Harteveldt
said.
An Internet search for "travel search engines" yields dozens of
results, including not only well-known brands like Expedia and Orbitz,
which is owned by Cendant Corp., but also a slew of names like
AllCheapFares, Kwikfly and Travel Now.
Experts say the travel search market is reaching a point where
competitive pressures threaten to smother start-ups before they can
get a toe hold.
"I think it's going to be a lot tougher road for some of the new
companies to try their hand at travel search," said Phil Carpenter,
vice president of corporate marketing at search engine SideStep. "I
think it's getting really challenging for new players to enter the
space."
Carpenter said the key to success is in partnerships with big-name
travel suppliers and other travel service companies. Only then will
users be confident that they are getting access to the best deals
possible, he said.
SideStep, a leader in travel search, just this month announced deals
with Hilton International, Amazon.com and American Airlines.
SideStep searches more than 100 Web sites for travel bargains. But the
company is not alone in that approach and faces competition from
search engines like Kayak.com and Yahoo! FareChase. Other competitors
include general search engines.
Meanwhile, online travel agencies such as Expedia and Priceline.com,
which made their reputations locating cheap fares, are adapting to the
new competitive environment by personalizing research and bookings
instead of relying solely on finding low prices. The agencies hope to
expand their businesses by addressing all travel needs and making
recommendations.
"The online travel agencies haven't really felt the pinch," said
Lorraine Sileo, an analyst at PhocusWright, a travel research
company. She said the newest crop of travel search sites are a bigger
threat to each other than to established travel agencies.
Still, the appeal of ad revenue, lucrative partnerships or a buyout
remain key motivators for people looking to jump on the travel search
gravy train. What's more, e-commerce trends suggest their optimism is
not misplaced.
Data from Forrester Research showed that in 2005, travel has been the
largest sales category in online commerce with $62.8 billion of the
total sales of $172.4 billion. The travel component on Web commerce is
expected to account for $119.1 billion of a total $328.6 billion by
2010, Forrester said.
SideStep's Carpenter said there is still money to be made in the
online travel industry as long as a company has an innovative approach
and the funds to carry out a vision.
Copyright 2005 Reuters Limited.
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Kyle Peterson (reuters@telecom-digest.org)