The Journey of a Thousand Miles Begins with the Web
A few years ago my wife and I decided to visit the Hawaiian island of Molokai. Billing itself as "the friendly island" and sitting a boat ride away from Maui, Molokai is just about everything Honolulu is not. The island boasts almost no nightlife and visitors are still a minority. Arrive late for supper, and you may search in vain for grilled ahi ahi, but perhaps wind up, as we did, feasting on Philippino food served by a steamy, hole-in-the-wall restaurant with Formica tables, bare walls, and stark lighting, and served home cooking style by the owner herself. With a population of less than 10,000, Kaunakakai--Molokai's principal town--has a ramshackle patina that only the tropics can produce. Molokai is thus affords a look at Hawaii as it once was, before the advent of T-shirts shops, multi-story hotels, buffet dinners and the rest of the state's fierce tourist industry.
But on an island famed for authenticity, not accommodations, how do you find and book a room--especially if you prefer something smaller than Molokai's one resort? Pondering that question a few months before our departure, I sat down at my browser and entered www.
Like so much else in life, the Web is starting to change how people travel, and those changes could be significant. A report commissioned by the Travel Industry Association of America issued last February maintains that online bookings tripled between 1996 and 1997, rising from $276 million to $827 million. These figures represent everything from air travel and accommodations, to car rentals and vacation packages. The report predicts that the "online travel industry" will exceed $4.
Some international travelers are beginning to use American services. For example, 20 percent of the users of Pegasus Systems' hotel processing services log on from outside the U.
Online information with no middleman
For travelers, the Web can be a blessing. It used to be that a savvy traveler might search a bookstore for a few good travel books, ask friends for recommendations, and try to locate a smart travel agent. While all those resources are still available, the Web is fundamentally different because, for the first time, it connects major hotels, country inns, scuba shops, camping outfitters, llama trekkers--the entire spectrum of the travel industry--directly with their customers. And while the most obvious Web resources are the well-financed sites, such as Microsoft's Expedia and those of the large airlines, the Web is an invaluable resource for independent travelers who prefer more out of the way places. In providing a direct conduit, the Internet gives hope that the world of travel won't be completely taken over by big business.
Our Molokai rental house provides a good case in point. The owner told me that he was able to give us such a good price because he didn't have to pay a middleman, such as a local real estate management company, to represent the property. His only advertising cost was a small fee paid to the organizer of the Molokai Web page. Moreover, the Web provided a targeted advertising vehicle that heretofore was previously unavailable. "Molokai visitors are a pretty adventurous group," he told me, "and before the Web it was difficult and expensive to reach them." Until the Web, the owner placed advertisements in Sunset Magazine, a magazine covering the joys of West Coast living. But the cost was so high that he could squeeze in just a few lines of ad copy--barely enough for a terse description and a telephone number. By contrast, the Web page included information on location, as well as photos of the living room, bedrooms, kitchen and yard. It was as if the world wide Web were designed specifically with Molokai travel in mind.
Since that trip, I have relied on the Web for more of my travel bookings. Last year, I stayed in a remote inn on the Caribbean island of Dominica--a 45 minute drive in a manic taxi into the island's interior. Despite the inn's remoteness, a friend located the inn and its description by the Internet.
This year, I've been using the Web to plan a December trip to Australia. Wanting to dive on the Great Barrier Reef, I turned to the Web to learn that you could actually stay on the reef itself on Lady Elliott Island. I found a Web page of an Australian who had visited last year and praised its marine life while complaining about the dive operation's practice of having divers tote their own equipment to the boat by wheelbarrow. That didn't bother me, so I emailed the resort and entered into a lengthy correspondence with the island's helpful online representative, choosing a dive package, arranging incoming and outgoing flights, and getting a general sense of what is in store. This email exchange took place almost daily for two weeks, and it was hard to imagine that my correspondent was sitting thousands of miles, and several time zones, away on an island 30 miles off the Australian coast.
Some websites can also add richness to a trip even when they aren't travel related. As an amateur botanist headed for New Zealand a few years ago, I wanted advice on seeing the country's flora. Working late one night, I located the biology department of a college in Christchurch on the South Island, our stepping off point for seeing the country. I looked under the faculty section, and emailed a professor whose area of expertise seemed to match, eventually asking if she'd care to join my wife and I take for lunch. She not only accepted, but brought a box full of flora books and maps, some of which we borrowed and mailed back to her before we left.
