Start-Ups Fuel E-Travel

Travel e-commerce is expected to reach $20 billion by 2001, a 700 percent increase over $2.5 billion in 1998, according to Internet travel research by PhoCusWright.

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PhoCusWright’s “Yearbook 1999: Analysis, Assumptions, and Assessments for the Online Travel Marketplace” predicts that online Internet travel bookings will surpass $6 billion in 1999.

According to PhoCusWright, Internet start-ups are fueling the online travel market and traditional offline companies, such as Hotel Reservations Network, which are shifting their telephone-based reservation system to the Internet. Intermediaries’ share was 54 percent in 1998, according to PhoCusWright. That compares to 46 percent for supplier sites — 25 percent for airlines, 13 percent for hotels, and 8 percent for car rental companies.

“Despite the fact that airlines and hotels are investing heavily in their Web sites, we see fierce competition from online travel services and auction sites,” said PhoCusWright President and CEO Philip Wolf. According to PhoCusWright, airlines, hotels, and intermediaries will evenly split the Internet travel industry pie.

Online travel agencies accounted for more than half of the e-commerce bookings in 1998, and their share will change only slightly over the next three years, according to PhoCusWright. First quarter 1999 results show strong growth for leading online agencies such as travelocity.com and MSN Expedia, which have more than tripled sales over the same 1998 period.

All segments of the market will at least double sales in 1999, with vacations, tours, and cruises — nearly nonexistent a year ago — starting a fast growth trend.