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.

Have you tried new the Independent Digital Edition apps?
Arts and Entertainment

ebooksNow available in paperback
Arts and Entertainment

ebooks
Arts and Entertainment
Christopher Eccleston (centre) plays an ex-policeman in this cliché-riddled thriller

TV review
Arts and Entertainment
Lena Headey looks very serious as Cersei Lannister in Game of Thrones

TV This TV review contains spoilers
Arts and Entertainment

film
Arts and Entertainment
Wiz Khalifa performs on stage during day one of the Wireless Festival at Perry Park in Birmingham

music
Arts and Entertainment
Festival-goers soak up the atmosphere at Glastonbury

music

Arts and Entertainment
Star Wars creator George Lucas

film

Arts and Entertainment

music

Arts and Entertainment
A shot from the forthcoming Fast and Furious 7

film

Arts and Entertainment
The new-look Top of the Pops could see Fearne Cotton returns as a host alongside Dermot O'Leary

TV

Arts and Entertainment
The leader of the Church of Scientology David Miscavige

TV

Arts and Entertainment
No half measures: ‘The Secret Life of the Pub’

Grace Dent on TV The Secret Life of the Pub is sexist, ageist and a breath of fresh air

Arts and Entertainment
Art on their sleeves: before downloads and streaming, enthusiasts used to flick through racks of albums in their local record shops
musicFor Lois Pryce, working in a record shop was a dream job - until the bean counters ruined it
Arts and Entertainment
Serial suspect: the property heir charged with first-degree murder, Robert Durst
TV review
Arts and Entertainment
Igarashi in her

Art Megumi Igarashi criticises Japan's 'backwards' attitude to women's sexual expression

Arts and Entertainment
Could Ed Sheeran conquer the Seven Kingdoms? He could easily pass for a Greyjoy like Alfie Allen's character (right)

tv Singer could become the most unlikely star of Westeros

Arts and Entertainment
Beyonce, Boris Johnson, Putin, Nigel Farage, Russell Brand and Andy Murray all get the Spitting Image treatment from Newzoids
tvReview: The sketches need to be very short and very sharp as puppets are not intrinsically funny
Arts and Entertainment
Despite the controversy it caused, Mile Cyrus' 'Wrecking Ball' video won multiple awards
musicPoll reveals over 70% of the British public believe sexually explicit music videos should get ratings
Arts and Entertainment
Lena Headey as Cersei Lannister and Ian Beattie as Meryn Trant in the fifth season of Game of Thrones

TV
Arts and Entertainment

book review
Arts and Entertainment
It's all in the genes: John Simm working in tandem with David Threlfall in 'Code of a Killer'

TV review
  • Get to the point
Latest stories from i100
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.

    General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

    Chuka Umunna: A virus of racism runs through Ukip

    The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
    Yemen crisis: This exotic war will soon become Europe's problem

    Yemen's exotic war will soon affect Europe

    Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
    Marginal Streets project aims to document voters in the run-up to the General Election

    Marginal Streets project documents voters

    Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
    Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

    The real-life kingdom of Westeros

    Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
    How to survive a social-media mauling, by the tough women of Twitter

    How to survive a Twitter mauling

    Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
    Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

    At dawn, the young remember the young

    A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
    Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

    Follow the money as never before

    Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
    Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

    Samuel West interview

    The actor and director on austerity, unionisation, and not mentioning his famous parents
    General Election 2015: Imagine if the leading political parties were fashion labels

    Imagine if the leading political parties were fashion labels

    Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
    Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

    Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

    The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence
    Public relations as 'art'? Surely not

    Confessions of a former PR man

    The 'art' of public relations is being celebrated by the V&A museum, triggering some happy memories for DJ Taylor
    Bill Granger recipes: Our chef succumbs to his sugar cravings with super-luxurious sweet treats

    Bill Granger's luxurious sweet treats

    Our chef loves to stop for 30 minutes to catch up on the day's gossip, while nibbling on something sweet
    London Marathon 2015: Paula Radcliffe and the mother of all goodbyes

    The mother of all goodbyes

    Paula Radcliffe's farewell to the London Marathon will be a family affair
    Everton vs Manchester United: Steven Naismith demands 'better' if Toffees are to upset the odds against United

    Steven Naismith: 'We know we must do better'

    The Everton forward explains the reasons behind club's decline this season
    Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

    Michael Calvin's Last Word

    Praise to Wenger for having the courage of his convictions