November 9, 1998

"Crossing The Chasm" To Travel eCommerce Highlighted At PhoCusWright Live98

By Lorraine Sileo, PhoCusWright Information Services

Getting Web users to "cross the chasm"-from browsing travel sites to booking online-is an industry crusade. Statistics show that Internet users who travel are "looking" at travel sites in droves. More of them go online for travel information than use magazines or guidebooks to plan their trips. But most of these "wired travelers" book their travel somewhere else. Offline.

This problem was highlighted at PhoCusWright Live98 in Phoenix, AZ, last week, where results from the 1998 Travel eCommerce Survey were unveiled. Commissioned by PhoCusWright, the research was sponsored by four leading online booking services-Preview Travel, The Sabre Group/Travelocity, MSN Expedia and Internet Travel Network (ITN). ICR/International Communications Research of Media, PA, called 10,000 homes at random and conducted 500 in-depth telephone interviews.

Findings revealed that 80% of "wired travelers" have looked at travel sites, and 18% have purchased travel online. "Wired travelers" are U.S. adults who have traveled commercially by air at least once in the last year and visited a Web site in the last month. Of those that bought travel online, 83% bought airline tickets, 40% reserved a hotel room, 32% rented a car and 3% purchased a vacation package or tour.

But 57% looked and didn't book-close calls that frustrate this fledgling industry. Among that group, 70% purchased that travel later—nearly 40% from a traditional travel agency. "The infamous look-to-book has once again reared its ugly head," bemoaned Simon Breakwell, group manager, MSN Expedia. Though MSN Expedia books $7 million in travel per week on the site, "we drive $18-20 million a week" in sales when including travel priced on Expedia, but booked elsewhere, he said.

Current non-buyers are stubborn and need to be lured into their first online purchase. Of the 56% who have not bought anything online, 75% have no intention of buying online anytime soon. "The first transaction is critical," Ken Orton, president and CEO of Preview Travel, told the audience at Live98. "People tend to repeat. Once they jump the chasm they are yours to lose."

Yet it’s unlikely travel will be that first transaction—it’s more likely to be a book, computer supply or CD. Finding those buyers, and getting them to buy travel, is a marketing dilemma. "We are not the training wheel transaction," Orton said.

Why are people who have already purchased something online more likely to start buying travel (as opposed to those who avoid eCommerce)? The survey found that 44% of "wired travelers" have bought something online. These buyers show significantly less fear of credit card fraud, privacy or customer service issues than non-buyers. They’ve been through the drill and "trust" eCommerce. These are the folks that are more likely to be lurking on Amazon.com or other transaction sites rather than travel destination sites, such as National Geographic.

How do consumers learn to "trust" travel eCommerce? Suggestions include the 24-hour hold, email reminders and easing credit card concerns. Even though there is no evidence of credit card fraud, it is still the top reason people don’t buy travel online (64%). (This is an irrational fear, and one that wanes in focus groups when the issue is discussed further.)

In his keynote address at PhoCusWright Live98, Terry Jones, president of Sabre Interactive and CIO, The Sabre Group, challenged the industry to make strong positive statements about credit cards and promote the "shop safe guarantee," which covers consumers’ credit card risk. Web sites should not force people to use a credit card to check fares, he said.

Ultimately "the issue is not about the credit card, it’s about protecting (supplier) inventory," Jones stated. But airlines are afraid of any variations in the yield management system, and their rigid, complex purchasing rules hamper travel eCommerce. Jones thinks the 24-hour hold should be extended. For this to happen, there needs to be more flexibility in the distribution channel. Unfortunately, suppliers want less flexibility.

Incentives also work, and this is where airlines get to play their biggest hand, Dick Whilden, chairman, president and CEO of Internet Travel Network, told the audience. ITN investor United Airlines has seen transactions jump since promoting 20,000 frequent flier points to regular online bookers. Offering 24-hour/day help and order confirmation also build trust, Whilden said.

Ultimately, the key to selling travel is information. Orton believes that knowing the traveler well enough to guide him through the purchasing process will improve look-to-book ratios. Until this ultimate "one-to-one" marketing approach is used, it will take a combination of hand-holding and free miles to keep this industry hopping.

For a press release about the PhoCusWright 1998 Travel eCommerce Survey go to http://www.phocuswright.com/press.html