¨The internet is just a world passing around notes in a classroom.¨
Ways the Internet Transformed Travel
This blog was written before the COVID Pandemic. The COVID epidemic played havoc on the travel business. In 2022, Fifty Plus Nomad decided to focus on traveling and living in Mexico and language learning posts. We will only update these long-term travel-related posts on a time-permitting basis. We would appreciate your comments and updates on these posts.
Until the late 1990s, planning a holiday usually involved visiting the local travel agent, consulting a well-used guidebook, or relying on friends’ word-of-mouth recommendations.
Today, thanks to smartphone apps and fast computer access, travelers:
- Book their flights, tours, activities, restaurants, and hotels online.
- Reserve stays in someone else’s home.
- Use apps to book taxis.
- Search online reviews to select restaurants, tours, and attractions.
The travel industry adapted to online sales more quickly and efficiently than most other industries. The first online hotel and airline bookings occurred in the early 1990s, at least five years before most other retailers.
The industry is also particularly well suited to the internet. Unlike buying a dress, consumers do not feel they have to be in a store to try on a product before purchasing. Plus, computerized bookings (made through travel agents) existed for several years before the internet became commonplace. (The transition to online booking was relatively easy technologically).
Unlike other retail industries, most hotels, airlines, and car rental purchases are made online. There has been a 12% increase in the volume of online bookings annually for over a decade. The total value of bookings made online in 2012 was over $500 billion.
Changing Consumer Expectations: the Travel Industry and the Internet
- 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 flexibility could pay big dividends. After opening up this information, the average consumer expects to and does pay less than before. (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. You paid through the nose if you wanted to travel during the same times of the day or times of the year as everyone else. If you had even a little flexibility, you saved mega bucks. Airlines knew that businesspeople had little flexibility and thus used to charge them through the nose to travel during high-demand periods, often with no corresponding service increases. (I remember once booking a flight from LA and Seattle. I tried to schedule the flight at 8 am, which cost over $400. By leaving at noon, I got the flight for $99).
- Technology has also allowed consumers worldwide to find little-known options designed around their tastes and interests.
- Travelers can evaluate the quality of services through online review sites, social media, and businesses websites.
- Travel companies can increasingly suggest customized products based on their clients’ profiles and past behavior.
- Travelers have frequently formed online communities to discuss options with others with similar backgrounds, interests, and needs.
Travel Industry and the Internet: A Tight Business Model
- There were 50,000 fewer travel agents (around a 40% reduction) in the US in 2014 than in 2000. However, the industry has recently stabilized as more travelers realize that agents can help them steer through the increasingly complex airline fare regulations.
- While the internet reduces the number of 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 people’s 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.
- The internet allows the travel industry to avoid costs, time, and personnel in almost every aspect of its operations, such as reducing the cost of issuing paper tickets. Airlines even save fuel and printing costs, for example, by issuing all of their employee briefings, regulations, etc., digitally instead of on paper.
Want to Learn More About the Travel Industry and the Internet?
Check out this article from The Guardian.