Online travel business sees traffic and conversion bumps

Online travel agents are holding up through the recession on business and leisure travel. A new report from research firm PhoCusWright and, travel websites showed increases in both monthly traffic and sales conversions for the second quarter of 2009 relative to previous years.

Transactional travel websites – suppliers and online travel agencies – saw monthly visitors surge in June, with cruise lines gaining 19 percent year-over-year, and hotel chains picking up 13 percent. For the first half of the year, compared to 2007 and 2008, hotel and car-rental visitor traffic showed modest gains. Only the air sector of online travel-agency business posted a decline from last year, of 15 percent, but the conversion of air travel-oriented visits to sales increased.

Fewer people are looking, it seems, but it's also more focused. Online travel agency visitors looking to buy tickets are more likely to pull the trigger. "The reliance that consumers have on travel Web sites has not weakened one bit," says Carroll Rheem, director of research at PhoCusWright. "Consumers are certainly spending less, but they are not giving up travel, nor are they turning away from the Web sites that offer them the selection and convenience they value."

This year, online travel agencies have experienced a wide range of conversions, with cruise shoppers converting at only 0.2 percent and those for rental cars reaching 19.7 percent. Though the trend is heading upward, a substantial portion of figurative window-shoppers are not completing their bookings. As a result, many online travel agencies are still leaving money on the table.

The key to changing this trend may be with the websites that aren't selling anything at all. Non-transactional travel websites – used by buyers to shape their opinions and ultimately to help them make purchasing decisions – not only feed traffic to websites where money can be spent, they can generate interest in executing a transaction. Review websites, travel blogs (such as Gadling) and online travel communities can help potential buyers compare notes, share photos and discuss experiences.

"Non-transactional sites often benefit suppliers more than they benefit online travel agencies," Rheem says. "Despite being less likely to visit non-transactional sites within the same month, supplier shoppers who do visit non-transactional sites exhibit an increase in conversion rates across all products and categories." Online travel agencies, on the other hand, experience either smaller increases in conversion than supplier websites or, more often, no change at all in conversion rates.

While online travel agencies and other suppliers are persevering in this tough travel market, it's clear that they have some room for growth. Figuring out how to increase conversions and generate more revenue from non-transactional websites can increase their spheres of potential buyers. But it will have to involve a new strategy that reaches beyond their own websites to the broader internet travel community.

The online ecosystem is large and growing, sometimes putting more distance between the potential customer and final payment. Potential abounds, but it will take a hefty amount of labor to mine it for financial results. Building a pipeline from the non-transactional to the transactional, though, will redefine success in the online travel marketplace.

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