Online Shoppers Buy Direct

Four in 10 online travel shoppers have shopped an online travel agency site, but ultimately purchased direct from a supplier, according to a new report published by PhoCusWright Inc. This behavior is more pronounced for air than any other segment. Findings from the newly released The PhoCusWright Consumer Travel Trends Survey Seventh Edition, which surveys “online travelers” in the U.S., found that nearly half of online travel shoppers have looked at online travel agencies but ultimately purchased direct from an airline (either through the call center or Web site). That compares to three out of 10 who have shopped online travel agencies but ultimately purchased direct from a hotel or car rental company.

Clearly loyalty remains elusive for online travel agencies and suppliers alike. But in the past two years, online travel agencies have been losing coveted customers to the supplier-direct channel, which includes the supplier Web site and call center. Low price guarantees, loyalty points, and improved Web site navigation and services have impacted this shift.

In fact, more than twice as many online travelers (36%) believe that the supplier-direct channel provides the best customer service compared to 15% who choose the online travel agency channel. Even offline agencies, which are coveted for their personal touch in a technology-driven world, did not fare as well, with 33% claiming they provide the best customer service. An even more compelling finding is that nearly four out of 10 (38%) online travelers believe that suppliers offer the lowest prices, up from just 14% in 2002 – a 24-point gain in two years. Despite this improvement, more shoppers (45%) still think that online travel agencies offer the lowest prices – by far their largest asset in the minds of consumers.

Online shoppers believe that suppliers offer the lowest fees (44% vs. 29%), most bonus miles/loyalty reward points (51% vs. 14%), and an easier change/cancellation policy (39% vs. 17%) compared to online travel agencies.

“Online agencies have lost their footing with leisure travelers in 2004 as a result of aggressive supplier efforts to better manage inventory and win business through a combination of online and offline direct channels,” according to Susan Steinbrink, PhoCusWright analyst and author of the report. “The key to their long-term, Internet survival will be in successfully upselling the customer with valued multiple travel components.”

All the above being said, the study found that the number of adult Americans buying travel online increased by 14% in 2004 to 40 million. Among the 59 million adult Americans who said they had been online in the past month and had flown on a commercial airliner in the past year (defined as “online travelers”), 88% shop for travel online and 63% said they usually purchase travel via the Internet.