by Doug Desjardins
Booking holiday travel online has gone from a niche market to the norm as more people search for bargains on flights, hotels and car rentals. And the increasing number of travel sites in a market once dominated by a few big players has raised competition to a level few could have imagined when the first sites debuted a decade ago. 
The emergence of online services that search multiple travel Web sites to find the best prices has only added to the cutthroat nature of the market and is forcing all the players to make concessions. Earlier this year, the major online travel sites eliminated booking fees to compete more effectively and that type of discounting is expected to continue this year as airlines, hotels and car rental companies struggle with double-digit declines in business and leisure travel.
“The reliance that consumers have on travel Web sites has not weakened one bit,” said Carroll Rheem, director of research at travel industry research firm 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 the convenience they value.”
PhoCusWright reported that business at online travel sites increased during the second quarter of 2009 despite the downturn in travel. The company reported that online booking of cruise ship travel increase 19% and hotel bookings jumped 13%. Rental car reservations also increased slightly and the only area where business decreased was airline travel.
Travel sites are dealing with a market where hotel rates dropped 17% during the first half of 2009 and where business travel plummeted 20%. As a result, consumers accustomed to finding bargains online have become even more demanding and created an environment of heightened expectations.
That’s part of the reason online travel sites began offering holiday travel bargains earlier than ever this year. In mid-September, Orbitz began offering $40 off a stay of three nights or more at hotels on its site only to be one-upped by bedandbreakfast.com, which is offering $100 off a stay of two nights or more. Priceline teamed with Hertz to offer consumers $20 off weekend rentals and was matched by Travelocity’s offer of $30 off a weekly rental at Alamo. Travel analysts expect this type of gamesmanship to continue for the rest of the year.
An informal survey conducted in September by travel analyst Sarah Pascarella shows just how tough competition has become in the online travel industry, especially in air travel. She searched for the best deals on several round-trip flights to different cities and found that Expedia, Orbitz and Travelocity all offered the same price for every flight down to the penny.
Footnotes:
COUPON TIME
As competition heats up, the deals just keep better and better! And we’ve got some of the best at our Holiday Travel Deals page!