Not every attempt and Web exploration is as successful or straightforward. In trying to purchase some field guides to Australia's bird, mammal, and plant life, I queried I tried to query the bookstore at the Australian Museum in Sidney, which is reputed to have the largest collection of natural history books in the city. The first email reached a sympathetic woman in the museum's research department. But the actual bookstore itself took a solid month of persistent correspondence to get an answer, and I'm still not sure if my order has been accepted.
I encountered similar frustration in making a reservation to visit my Aunt and Uncle in the state of Idaho this summer. I logged onto the Web site of United Airlines, which operates a direct flight between the San Francisco airport and Boise, Idaho's state capital. When I didn't receive any kind of confirmation in a week, I logged back on the site looking for someone to write to. To my surprise, the site contained no email contact information whatsoever, and I wound up calling United's reservation system--the very same the Web site had been designed to avoid.
The travel industry, of course, is not alone in having this fundamental misunderstanding of the World Wide Web. One can almost imagine corporate management salivating at the prospect of electronic commerce generating sales without any human intervention. But no website, no matter how complete, can answer every question. A "don't call us" philosophy is plain foolish when you are talking about your own customers. That glitch aside, the United Airlines seems to work. You can get flight reservations, book overnight accommodations, compare prices for rental cars, and see how your frequent flyer mileage account is doing. Virtually all U.
Travel agents fight back
One side effect of the growth of Web travel sites has been a corresponding drop in the commission airlines give to travel agents. In the U.
Some travel agencies have responded by charging their customers fees for services once rendered for free.. A study by ASTA reported last June said that some two-thirds of its member agencies are charging average fees of $10.
"Study after study has shown that travel agents routinely save their clients over direct booking with the airlines," says Steve Loucks, director of communications for the American Society of Travel Agents. "That's because travel agents have virtually every fare option and schedule at their fingertips. You may think that the Internet would pose a threat, but in reality, travel agents still come out ahead. In fact, when I was booking my summer vacation, the best fare I could get was on-line for $398. But my travel agent found me a fare leaving on the same airline at the same time for $347, so even by charging me a nominal fee, I still saved significant dollars. To most savvy travelers, time is money. They are used to paying fees, especially when knowing that they might ultimately be saving big dollars."
There is something to Loucks claim, especially if you don't have hours to spend on an online treasure hunt. I saved several hundred dollars booking a flight to Japan through a Japanese travel agent. If airlines really want direct business, they are going to have to make their best rates readily apparent to online shoppers. On the other hand, a sizeable number of travelers may do both--seeking some information on the Internet, while employing the services of a travel agent, as well. For our forthcoming Australian trip, I booked the international flight and most accommodations via the Internet. But I also contacted an Australian travel agent in San Francisco, who got us a better deal on flights within the country. He also booked a campervan in Brisbane and our hotels in Sidney. The combination of Internet and guidebooks made us smarter customers, and perhaps easier ones for him to deal with--because we knew what we wanted.
Dennis Black, a professor of biostatistics at the University of California, San Francisco, also uses this dual-source approach when scheduling his extensive travel schedule. He relies on a travel agent for most of his bookings, but also likes to check out Websites for himself to view flight schedules. "Sometimes, my agent isn't always available or my request is too small to bother her with," he says. Black has also had good luck locating his own discounts. On a recent trip to New York, he used the TravelWeb service to snag a $120 a day weekend rate on $320 room with a view of the World Trade Center.
A few sites and databases do most of the business
While small sites offer the best way to vacation away from the pounding masses, the masses themselves are booking with a few major sites that offer a suite of services. According to a study commissioned last year by the Travel Industry Association of America, six services dominate the industry: Easy Sabre/
While each site is different, the information they provide overlaps. All travel sites that permit airline booking usine one of just a few airline reservation systems, known in the travel industry as "global distribution systems." Other information resources are also shared. Pegasus Systems, Inc., which operates TravelWeb, has cut a deal with Microsoft to provide TravelWeb's accommodations database for the Microsoft Travel Technologies platform, thereby providing access to users of sites operated by Microsoft Expedia, Northwest Airlines, Continental Airlines, and American Express. The sites and information providers earn their money principally through commissions, with the site and database provider sometimes splitting the money.
