Holidaymakers take plunge into Internet booking pool

UK holidaymakers are adopting a more self-service approach to travel and are increasingly turning to the Internet to book their...

UK holidaymakers are adopting a more self-service approach to travel and are increasingly turning to the Internet to book their holidays. Daniel Thomas reports

As the holiday season moves into full swing people are scrambling to escape the miserable, unpredictable British weather, and an increasing number of holidaymakers are turning to the Internet to book their breaks in the sun.

Despite the adverse effects of the 11 September US terrorist attacks on the travel industry, the European online travel market has grown considerably in the past year, and will be worth £12.1bn by 2006, according to market research firm Jupiter Media Matrix.

The UK is the biggest online travel market in Europe, said Jupiter, with almost six million unique visitors to travel Web sites per month. However, the research does not show how many of that six million are actually making online purchases, so the figures do not accurately gauge how successful sites are.

Concrete evidence that consumers see the Internet as a real alternative to the high street for booking holidays emerged last week, when travel agent First Choice said that 85% of customers using its recently launched online package holiday booking service have opted to carry out the whole transaction via the Web.

The figures mark a major shift in consumer behaviour. Users have tended to go to travel Web sites to gather information and browse about holidays, before completing the actual transaction offline, whether via a travel call centre or by visiting a high street branch.

Alun Williams, head of e-commerce at First Choice, admitted that he was surprised by the high numbers of people paying via the Web.

"The normal model is for the customer to browse for information online before completing the deal through a call centre," said Williams. "We thought the majority of customers would do this but the simplicity of the new service means 85% of them are opting to pay online."

Traditional high street travel agencies, such as First Choice and Thomas Cook, have begun to focus on new channels because of the advent of low-cost airlines, such as EasyJet and Go, and Internet-only travel agencies, such as Expedia.co.uk, which have threatened their revenues.

Catherine Nichols, a travel industry analyst at GartnerG2, said the increased competition, added to reduced commissions from airlines, has put high street travel agents on the back foot.

"Travellers now have a wider choice of sources for travel advice and tickets," she said. "As they develop a more self-service approach to travel, and especially air travel, many are deserting the high street travel agents and heading for other channels, such as online travel agents and direct-sell call centres."

Rather than just relying on existing customers sticking to what they know, high street travel agents have had to build and promote services that exploit both traditional and modern ways of selling travel.

Thomas Cook, which launched its online arm in February 2000, has invested heavily in e-commerce and is beginning to reap the benefits.

"Online bookings are 15% up on where they were last year and 30% of our customers are using the Web as their first port of call," said Gwyn Williams, content manager at thomascook.com.

Alun Williams said high street agents had an advantage over firms such as Expedia because of their established brand.

"These e-agents are spending millions marketing themselves whereas we can focus on our core business - selling holidays," he said. "We have found that around 60% of our customers are coming to our site by tapping firstchoice.co.uk into their browser, which shows the strength of our brand."

Alun Williams said part of the reason for the success of First Choice's online booking service is the function which allows customers to tailor their holidays to their individual needs.

"The online options include alternative flight times, flight upgrades, alternative room types, pre-bookable seating and car hire," he said. "These options have radically transformed the way our customers plan and buy their holidays."

Tailor-made holidays, where consumers can create holidays on screen with a mixture of flights, hotels and other travel components, will be the next major trend in online travel, according to industry figures.

Last month, Online Travel Corporation, the UK's largest online travel supplier and retailer, launched a service that will allow users to tailor-make their holidays for destinations all over the world.

The build-your-own technology works by bundling together flights and accommodation of the user's choice. It offers a range of published, consolidated and negotiated airline fares with hotel accommodation worldwide.

Mark Jones, chief executive of Online Travel Corporation, which provides travel content and fulfilment services to 50 companies including Virgin.net, Freeserve and Expedia, is confident the service will be a success.

"Tailor-made holidays are undoubtedly the next big thing in online travel," said Jones. "Increasing numbers of travellers are choosing the tailor-made route and we are committed to leading the way online with more and more integrated content."

Mark Riseley, a travel industry analyst at GartnerG2, said dynamic packaging technology such as this is ideally suited to online travel agents.

"It offers them an opportunity to increase their share of the wallet because the margins on flights only [the best selling travel component on the Web] are virtually zero," said Riseley. "It is also a threat to traditional tour operators because it gives consumers an easy alternative to package holidays."

Alun Williams said the technology is too immature to pose a threat at this stage. "The technology is too disparate at the moment and we cannot see it threatening the popularity of package holidays, which is our core business," he said.

First Choice is aggressively focusing on its e-commerce strategy moving forward, Williams said. "We now know that the model works," he said. "People are prepared to part with large amounts of money over the Web despite the complexity involved in buying a holiday."

Travel companies such as First Choice and Thomas Cook are now realising that the Internet can be viewed as an opportunity rather than as a threat. But they cannot afford to rest on their laurels, warned Riseley.

"Tour operators have to ask themselves how much value they are giving to customers," said Riseley. "The emergence of Internet rivals and confident consumers who are prepared to look beyond the package holiday means the stakes have been raised."

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