Today anyone with an Internet access and Credit card can just like that, plan for a week’s tour to South Africa or the Himalayas, thanks to the travel sites who offer trip planning at your finger-tips - flight booking, hotels and car rentals along with the reviews of the hotels, places of interest, and information on packaged deals. Clearly travel sites have been redefining the travel agency business. In 2005, over 79 million people in the US used the Internet to plan and book their travel, a function which previously involved travel agents much more actively.
Online travel is one of the largest e-commerce categories. According to Forrester Research the online travel industry is projected to grow from $63.6 billion in 2005 to $110.5 billion by 2008 in the US. JupiterResearch on the other hand estimates $128 billion to be spent on online travel in the US in 2011. Jupiter expects 38% of all travel revenues to be made online by 2011. Over the last few weeks, we have analyzed the Travel sites based on the Web 3.0 framework.
The online travel industry is expected to continue its strong growth and this is one of the main reasons for the ongoing VC and entrepreneurial interest in this category. In March 2007 Silver Lake and TPG acquired Sabre Holdings the owner of popular travel sites like Travelocity and LastMinute. The Blackstone Group along with its affiliates took over the Travelport business of Cendant Corporation for $4.3 billion in August 2006. Now, they’re trying to spin off Orbitz and take it public. Indian portal Sify entered the online travel business by acquiring Globe Travels.
We have been reviewing the online travel industry and have covered Yahoo! Travel, TripAdvisor, Travelocity, Orbitz, Expedia and Priceline and Lonely Planet from a Web 3.0 perspective.
The fact that online travel is a booming industry is clear from the growing number of travel sites, emergence of travel metasearch engines like Kayak and SideStep and the mushrooming of niche sites like Site59, Farecast, FlyerTalk, Mobissimo, etc. Identifying the opportunity Forbes has launched a special section for luxury travel and NYT has tied up with Expedia for its travel portal. We have not yet had a chance to review many of these other sites. Expect to see more in due course.
Context is, by and large, poorly understood by the sites, although nuances like flights, hotels, car rentals, cruises, vacation pacakges, maps, hotel and destination reviews, trip planning, sharing, etc. allow the consumers to plan their trips and make bookings. But few have created contexts like student travel, luxury travel, adventure travel, romantic travel, etc.
The Content offerings at many of the sites are good. Some, like Lonely Planet, come from Content roots, and do an especially good job. The CPM rates for these sites are similar and are in the range of $15 to $65 per thousand impressions. Considering the present boom in the online travel industry, ad rates are expected to rise in the coming years. As for leapfrog technology, my biggest wish-list item is large scale mashups from various parts of the web that can enrich and strengthen content that is already on the site.
The Community features on most of these sites lack punch and leaves a lot to be desired. Trip Advisor has the best community section but the rest really needs to improve the community features and incorporate photo and video sharing, forums and blogs on different aspects of traveling like trekking, backpackers, family, summer holiday, etc. LonelyPlanet, though has a good video sharing, review section, trip sharing, find a travel partner, forum, etc. According to Forrester peer reviews and blogs will have a decisive influence on travel behavior.
Online travel is the largest Commerce segment and most of the revenues come from the commissions earned on the bookings made through the sites. However, these sites are not taking full advantage of e-commerce and I believe there is an opportunity for these sites to retail a lot of travel related merchandise through their site. Yes, sites like, TripAdvisor, SideStep, etc. do merchandise travel gear in partnership with Cafepress but it is a pretty shoddy affair. LonelyPlanet in fact has done a much better job.
What I would like in the Vertical Search space is that the sites allow users to Search by Context and by this I mean, if I am a student I would like to search for hostels for backpackers like me, as well as other travelers to hang out with, by destination. The basic bread-and-butter vertical search is provided by Kayak and Sidestep, which we have reviewed.
Personalization is sub-par in most of these sites and they allow users to plan their trip, save and share their trip, photos, make posts and write reviews. They have email alerts for travel deals and newsletters. Endless possibilities exist, all the way to a Personal Concierge.
Conclusion
The online travel industry is projected to grow at 30% per annum in the next 5 years and this has resulted in a number of entrepreneurs, VC and PE funds entering the space. New entrants (Gusto, Mobissimo, travelervideos.com) in the online travel space and stand-alone travel operators like airlines and hotel companies are going to put pressure on the existing travel sites. However, those sites that are able to integrate the latest technology, differentiate their offerings, build their brand and provide consumers with the best Web 3.0 experience will have an edge in this highly commoditized industry, and that opportunity applies just as well to the major airline sites.
Showing posts with label short breaks. Show all posts
Showing posts with label short breaks. Show all posts
Tuesday, January 06, 2009
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