Air Transportation Dominates Online Travel

Air travel will continue to dominate the travel products sold online, representing more than 80 percent of the online travel dollars spent, according to research by Jupiter Communications.

Online rental car and hotel bookings will continue to climb, cutting air travel’s percentage to 60 percent of what Jupiter predicts will be a $16.6 billion market in 2003. Jupiter also estimates that 66 percent of online consumers have used the Web to research and book travel online, which will result in nearly 10 percent of the US travel market being booked online by 2003.

Jupiter’s prediction of online travel being a $16.6 billion industry by 2003 comes in below an earlier prediction by PhoCusWright, which predicts online travel to be a $20 billion industry by 2001.

Despite the enormous potential in the travel market, Jupiter found that suppliers such as airlines, car rental companies, and hotels, have allowed their sites to stagnate and must continue to market aggressively to acquire and improve execution to retain today’s travel consumer.

“Online consumers are being courted by more and better travel options, and travel players are letting the opportunity to retain these consumers slip,” said Jupiter analyst Fiona Swerdlow. “In the last two years, suppliers geared up and moved to disintermediate the travel agent market. However, despite falling commissions and increased competition, travel agents have conceded only 1 percent of the US online travel market.”

Swerdlow also said that online travel players will not see significant customer growth unless they create online product offerings that simplify the purchasing process.