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For some, booking travel online just isn't what it used to be

The average American online travel consumer looks a lot like the average American air traveler these days: dissatisfied.

More people make travel arrangements online than offline, and last year the e-travel industry grew 8 percent, according to PhoCusWright Research. Booking flights and hotel rooms on the Internet has fully hit the mainstream. But a closer look at the industry reveals a curious trend: while more people are buying travel online, they’re less happy when they do.

Americans have been griping about their travel woes for years--the long lines at security checkpoints, cramped seats, or, like the thousands of American Airlines customers recently, delayed and cancelled flights. In a 2007 Gallup poll, 80 percent of respondents listed at least one dislike. That frustration helped inspire the rush to online agencies like Expedia in the late ’90s. The sites offered a way to hunt for cheap fares across dozens of airlines and hotels. Suddenly, people could find rock-bottom tickets and control their own itineraries.

But that dissatisfaction with the travel business has now, apparently, spilled over to the Internet, where customers have shifted in droves over the last decade.

Today, industry analysts complain that the standard search-and-buy platform that online sellers use is out of date. And the old-guard agencies like Orbitz and Travelocity face increasing competition from suppliers who’ve seen the wisdom of pulling their inventory out of the hands of middle men.

A decade ago online agencies “had an advantage over anything else out there,” said Larry Freed, president and chief executive officer of ForeSee Results, which tracks consumer satisfaction. “All of that has eroded.”

In 2007, satisfaction with online travel agencies dropped 1.3 percent for the second year in a row, according to the University of Michigan’s American Consumer Satisfaction Index. If that doesn’t sound like a lot, consider that the three other e-commerce sectors the index measures—retail, brokerage and auctions—all increased.

The findings also match those of a 2008 first-quarter study by Forrester Research, the technology and market analysis firm. According to that study, just 66 percent of leisure travelers say it’s easy to plan and buy travel on the Internet, down from 71 percent in 2007. Only 49 percent of travelers say they enjoy doing it, down from 53 percent last year. And people aren’t purchasing any more travel online than they were three years ago; the number appears to have plateaued at 60 percent.

“There’s plenty of blame to go around,” said Henry Harteveldt, the vice president of travel research at Forrester. “The investments that have been made by both online travel agencies and suppliers alike have been around the periphery, not the core technology that would support a better shopping and buying experience.”

Because online travel agencies take between 18 and 30 percent in fees, some property owners have stopped using them. They’ve launched their own Web sites, replete with Web 2.0 features and best-rate guarantees. American Airlines offers DealFinder, a downloadable desktop application. InterContinental Hotels has “Get a room” on Facebook. And US Airways lets travelers sign up for frequent-flier membership via text message.

The agencies have also rolled out their own snazzy features, and they’ve had some success. In 2007, Travelocity launched Experiencefinder, a media-rich site where travelers can customize package itineraries. People are spending an average of 30 minutes per visit—up from 11 minutes on the regular site—and they’re booking many more items. Orbitz has launched two blogs and a Facebook application. And of course no one but the online agencies can offer interline tickets. As Brian Hoyt, the vice president of communications at Orbitz put it: “The online travel industry business is still a good business to be in.”

But their new programs haven’t changed the way airline tickets and hotel rooms are displayed--the essential ingredients to booking travel. “If you will, they’ve focused on the icing, not the cake,” said Harteveldt. They offer more content, he says, but if you type in “beach vacation,” you still have to know where to start and what destination you want to go. “Travel sites don’t do a good job of helping people decide where to travel,” he said.

Enter a constellation of new companies, armed with tailored searches and user-generated review content. Most recently, the industry has been taking note of InsideTrip, which launched on March 4. Dave Pelter, the founding chief executive officer who worked in the airline business for more than a decade, spent about a year creating a quality score for flights by identifying 12 “pain points” like leg room and layover duration.

The rating system he came up with allows people to choose a flight based on the age of the aircraft or the number of bags the airport where they’ll be landing lost last year. The idea was that the score would give his customers a sense of a flight’s value beyond its cost. “There’s an assumption that all people care about is price, and we’re trying to push back on that,” said Pelter, adding that a cheaper fare may not matter if “it’s an itinerary that you wouldn’t want your worst enemy flying on.”

So far, the response has been “beyond our expectations,” said Pelter, who declined to release any figures. It’s too soon to say if a company like InsideTrip will change how online sellers do business and prevent the industry from falling further in the esteem of its consumers.

“I would expect if I looked into my crystal ball, that something’s gotta give, something’s gotta change over time,” said Freed.

Harteveldt was more direct: “If this industry doesn’t get its act together, they will see fewer people buy travel online. Those who remain online will likely continue to hold the line on how much they buy online, if they don’t curtail that as well.”