Ecommerce is one of the most booming sectors of the U.S. economy. An increasing number of businesses are going online and not selling online is practically a sin for any organization. Therefore, it isn’t surprising that the internet is playing a major role when it comes to travel. Ecommerce travel websites are abundant and a majority of travel bookings are now being done online. In 2013, for the first time, the U.S. consumer spent over $100 billion online on travel alone.
Travel websites offer unique interactive services to their clients; the travel portals have become more sophisticated with wider options and 24-hour help lines. The websites allow users to post reviews and create travelogues of their experiences. This feature allows consumers to better understand travel destinations and create user-friendly experiences. Travel websites have become all inclusive and offer detailed information on destinations, attractions and accommodations.
Competition
According to Forbes, the U.S. online travel market is growing at the slowest pace. There are a number of key players in the market looking to grab a large market share. Expedia.com (EXPE, Financial) is one of the leading e-commerce travel platforms in the U.S. However, Forbes predicts that Expedia might have to compromise on domestic operations to focus on capturing a larger share in the international market. Priceline (PCLN, Financial) is another online travel marketplace in the United States that has managed to overtake Expedia as the largest ecommerce platform in the world by focusing on its key operations outside the U.S. Now Priceline is trying to compete with Expedia in the U.S. It launched an offline ad campaign and also acquired Kayak (KYAK, Financial) which is a leading Meta search engine in U.S. This yielded a 26% increase in bookings and is expected to rise further. Another major player in the market is Orbitz Worldwide (OWW, Financial), whose market share is just behind Expedia in the U.S. domestic market. Orbitz Worldwide grew 8% in 2013 and is expected to grow even more. More competition in the domestic market will lead to a drop in sales for Expedia, forcing it to concentrate its efforts outside the U.S.
The smaller players in the industry will find it hard to penetrate the market due to lack of economies of scale. The larger operations of Expedia and Priceline offer them the advantage of being able to negotiate deals with a larger number of hotels and also offer better deals to the consumer as compared to their smaller rivals.
Future prospects
Now mobile phones have become the latest asset to travel sales. Mobile apps offer convenience like never before. People can amend their travel plans on the go and PhoCusWright has predicted mobile travels sales to account for 25% of total U.S. online bookings in 2015. It is expected that mobile sales will lead to revenue of $40 billion in the coming year. Currently ecommerce accounts for 38% of travel sales, and this number is only expected to rise. It is becoming increasingly difficult for traditional travel agents to keep up with this new trend. Travel agents offer both online and brick-and-mortar services to engage more customers; however, they cannot compete with the convenience offered by online ecommerce portals. Online booking not only helps you save on agents' fees but also provides best value for money due to availability of incredible deals.