While online commissions are also capped as airlines try to funnel traffic through their own sites, that's not always convenient. According to the Travel Industry Association of America, the mega sites attract the most traffic because they generally provide one-stop shopping for air, hotel and auto rental. Not surprisingly, airline tickets accounted for the vast majority of electronic commerce transactions: nearly 90 percent in 1996 and an estimated 73 percent even in 2002.
But big is not necessarily better, especially if you want to step out on your own away from the crowds. Based on my own observations, I'd say that a growing number of Japanese are starting to travel independently the way many Americans and Europeans do. They include the Japanese family I met in the Rocky Mountains, who had rented their own camper and were seeing the mountains on their own. We had both stopped at the same view spot. I loaned them my binoculars, they offered me some cookies: a nice exchange that would have been impossible on a group tour. The Web will make more of that kind of independent travel easier to arrange, and your English doesn't have to be perfect to arrange it.
An interview with Karin Wacaser, spokesperson for Pegasus Systems and its TravelWeb service: www.
- Why should anybody go online rather than just make the telephone call?
- Because the telephone doesn't always work. I just heard a story from the publisher of a travel magazine, Travel Weekly, which illustrates this. He wanted to book a hotel, but his travel agency was closed and the reservations number was constantly busy. So he went on the Internet, ended up at our site, and made the booking in two minutes. He said the transaction was so quick he couldn't believe it.
- How does that work? How does the reservation go from your system to theirs?
- Unlike the GDSs [global distribution systems], we have a direct connection into the hotel's reservation system. So when you're doing a search on hotels and checking availability and rates, you are seeing real-time, what is actually in the reservation system. It's not a delayed or duplicate database.
- How does it work with an airline reservation?
- You book on the Web site and the reservation is sent through the GDS to the airline to the reservation system, then back to the GDS and to you.
- When people log onto your site for hotels, can they get discounts that they couldn't get any other way?
- Yes, we have a special weekly program, called Click-it Weekends. Every Monday night we gather from all of our hotels their best deals for the coming weekend. I don't know if we have an exclusive, but you probably won't find these rates anywhere else. They are discounted rates only for that weekend and they are for hotels all over the world. For example, we will be adding a company in Las Vegas that gets deeply discounted rates from Las Vegas hotels. Those are great deals at all the big hotels --Caesar's Palace, the Excaliber, New York, New York.
- Given that you are a free service, how do you make money?
- Some sites have set themselves up as online travel agencies--so they make money through commissions, just as any other travel agency would. We do it primarily through our hotel booking service, with hotels paying us $2 to $2.
50 per reservation. We also generate revenues from advertising, and through commissions on flights booked through us.
- Are the airlines are trying to move all the business to their own sites?
- Of course, it's cheaper for them. But the reality is they're not going to reach as many customers as travel agents can provide them. The advantage of a site like ours is that when you go to look for a flight from San Francisco to Chicago, you can see the schedule for several airlines--all with one search.
- >When it comes to a face off between you and Expedia and the others, is there room for more than one of you? Will you each take on different niches?
- There's a lot of speculation that there will end up with only three or four. I don't know. Eventually Expedia will be offering the same hotel booking functionality that we offer--so why would somebody go to Expedia versus TravelWeb? We use different airline booking engines, so there could be some difference there. Also, the way that we display our hotel information and the tops of hotel information we put on our site, Expedia may do differently.
- It may come down to the look and feel?
- Yes. And also, the amount of marketing dollars spent promoting it.
- Is that why so many people in Japan heard about you?
- Yes. Back in 1996, we knew that Japan would be one the most sophisticated, Web-savvy countries, so I targeted a lot of publicity at Japanese publications, and we received a lot of good press.
- Are you going to try to do a Japanese language site?
- There have been companies that have approached us on that and we also looked at it about a year and a half ago. The cost to do it at that time was prohibitive because we would have to create two parallel sites. By the way, it appears that most of the Japanese bookings on Travel Web are leisure travel. We figured that out because 54 percent of all the bookings included a weekend night--either Friday, Saturday or Sunday.
- Do you think that's because most of the business travelers are going through regular agents?
- Yes, I think so. Thirty-five percent of TravelWeb's bookings are made more than 30 days in advance, whereas only 12 percent of hotel bookings by travel agents on the GDSs are made that far in advance. Also, 42 percent of the bookings are repeat users. Once people buy on the Internet, they come back.