The Future of the Online Travel Industry

The online travel industry is one of the most competitive of any that I think exist online or offline today.  In a market previously dominated by two or three players, the rise of travel aggregator sites such as Kayak and Sidestep has made travel an even greater price-driven commodity.  These aggregation sites are increasingly becoming a first point of call for experienced online travel deal seekers looking for the best deals on airfare, hotels, and car rentals.  Despite efforts from the big three (Orbitz, Expedia and Travelocity) to bring out enhanced content (often through partnerships with content providers like Frommers), the majority of site visitors are still task oriented and highly price conscious.   

Adding pressure to these OTAs (Online Travel Agents) is the growing prevalence of low price guarantees which have been announced by most large hotel chains, including Hilton, Marriott, and Starwood — which are taking hotel bookings away and leaving only airfares and car rentals (both lower margin).  As a result, the opportunity for any of the many competitors in this space is increasingly concentrated in two areas:

  1. Corporate travel (exclusive deals, recurring sales, full price tickets, etc.)
  2. Package deals (last minute deals, book everything at once, specials)

The big three know this.  Each has last minute deals (sourced through Site59 – one of the few successful online travel models out there) and dedicated corporate travel areas.  Yet amidst all these challenges, there is hope in the fact that the passion for travel and travel deals is strong and driving the popularity of consumer driven discussion sites such as FlyerTalk.  The site has thousands of posts from travellers helping others, trading discount certificates, and talking about customer service experiences.  TripAdvisor is one of the most frequently trafficked sites from search engines due to its high rankings for just about any location or hotel-based keyword search.  Each of these sites is hugely influential because they feature real voices sharing real insights.

My view is that the opportunity in the online travel industry is for a single travel site to emerge as the authority in pulling these two types of sites together, to follow a user through from browsing to buying.  An OTA focused on including real voices of consumers to review hotel properties, share deals and frequent flier tips, and even trade discount certificates … what would that look like?  It’s an intriguing possibility, and one that I think will describe the online travel sites which are still around after a few years.

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