6 Online Travel Myths - evaluated

PhocusWright issued a press release yesterday aiming to debunk some myths about the state of the Online Travel Agency Market. I would like to address some of these for clarity sake. Then you be the judge as to whether these are myths or realities. The Professors opinion is listed under each myth.

Myth #1: The number of online travel buyers in the U.S. is declining.

UNTRUE. Absolutely incorrect - we are still seeing a rise in the number of buyers. However of course as we have a maturing market the profile is changing. This is where you have to be very careful in defining the exact terminology.

Myth #2 More and more online travel shoppers use supplier sites than online travel agencies.

TRUE. If you use the correct terminology and clarify here. If the statement was that Supplier sites are getting an increasing number of transactions - then this statement is true. As capacity shrinks in the USA (the most mature market for Online Travel) the hunt seats intensifies. This is actually causing an increase in visits to all sites. Further the proliferation of search sites and meta crawling engines is raising traffic but not raising sales. Internationally non-US speaking there are still better growth rates on OTA sites for transactions.

3. Travel agencies are experiencing a resurgence as travelers return to traditional purchasing channels.

UNTRUE. Wow who started this myth. Someone out of their tree. There is no need for much debate on this issue - numbers of agents are WAY down. However there is a degree of flight to quality. Again as it gets harder to search due to shortage of inventory the noise (web traffic) increases. There is a stubborn hard core of people who refuse to switch for either looking or buying. But in general NAH!!!

Myth #4. The next generation of travelers prefers to do everything online.

TRUE. Actually this is part of the obfuscation of reports like this. The difference between traffic and transactions. Again looking at the USA market there is a considerable amount of traffic that cannot be purchased online STILL. However we believe that if there was a general universe that the preference for Millenials and GenY would be to use an online tool for search and transaction.

Myth #5. Social networks and travel reviews have the greatest influence on travel decision-making.

UNTRUE. Your friends and relatives have greater influence. However there is a lot of study on this topic that shows that Social media - call them user reviews because that is what they mostly are - have a considerable influence. What we see here is that there is a real concentration around the Expedia owned Trip Advisor businesses that stand clearly above everyone else. Further NOT having a user review section for your site actually makes your site less appealing. If you were to change the statement to Social networks and travel reviews have SIGNIFICANT influence on travel decision-making, then I would rate this as a true.

Myth #6. Online travel markets need high credit card and Internet penetration to succeed.

DRAW. This is an "it depends" answer. With all due respect to Philip and Ram - India is not a proxy for the rest of the world. Germany too has low credit card penetration (less than 40% yet it is a thriving market - albeit with lower penetration). The problems of credit cards with fraud and cardholder protection allows significant rates of fraud to exist to the detriment of the merchant. Developing multi-channel strategies is critical to success. There are very few markets where pure online works - but there are still a large number of markets where travel agents still work. Financial Fulfillment is a critical element of defining this. But a credit card is not the exclusive answer and sub-networks including non-internet ones, do work for Travel.

So how did we do on the test?

Interestingly there are 3 UNTRUES, 2 TRUES and a DRAW. I am favoring the UNTRUES due to the actual wording of the statements in PCW's myths.

Perhaps we should run a Travel Mythbusters for Travel and have Adam and Jamie replicated to go through the 6 Myths.

Let me know if you want to take up that challenge.