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Destination Management System

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par Inan Elmerini
Embry-Riddle Aeronautical University Daytona Beach - Executive MBA 2001
  

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Chapter 5

INTERNET TRAVEL

THE GLOBAL NET

The Internet continues to grow at a phenomenal pace. Internet users have soared from 171 million in 1999 to 354 millions as of today (NUA Internet Survey, 2001). North America remains ahead with 135 million of the world total. Europe and Asia Pacific follow with 113 million and 105 million Internet users respectively. Current predictions indicate that Internet users could exceed the 1 billion mark by 2005, with the explosion of Internet access wireless devices. According to the International Technology and Trade Associate (ITTA, 2000), adoption of Internet and IT sector is at the heart of the decade long economic expansion. The adoption of IT and Internet tools has driven growth in almost every sector including travel and tourism by practically doubling productivity. The Web contains 2.1 billion indexable pages (7 million pages added daily) distributed over 17.7 million sites. «Dot-Com» domain names dominate the Internet with 9.4 million sites.

 

Number of Worldwide Online Households (in
millions)

200

150 100 50

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

0

YEARS

 

Figure 4. Number of Worldwide Online Households (Bear, Stearns & CO, 2000).

INTERNET BUSINESS TRAVEL

United States

Approximately 90 million online travelers or about 44 percent of the U.S. adult population are online travelers (past-year travelers who currently use the Internet). Two-thirds (66%) of online travelers or 59.4 million U.S. adults have used the Internet to make travel plans in the last year (PhoCusWright, 2001). Travel planning consists of activities such as getting information on destinations or checking prices and schedules. This is up 23 percent from 48.1 million adults in 1999. Among them 21.9 millions adults or 36 percent of current Internet users have used the Internet to make travel reservations in the past year. Travel reservations include actual booking or paying an airline ticket,

hotel room, rental car, and package tour. The number of online travel buyers is projected to reach 72 million in 2003. (Forrester Research, 2000)

Search engine websites are the most popular for online travel planning (62%). Company-run websites and destination sites are also popular at 51 and 48 percent each. Online travel agency sites are used by over half (36%) of online travel planners (Travel Industry Association of America, 2000).

Figure 5. Types of Internet sites used for Travel Planning. (Travel Industry Association of America, 2000)

Travel is the most important business on the web in term of the volume of e-commerce (eMarketer, 1999). By 2003, US$29 billion in travel will be sold online, almost four times 1 999's level (Forrester Research, 2000). Despite this immense growth most Internet travel research companies' estimates, only put

online travel booking at 10% of total travel booking in 2003. Today airline booking represents 60% of total Internet travel buying.

Figure 6. Online Buying in United States (With reference to Bear, Stearns & CO, 2000)

Europe

The European online travel market is gaining prominence as the economic signs for this e-commerce segment continue to grow stronger. The European online travel market will soar from US$2.9 billion in 2000 to US$10.9 billion in 2002 - nearly a 300% two-year gain (PhoCusWright, 2001).

Factors contributing to this growth were continuing rapid expansion in Internet and wireless usage; the breakdown of e-commerce barriers such as bill payment, security and privacy concerns; improved telecommunications; and the

influx of new and improved online travel services. Increasingly, Europeans are able to access the Internet using flat-rate payment plans instead of having to pay for Internet access by the minute, which had been a major constraint. At the same time, several online players have begun to build significant market share - and are raising public awareness of travel e-commerce in the process. Airline Web sites and tour operators control 28% and 27%, respectively, of the European online travel market in 2000. Online travel agencies have a 26% market share; railways, 9%; hotels, 7%; and car rental companies, 3%. Unlike in the U.S., supplier Web sites dominate the online travel market in Europe. Airlines, tour operators, hotels, railways and car rental companies represent

74% of the European online travel market in 2000, while online agencies' share is 26%.

Airline Web site sales will total $810 million in 2000, while $382 million of airline tickets will be sold through online travel agencies. The two airlines with the largest online bookings, Easy Jet and Ryan air book 100% of their Internet sales on their own Web sites.

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