Travel & Web 3.0: Overview

Online Travel is one of the top segments that draws over 2% of the Internet traffic and approximately 24% of online advertising dollars, and in this series, we will evaluate the category against the Web 3.0 framework.

According to a report published by Hitwise, Online Travel sites accounted for an average of 2.02% of all Internet traffic and local travel sites made up 1.93% of this 2.02% in March 2007. On an average a visitor spends over 8 minutes 30 seconds on a travel site.

According to Alexa, Expedia is the leading travel site in the world with a Traffic Rank of 409 followed by TripAdvisor with a traffic rank of 504. Other top travel sites that deserve a mention are Yahoo! Travel, Travelocity, Orbitz and Kayak. All these sites have very high quality content (maps, booking services, reviews, etc) with contextual information. Some of these sites also have vertical search and comparison facilities. Expedia earned revenues of $2.2 billion in 2006 and advertising rates vary between $20 – $60 CPM.

According to the latest data published by eMarketer, online travel sales zoomed to over $78.8 billion in 2006 in the US and it is expected to continue to grow at a CAGR of 16.6% to $145.8 billion in 2010. These are strong growth numbers and the phenomenon is not restricted to the US alone.

Europe experienced the maximum growth of 49% in the online travel industry in 2005 and is expected to continue growing at a robust pace till 2009. Though Online Travel is at various stages of development in the different markets they all are growing rapidly and countries like India and China are seeing a lot of activity in this space and are expected to see the maximum growth in the coming years, although starting from a low basis.

The Online Travel industry is booming and this is supported by the new product and services offered by the travel sites. Researching flights, hotels, cheap tickets and packaged deals, Travel-related RSS Feeds, podcasts, blogs and communities, group travel sites, and online booking of flights and hotel tickets are the key functionality offered by the travel sites.

A typical travel site has the following categories:

* Flights
* Hotels
* Car Rentals
* Vacation Packages
* Cruises
* Deals and Destinations
* Maps
* Corporate Travel

Some of these travel sites have incorporated very good Consumer Generated Media (CGM) features like discussion boards, forums, RSS Feeds, blogs, etc. Sheraton’s, TheLobby.com uses the CGM feature by allowing consumers to share information and encourages participation from the Starwood users. Remarkable vision from a large company in staying on the cutting edge of innovation.

Keeping in pace with the blogging community, a number of travel blogs have also emerged. According to Forrester Research, peer reviews and blogs have a huge impact on the travel plans of Internet users and this is evident from the fact that 33% of leisure travelers changed their hotels based on what they read on the blogs or other travel related community sites.

TripAdvisor has the largest travel community in the world, with more than 5 million posts. According to Alexa, VirtualTourist is one of the leading travel blogs with over 800,000 registered members spanning more than 220 countries and territories, 30 million page views and 5 million unique visitors per month and covering 2 million travel destinations, which is 4 times that of travel guides like Frommers.com and Fodors.com, and have twice the reach of Concierge.com.

Today the online travel industry is witnessing the emergence of some niche sites like Farecast and FareCompare, which enable users to compare fares, flights and decide on the best time to book flight tickets. Gusto.com, a travel related social networking site allows users to share their travel itineraries and trip information. Kayak and SideStep, which provide vertical search engine services, are expected to boost traffic to travel related sites.

TravelerVideos.com allows user to upload and share their travel related photos and videos and write their own blogs. These are valuable market driven services that are changing the rules of the game by increasingly differentiating themselves in a highly competitive and commoditized market.

Online Travel in India

According to HVS, the online travel industry in India is expected to touch $2 billion by 2010, a huge 271% increase over 2005. This has resulted in a considerable interest in the country’s online travel industry and sites like MakeMyTrip, Yatra, TravelGuru are doing brisk business. Considering the growth opportunity in India, Travelocity has started its India operations and Amadeus has tied-up with IndiaTimes, MakeMyTrip, Sify, TravelGuru and Yatra to provide technology solutions, giving these online travel agents access to – and the ability to book – the full range of domestic and international airline tickets in Amadeus’ distribution system.

In the upcoming days, we will deep dive further into the Online Travel category.