I’ve blogged a couple of times recently (here and here) about declining levels of customer satisfaction with online travel websites. Now another survey reports their declining further.

Detail is here at Hotelmarketing.com but in a nutshell this seems to suggest that the old model of ‘booking engine only’ websites is losing favour as users want a richer, more immersive and customer focused experience rather than simply a one size fits all approach to buying travel online.

The online travel industry has dropped 1.3% as a whole, Expedia lost 3.8% and now scores 75 (the highest).

The next generation of travel websites can’t be far away, hopefully the advances in technology will allow customer satisfaction to be dramatically improved through the use of advanced usability techniques, customer profiling and tools which enable rather than just sell, sell, sell.

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News here from ZDNet that some of the largest online travel agencies in the U.S. may shift their focus abroad in order to keep growing their business. Chief execs at Priceline, Orbitz and Expedia all said at a summit this week that they would be focusing on emerging markets in an aim to capture as much of those markets as possible.

Asia-Pacific seems to be the particular focus but there is still work to be done in Europe by some of these large players. Orbitz, Priceline and others such as Travelocity do not have the profile in Europe that Expedia have built up. I’d expect to see some more aggressive tactics over here from companies like them.

This could make it an even tougher year from domestic players especially with the economic climate in the U.S If the Americans stop spending I’d expect them to put their efforts into regions which are not so economically challenged.

Good article from Reuters here talking to Expedia CEO Dara Khosrowshahi about the prospects the current economic climate presents to the online travel agent.

It’s yet to show whether it will bite in the UK. Apparently more people than ever have booked their holidays in January (here and here from Travel Weekly). They believe 16% of people who plan to travel this year will have already booked in January. The fear among travel companies must be that if the economic conditions really bite we may not see all the rest of the 84% book as their plans may change as they reign in spending.

Time for some innovative marketing and aggressive pricing policies to make as much of the profits as you can before anything worsens perhaps? Or time to book a cheap holiday online.

Reuters have been holding a Travel & Leisure Summit in Los Angeles and this was one of the topics of conversation. The main answer seemed to be that deals will be key!

While consumers may tighten their belts, hoteliers may give better rates to online travel agencies as they will be more eager to fill their rooms. This should really benefit the large online agents such as Priceline, Expedia, Orbitz etc.

While a recession could erode demand generally it can also have the opposite effect in the activity of bargain and deal hunters as more people hunt for something affordable. This could benefit not just the big players but also the price comparison websites as they have access to so many rates they are the obvious place for any bargain hunter to start their search.

Another factor of economic weakness could be airlines who cannot fill all their seats, this should push them to offload unsold stock to online travel agents and may mean that there are some better deals than usual available.

Of course this is all conjecture, at the moment we have no idea how bad an economic downturn could get (wait for the commercial property market to show it’s weakness) or how long it could last.

My tip for this year is price comparison websites. They are positioned well as far as price goes for a year of weaker demand and this has to be the year that they finally improve their user experience to a point where they are so easy to find deals that they start to erode market share of slower moving websites (remember, a lot of price comparison sites are technology companies rather than travel). Looking forward to seeing how Kayak, Mobissimo, Travel Supermarket etc get on in this economic climate!

CNN is reporting that some U.S. online travel stocks have been downgraded and as a result many more have dropped in value. Priceline, Orbitz and Expedia have been downgraded by analysts and Travelzoo have underperformed.

It’s interesting, makes me wonder if there is more about this than economic shocks in the U.S. I’d hazard a guess that they are beginning to suffer to price comparison sites and more technologically adept traditional players.

The growth these online agents experienced a few years ago had to slow eventually and it looks like the market is displeased. Expect Expedia to do best as they now have the media angle with Tripadvisor advertising revenues to take into account.

According to the latest J D Power survey anyway…

The industry as a whole has slipped in their rankings from a score of 810 out of 1000 down to 802. Not a massive slip but in these days of advanced internet applications we should be trying to raise that figure significantly.

Hotwire, Travelocity and Expedia have all done very well. Other findings include:

  • The accuracy of reservations made on independent travel websites has improved slightly since 2006. In 2007, 95% of reservations were reported as error-free, compared with 94% in the previous year.
  • The study also finds that nearly one-half (49%) of all travel-related reservations in 2007 were booked on the web, an increase from 46% in 2005.
  • Across the industry, independent travel websites overall receive their lowest marks for appearance/design of website.
  • Generation X and Y travelers are more likely to book a reservation on price-focused websites, such as Priceline.com and Hotwire.com, compared with Baby Boomers and Pre-Boomers.

Here’s the list of results:

What this says to me is that:

  1. Consumers expect a much better experience than travel sites can provide currently. Their expectations are advancing quicker than we can develop new online experiences for them.
  2. OTA’s are spending so much on advertising and product that they are not advancing technically at the rates they used to be. OTA’s used to be some of the most advanced websites around, no more I’m afraid.
  3. Usability is not being embraced by the travel industry. This needs to happen and fast!

I would love to see if satisfaction has improved with other types of online travel players such as hotel brands and tour operators. My gut feel is that this result is another sign of the consumer shift to doing it themselves and away from online travel agents. Also a sign of the increasing sophistication of the historically lacking tour operators.

I blogged yesterday about the PwC report on travel distribution and how suppliers such as airlines and hotels are gaining market share back from the large online travel agencies. I know have a link to the report which I thought I’d share.

Pleasing to me is the fact that the first graph in the report shows tour operators also growing share slightly (as I mentioned yesterday). I believe that share will grow further in the next two years as tour operators play technology catch up and decommission old reservation systems and legacy problems.


The pressures’ on for the online travel agencies! Expedia, Opodo watch out! Not that I think aby tour operator is going to seriously compete with them on scale but we could definitely make things difficult for them in some destinations and niche areas.