CHICAGO -- The chief executive of Travelocity.com,
the largest Internet travel site, told travel agents that on-line
travel will boom but retailers will survive if they add value as
travel sellers.
In a keynote address at the Travel Weekly Conference on
Technology here, Terrell B. Jones, Travelocity's president and
chief executive officer, noted that, although his company is
posting strong sales, generating $500 million in bookings in the
last quarter, it continues to capture the business of only 5% of
those using the Travelocity site.
On-line travel sales make up just 4% to 6% of the $220 billion
in annual airline sales, with 74% generated by traditional travel
agencies.
And, of all the e-commerce industries, Jones said studies show
"the biggest gap between shopping and buying is in travel."
The vast majority -- 95% -- of Travelocity's users continue to
buy direct from a supplier or from a traditional travel agency.
"It's a very low conversion rate, although a very successful
business," he said.
One of the issues is loyalty, which traditional agencies have
but Internet retailers have yet to succeed at, he said.
But, he added, the market balance is shifting toward those
travel agencies that can serve customers how and when they want to
be served.
"In this new world there will be many, many new ways to
interface with the person they are buying from -- with interactive
television, PCs, interactive voice response, the travel agent, the
corporation, the Internet and directly to suppliers."
"Two years ago everyone talking about disintermediation [the
elimination of the middleman; with buyers going direct to
suppliers]. I think there are going to be more channels and more
complexity."
Jones said there has been an evolution in the thinking of
on-line retailers, such as Travelocity, starting with their concept
of being as good and bigger than anything found in the physical
world, with the convenience and price.
But in subsequent phases, the retailers on the Internet have
realized they must offer much more unique services, including
giving users services they can't get in the physical world. An
example is Travelocity's popular feature offering airplane seat
configurations, he said.
And, the focus also is on offering customer service that builds
relationships and trust with users, including those who are
reluctant to use credit cards on the Internet, an ongoing
problem.
"Customer service is extremely important, which is why the
individual travel agent has done so well," said Jones, who noted he
started as a travel agent 30 years ago at Vega Travel in Chicago,
an agency owned by former ASTA president Frances Goranin.
"[Vega's agents] added value by knowing everything there was to
know about a destination -- and they add value that way today.
"It's about using the Internet as a tool to make you smarter
than anybody else and combining that with your skills and value
proposition and you have something very strong and powerful," Jones
said.