Electronic commerce: Round the world in 80 clicks

The Internet will make high-street travel agents redundant and offer consumers cheaper fares. Or will it? Mark Vernon reports

Cutting out the middleman seemed like a threat to many businesses contemplating the impact of the Internet in the early days of electronic commerce. The idea was that as customers spoke direct to banks, bookshops or airlines, links in the supply chain would dissolve, with the savings being reflected in an orgy of lower prices. Superhighway prophets celebrated the approach of the Information Age as good news for "people like you and me". The balance of power would be handed over to the consumer.

Nowhere was this to have greater effect than in the travel industry, which has been so successful at using technology to sustain flexible pricing and match changes in customer demand. With the industry already online across the proprietary networks that feed travel agents, connecting straight to the customer was seen as the logical next step. Enter the World Wide Web.

But now that travel industry Web activity has reached a serious level - Forrester Research expects leisure travel revenue to reach $7.4bn by 2001, with 18 per cent of total sales already coming from the Net in 1998 - the reality is showing itself to be more complex. Certainly some prices have fallen, and industry dislocation has been evident. But it is not clear whether price cuts are just incentives to book online, rather than a result of real reductions in costs. And although airlines, hotels and cruise and tour operators are not escaping the channel changes unscathed, it seems that this is because of "reintermediation", as they strike new deals with online intermediaries such as Microsoft and Yahoo.

One company celebrating its Internet success is Travelocity (www.travelocity.com). Along with Microsoft's Expedia and Preview Travel, the company is in the top three for online bookings. Based on the Sabre travel reservations system, already one of the largest in the industry, the Travelocity website allows browsers to compare prices, check availability and make reservations on more than 400 airlines and nearly 38,000 hotels in more than 70 countries.

"We launched Travelocity in the US more than 18 months ago, and have seen sales grow exponentially to the stage where we have now topped $4m in each of the last three weeks," says Jim Marsicano, vice-president and general manager.

Out of the 2.1 million registered users, only 40,000 are located in the UK. The company is planning to increase its marketing focus here, and there are interesting differences in the service they will offer to customers on this side of the Atlantic. For example, in the US tickets can be sent by mail, picked up from an affiliated travel agent, or kept wholly electronic, with travellers making themselves known at the airport. In the UK, tickets will have to be picked up from an agent.

"In the UK there is still concern about disintermediation, so we do not offer electronic tickets," explains Robert Booth, the product marketing manager. "In the US this fear has been largely overcome, because it has been shown that people usually still want the comfort of an agency." It is the way individuals like to use the site that sheds the light. "People like to get a feel for the lowest prices. They like to look at the wide variety of air carriers. They like the availability of the service, 24 hours a day. But they also value their relationship with the vendor."

Research supplies the reasons. Given that there is information on the Web about their destination, the first hurdle that faces the browser is finding and understanding the description, availability and pricing data. Ironically, although air travel is the sector moving most quickly online, details about reservations are often obscure, laden with airport codes and carrier abbreviations and not readily translatable to a user-friendly Web interface. This becomes even more confused if the itinerary is complex. Once the consumer has decided to buy, he or she may still not be comfortable about transacting over the Web. Finally, many sites do not as yet offer online booking.

So how will the Internet reshape travel? Forrester Research believes there are three main drivers. First, travel companies distribute vast amounts of information, and the Internet provides the most effective means of accessing it. Second, consumers shop extensively when they travel, and the Internet offers a highly convenient way of doing so, once individuals learn to trust the medium. Further, all the leading travel Web sites offer access to a far wider range of tickets than most high-street agents, which are tied by the deals they have with suppliers. Only certain price categories are not available on public screens, among them some bucket-shop airline tickets.

Third, travel suppliers do want to cut channel costs by exerting pressure on traditional middlemen. "The Net provides another weapon in the travel industry's ongoing battle over distribution," says Forrester, though he warns that travel companies that undermine their own agents could become involved in conflicts that disable them from taking full advantage of the Web, another reason why a pattern of easy disintermediation is too simple a picture. Further, airlines have already capped travel agent commissions, thereby favouring online services such as Travelocity. But in this environment, smaller travel agents may not be able to afford Web distribution - which will leave consumers with fewer air booking options.

Arts and Entertainment
Blackman: Landscape of children’s literature does not reflect the cultural diversity of young people
booksMalorie Blackman appeals for a better ethnic mix of authors and characters and the illustrator Quentin Blake comes to the rescue
Arts and Entertainment
'Eminem's recovery from substance abuse has made him a more potent performer, with physical charisma and energy he never had before'
musicReview: Wembley Stadium ***
Arts and Entertainment
‘Dawn of Planet of the Apes’ also looks set for success in the Chinese market

film
News
Arts and Entertainment
The successful ITV drama Broadchurch starring David Tenant and Olivia Coleman came to an end tonight

tv
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Arts and Entertainment
Chocolat author Joanne Harris has spoken about the financial struggles most authors face

