¨The internet is just a world passing around notes in a classroom.¨
The internet has perhaps changed the travel industry more than any other business. Just look at some of the ways the internet changed the travel industry, including:
Changing Consumer Expectations
- By placing the ability to book services directly into the consumers’ hands, customers can play around with different times, dates, etc. for flights, etc. As a result, customers discovered that a little bit of flexibility could pay big dividends. After opening up this information, the average consumer expects to and does pay less than before the internet. (Especially when adjusted for inflation);
- Before the internet, travel agents and airlines were trained to ask consumers: “When do you want to leave?”. (I used to call this “the most dangerous question”). The airlines set up their fee schedules to reflect the most common answers to this question. If you wanted to travel at the same time as everyone else, you paid through the nose. If you had even a little flexibility, you saved megabucks. Airlines knew that businesspeople had little flexibility and thus used to charge them through the nose often with no corresponding increases in services;
- Technology has also allowed consumers worldwide to find unique travel options designed around their tastes and interests;
- Travelers can evaluate the quality of travel services through online review sites, social media, and businesses’ websites;
- Travel companies are increasingly able to suggest customized products based on travelers’ profiles and past behavior; and
- Travelers have frequently formed on-line communities to discuss travel options with others with similar backgrounds, interests, and needs.
Changing the Travel Industry Business Model
- There were 50,000 fewer travel agents (around a 40% reduction) in the US in 2014 than in 2000. However, recently, the industry has stabilized as more travelers realize that agents can help them steer through the increasingly complex airline fare regulations;
- While the internet killed off many travel agents, many other parts of the industry, like tour operators, have survived by introducing online bookings;
- Online bookings have allowed the sharing economy to flourish. By making reservations easy and quick, travelers accept the idea of staying in other peoples’ homes through Airbnb. They also are willing to use private cars as a taxi through Uber. In fact, within five years after launching Airbnb, 9% of UK and US travelers rented space in a private home or apartment through Airbnb; and
- The internet allows the travel industry to avoid a lot of costs, time, and personnel in almost every aspect of their operations. Probably the most essential cost-savings came from reducing the cost of issuing paper tickets. Airlines even save fuel costs, for example, by putting all of their employee briefings, regulations, etc. digital instead of on paper.