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Travel websites gain visitors by offering more than low prices

January 22, 2006|James Gilden | Special to The Times

THE most popular destination for travelers continues to be the Internet. Forty-seven million Americans bought travel online in 2005, about 7 million more than in 2004, according to PhoCusWright, a Connecticut-based travel research firm.

This year, travelers will spend about $79 billion online for leisure and self-booked business travel, it says.

"Record numbers of consumers traveled in the U.S. in 2005 and a record number of consumers used the Internet" for planning travel, said Hugo Burge, vice chairman of travel website Cheapflights.com.

The evolution in consumers' use of the Internet for planning and purchasing travel, and changes in how online sellers of travel interact with their customers fueled the growth.

Front and center was the increase in online travel communities and user-generated content, such as consumer reviews of hotels and websites where travelers can post photos, said Lorraine Sileo, an analyst with PhoCusWright. One such site is TripAdvisor (now owned by Expedia Inc.), which has 18 million visitors a month and garners more than 2.6 million consumer reviews, making it among the most popular travel websites.

Expedia and Yahoo Travel added user reviews for hotels to their sites in 2004, and Travelocity has had such reviews since 2000. It's part of an effort by big online agencies to differentiate themselves with value-added features, providing consumers with information that goes beyond the lowest price.

"So much of the online industry has been focused on one thing alone and that's price," said Tracey Weber, chief operating officer of Travelocity. "It shouldn't be the only thing that consumers consider when they make their choice."

Besides information such as traveler reviews of hotels, Travelocity also tells whether a plane is a turboprop or a jet. Many travelers will pay the extra $10 to $15 to be on a jet, Weber said. That kind of information lets them make choices that can improve their travel experience.

"It's not like [ordering] a latte," Weber said. "You're spending a lot of money for an important trip and there's value to look at beyond price."

Travelocity also launched a customer care initiative in 2005, blurring the line between a bricks-and-mortar travel agency and the "do-it-yourself" online model. Now if a traveler has a problem during his trip, he can call Travelocity and the online agency will help sort it out. Customer service reps, who had before helped only with reservations, were given training to deal with such issues.

Travelocity also will seek to notify a customer in advance of a reported problem. For example, if a traveler booked a hotel because of a pool but arrives to find that the pool is being renovated, Travelocity will tell other guests booked at that hotel and offer a different accommodation. Since the initiative was launched in May, Travelocity said, more than 120,000 customers have been helped during their trips.

"It's a huge change for us," Weber said.

Websites' new and expanded functionality also has boosted growth.

Just a few years ago, selecting a seat online wasn't an option. Now it's ubiquitous on nearly all websites that sell tickets, including the airlines' own websites.

"The Web is all about consumer choice and user experience," Cheapflights.com's Burge said.

Consumer choice of travel websites blossomed in 2005, as new entrants jockeyed to woo consumers. Aggregators, those sites that direct a customer to a supplier's website to purchase a ticket or a room, were at the forefront of the change. Such aggregator sites as Yahoo Farechase, SideStep, Mobissimo and Kayak are designed to make comparing fares and rates straightforward.

"This really was the year when you saw it come into its own," Phil Carpenter, former vice president of corporate marketing for SideStep, said of the site, which now has a user base of 4 million. "It moved from something that was a service that was used by early adopters to one that is being embraced by the mainstream."

So what does all this mean to the travel consumer for 2006?

More features and functionality. Some of the sites will be playing catch-up; others will be launching innovations. For example, Travelocity will roll out a Meet Me In function (already available on Site59) that allows travelers from different cities to plan trips together to a single destination. Orbitz is upgrading its customer service offerings later this month, and has jumped on the consumer review bandwagon, adding 60,000 customer reviews to its website.

A slowdown in the number of new sites. It's easy to be confused by all the newer travel sites and what they do differently. Finding the right fit is the key. Not everyone cares about the same things. "Try a few different types of websites," Burge said. "It'll be for consumers to decide which kinds of websites become useful."

More use of supplier sites. Forty-seven percent of consumers who purchased travel online used a traditional online agency such as Travelocity in 2005, according to PhoCusWright. That number will decrease in 2006 to 44%, though the actual number of visitors will increase because more people are booking online. Consumers are shopping in greater numbers at supplier sites (that is, directly with the airlines and hotels) as those sites gain functionality, and aggregators such as SideStep and Kayak are luring more consumers. Supplier sites also don't charge a fee.

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James Gilden writes the Daily Traveler blog at latimes.com/dailytraveler.

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