books
Arts and Entertainment
A scene from How To Train Your Dragon 2

Review: Imaginative storytelling returns with vigour

film
Arts and Entertainment
Josh Hutcherson, Donald Sutherland and Jena Malone in Mockinjay: Part 1

film
Arts and Entertainment

film
Arts and Entertainment
Characters in the new series are based on real people, say its creators, unlike Arya and Clegane the Dog in ‘Game of Thrones’
tv
Arts and Entertainment
A waxwork of Jane Austen has been unveiled at The Jane Austen Centre in Bath

books
Arts and Entertainment
Britney Spears has been caught singing without Auto-Tune

music
Arts and Entertainment
Unless films such as Guardians of the Galaxy, pictured, can buck the trend, this summer could be the first in 13 years that not a single Hollywood blockbuster takes $300m

tv
Arts and Entertainment
Miley Cyrus has her magic LSD brain stolen in this crazy video produced with The Flaming Lips

music
Arts and Entertainment
Gay icons: Sesame Street's Bert (right) and Ernie

tv
Arts and Entertainment
Singer Robin Thicke and actress Paula Patton

music
Arts and Entertainment
The new film will be shot in the same studios as the Harry Potter films

books
Arts and Entertainment
Duncan Bannatyne left school at 15 and was still penniless at 29

Bannatyne leaves Dragon's Den

TV
Arts and Entertainment
The French economist Thomas Piketty wrote that global inequality has worsened

books
Arts and Entertainment
David Tennant and Benedict Cumberbatch

TV
Arts and Entertainment
Ben Affleck plays a despondent Nick Dunne in David Fincher's 'Gone Girl'

film
Arts and Entertainment
Pete Doherty (L) and Carl Barât look at the scene as people begin to be crushed

music
Arts and Entertainment

tv
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Have you tried new the Independent Digital Edition apps?

ES Rentals

    Independent Dating
    and  

    By clicking 'Search' you
    are agreeing to our
    Terms of Use.

    Iraq crisis: How Saudi Arabia helped Isis take over the north of the country

    How Saudi Arabia helped Isis take over northern Iraq

    A speech by an ex-MI6 boss hints at a plan going back over a decade. In some areas, being Shia is akin to being a Jew in Nazi Germany, says Patrick Cockburn
    The evolution of Andy Serkis: First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes

    The evolution of Andy Serkis

    First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes
    You thought 'Benefits Street' was controversial: Follow-up documentary 'Immigrant Street' has got locals worried

    You thought 'Benefits Street' was controversial...

    Follow-up documentary 'Immigrant Street' has got locals worried
    Refugee children from Central America let down by Washington's high ideals

    Refugee children let down by Washington's high ideals

    Democrats and Republicans refuse to set aside their differences to cope with the influx of desperate Central Americas, says Rupert Cornwell
    Children's books are too white, says Laureate

    Children's books are too white, says Laureate

    Malorie Blackman appeals for a better ethnic mix of authors and characters and the illustrator Quentin Blake comes to the rescue
    Blackest is the new black: Scientists have developed a material so dark that you can't see it...

    Blackest is the new black

    Scientists have developed a material so dark that you can't see it...
    Matthew Barzun: America's diplomatic dude

    Matthew Barzun: America's diplomatic dude

    The US Ambassador to London holds 'jeans and beer' gigs at his official residence – it's all part of the job, he tells Chris Green
    Meet the Quantified Selfers: From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor

    Meet the 'Quantified Selfers'

    From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor
    Madani Younis: Five-star reviews are just the opening act for British theatre's first non-white artistic director

    Five-star reviews are just the opening act for British theatre's first non-white artistic director

    Madani Younis wants the neighbourhood to follow his work as closely as his audiences do
    Mrs Brown and her boys: are they having a laugh?

    Mrs Brown and her boys: are they having a laugh?

    When it comes to national stereotyping, the Irish – among others – know it can pay to play up to outsiders' expectations, says DJ Taylor
    Gavin Maxwell's bitter legacy: Was the otter man the wildlife champion he appeared to be?

    Otter man Gavin Maxwell's bitter legacy

    The aristocrat's eccentric devotion to his pets inspired a generation. But our greatest living nature writer believes his legacy has been quite toxic
    Joanna Rowsell: The World Champion cyclist on breaking her collarbone, shattering her teeth - and dealing with alopecia

    Joanna Rowsell: 'I wear my wig to look normal'

    The World Champion cyclist on breaking her collarbone, shattering her teeth - and dealing with alopecia
    Bill Granger recipes: Our chef gives raw ingredients a lift with his quick marinades

    Bill Granger's quick and delicious marinades

    Our chef's marinades are great for weekend barbecuing, but are also a delicious way of injecting flavour into, and breaking the monotony of, weekday meals
    Germany vs Argentina World Cup 2014 preview: Why Brazilians don't love their neighbours Argentina any more

    Anyone but Argentina – why Brazilians don’t love their neighbours any more

    The hosts will be supporting Germany in today's World Cup final, reports Alex Bellos
    The Open 2014: Time again to ask that major question - can Lee Westwood win at last?

    The Open 2014

    Time again to ask that major question - can Lee Westwood win at last?