Aeris Click Blog

by Jason Ho

Travel planning and booking are two of the most popular online activities and according to recent Pew Internet & American Life Project statistics in 2006, 73% of US Internet users search for travel information online and 63% buy travel services or make reservations online. Online travel agencies gained competitive advantage over traditional brick and mortar ones through cost transparency and convenience aided by Web technology. High volume of visitor traffic is generated with aggressive lowest-price strategies (eMarketer, 2005).

In recent years, robust markets like Japan, Australia, New Zealand and Singapore, together with economic prosperity and relatively sophisticated travellers put the Asia Pacific region on par with Western markets on the travel value chain. On the opposite end of the scale are countries like Vietnam, Indonesia and Sri Lanka that are still in the process of establishing a basic online travel framework.

What creates this divide is synonymous with the factors that fuel the online travel industry’s growth. Emerging markets like China and India have a burgeoning middle class, improved travel technology with secure payment gateways, rapid growth of telecom and broadband and entrepreneurial leadership. Markets like Hong Kong and Thailand rely heavily on inbound travel. Some online travel spaces may even be built around infrastructure, more specifically, hotels.  Others with a fragmented hotel industry may depend more on a transportation-focused online travel space such as the monopolistic Indian Railways. There is a need for online travel intermediaries whose core business model is aggregating hotels and air tickets in respective markets.

In leisure travel, online booking has increased enormously due to low cost carriers selling directly and solely on the internet, airline companies operating their own booking websites, and the effectiveness of online agents. A keen understanding of what factors affect a traveller’s preference of online versus traditional agents is important for the online travel service industry to remain viable.

Online travel agencies face stiff competition and need to evaluate the e-service quality of their websites. There is a relationship between customer satisfaction and repurchase intention. These online agencies are encouraged to follow the six underlying dimensions of e-service quality; namely, website functionality, information quality and content, fulfilment and responsiveness, safety and security, appearance and presentation , and customer relationship.

Long term business strategies for online travel agencies are plentiful. Many are eager to venture into other markets and widen their geographical reach. Success depends on their ability to use a lower operating cost model, customized product offerings and having a deep understanding of local trends and consumer behaviour.  Basics like high quality websites translating into higher customer satisfaction—perceived quality affects satisfaction levels, behavioural intentions, loyalty, word of mouth, and ecommerce profit—will still remain relevant in the long run.