Suppliers Gain Market Share From Online Retailers

ONLINE travel agencies are losing customers to suppliers in the world’s biggest travel market – a finding that has strong implications for online Asia Pacific businesses.

According to the latest report from PhoCusWright, 40% of online travel shoppers in the United States price check on web agency sites before booking direct with the supplier.

Airlines have been the big winners with “nearly half of online travel shoppers” booking air (either through the call centre or web site) after cruising retail sites.

“This compares to three out of 10 who have shopped online travel agencies but ultimately purchased direct from a hotel or car rental company,” PhocusWright says.

“Low price guarantees, loyalty points and improved website navigation and services have impacted this shift.”

Service is also a factor. “More than twice as many online travellers (36%) believe the supplier-direct channel provides the best customer service compared with 15% who choose the online travel agency channel.”

Even traditional agencies fared badly with just 33% of respondents claiming they provided the best service.

Meanwhile, nearly four out of 10 (38%) of online travellers believe suppliers offer the lowest prices, up from just 14% in 2002 – a 24-point gain in two years.

Online shoppers also believe that suppliers offer the lowest fees (44% vs. 29%), most bonus miles/loyalty reward points (51% vs. 14%), and an easier change/cancellation policy (39% vs. 17%) compared to online travel agencies.

“Online agencies have lost their footing with leisure travelers in 2004 as a result of aggressive supplier efforts to better manage inventory and win business through online and offline direct channels,” according to Susan Steinbrink, PhoCusWright analyst and author of the report.

“The key to their long-term, Internet survival will be in successfully upselling the customer with valued multiple travel components.”

A total of 500 interviews were conducted via telephone from International Communications Research/ICR’s centralized telephone center between Oct. 6 and Oct. 16, 2004, for the survey.

Ends.

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