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Online travel takes off, but needs loyalty

Industry Standard

(IDG) -- Although e-commerce didn't reach industry analysts' expectations this holiday season, travel -- the e-commerce category that draws the most revenue -- saw its sales almost double in 2000.

Last year, online travel took in nearly $13 billion, up from $7 billion in 1999, according to researcher PhoCusWright. But that growth rate is expected to slow down slightly during the coming years. Forrester Research (FORR) projects it will be three years before the online travel industry doubles its annual revenues again, to $29 billion.

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The Internet attracts travelers hunting for bargain plane tickets or hotel rooms, according to a PhoCusWright survey. Fifty-four percent of Americans cite price as the top reason to purchase travel-related items online; 44 percent say they get their best deals through online agencies rather than through offline travel agents or the airlines themselves.

Travel sites provide good customer service, according to PhoCusWright -- a skill other online retailers have yet to master. Eight out of 10 Net travel customers surveyed said customer service is important to them when they make travel-related purchases online. And 9 in 10 respondents said they have experienced either good or excellent customer service at online travel sites.

Quality customer service, however, hasn't translated into loyalty among online travel customers. Fifty-eight percent of respondents to the PhoCusWright survey said they would buy from another travel site if it offered a better price, or if they couldn't find what they were looking for at their preferred travel site. Given that lack of loyalty, online agencies are trying to improve their Web sites and online research tools, and many travel sites are offering 24-hour customer service in hopes of keeping clients.

The PhoCusWright survey also found that online travel still has some distance to go if it wants to become the one-stop shop for every travel need. Online travel transactions like hotel bookings, car rentals and cruise and other travel packages make up a small amount of total online travel purchases. The majority of online purchases are still airline tickets, which represent 69 percent of this year's $13 billion market.




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