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December 20, 2001 - reprinted with permission from Canadian Travel Press
Online, Offline Convergence Is Where It's At
While the fall of 2001 will likely go down in the annals of travel industry history as the veritable, Dickensian "worst of times," there may be reason for embattled travel agents and suppliers to hope that the "best of times" are just around the corner.
The good news for retailers is that online travel purchases posted a huge, 53 percent increase - to US $4.3-billion - in the third quarter of 2001 compared to the same period in 2000, suggesting not only that travel is still a hot seller (in fact, the top seller on the Internet), but that there are opportunities for agents to carve out a healthy share of that business for themselves.
In a recent industry briefing, Ellen Keszler, senior vice-president of Sabre Travel Agency Solutions, said that the challenge for traditional "brick and mortar' agencies today is to recognize the market is shifting and take advantage of the changes that are now occurring and that will continue to occur. She pointed out that in 2001, traditional agencies will account for 56 per cent of all air bookings, but by 2004, that will drop to 41 percent as "... traditional offline channels will see significant declines as online challengers make gains."
Sabre's senior vice-president points to other shifts in the market, including the changing habits of travellers; changes in government policies on privacy, security and consolidation; the role that technology will play in driving these changes by providing access to lower costs, better bandwidths and a host of other improvements; and the appearance of new business models. A range of other forces will also be at work in this changing environment. Keszler said the industry is and will continue to see such changes as:
- Suppliers moving to regain control of the customer.
- Agencies trying to re-invent themselves.
- The development of new and non-traditional alliances.
- The continuing trend of consumer empowerment.
- The GDS distribution channel will face increased competition.
- New entrants will emerge in the marketplace.
- And, of course, the industry will continue to experience the impact of Sept. 11.
For Keszler and Sabre, these changes are not totally unexpected. As a company, Sabre has been adapting its operations to a changing marketplace for quite sometime now. As a result, it has developed and launched a number of products - Sabre eVoya and Sabre.Res - that are directed at providing its clients with the kind of technology that they need in order to adapt to the shifts that are taking place. It has also been quick to advise its customers of these emerging trends and those trends were a big part of the message that the company's senior vice-president Sabre Online Travel Solutions, Jeff Harmon brought with him to the recent briefing.
Harmon pointed out that "the marriage of travel and the Internet has been the most successful in the e-commerce world." And he added that not only is the sale of travel on the Internet here to stay, it is also about to take-off. He pointed to a March 2001 survey of almost 40,000 Internet users, which revealed that as a group, they purchased US$1-billion worth of online travel products. While that is a number that certainly makes one sit up and take notice, what is perhaps more important is that the survey also revealed that those same users spent an additional US $500 million for offline travel purchases.
The point, says Harmon, is that what's going on right now is that there is a blending of online and offline travel purchase activity and the result is that "previous metrics, don't necessarily cast the right picture of how to be successful in the future." As Harmon sees it, traditional agencies that move into the online world, won't be just online agencies, their business will be a blend of both.
For the customer, that allows them to shop online, then have the option to book the product either online or offline. In this respect, Harmon observed that currently only 59 per cent of ASTA members have a web site at a time when agents need to move aggressively online in order to "grab a piece of the pie." Agents interested in learning more about Sabre eVoya, Sabre.Res or other Sabre products should go to www.sabre.com.
