Traditional Tour Operators Fight Back against Online Travel Companies

Major travel groups are responding to fierce competition from online travel agents, such as Expedia and Travelocity, in the fight for the lucrative online travel retail industry, according to the new report just published by Euromonitor International, “Global E-travel habits”.

Multinational travel agents, such as TUI and Thomas Cook, will pose a significant challenge to online travel agents, particularly given their established brand names within the travel industry.

“Major operators believe they are in a strong position to challenge online companies because of their brand strength and high level of vertical integration. The fact that they own their products means they are in control of the quality of their offerings,” said Helen Roberts, strategic analyst from Euromonitor International.

The global e-travel market has developed significantly over the last 10 years, causing severe problems for traditional high-street travel agents. Online sales accounted for a 19.5 percent share of the global retail travel sector in 2006, the majority of which were made via online travel agents.

In the UK, online bookings increased from 7 percent in 2002, to 35 percent of all bookings in 2006, according to Euromonitor International. Traditional tour operators are realizing the potential in this channel and now view the Internet as the only way forward.

Traditional tour operators are improving their online facilities and investing in their websites in order to compete with online travel agents. Thomson, for example, recently enhanced its main website with a raft of new features and content, in an attempt to retain customers and encourage them to book through the site. It also introduced additional editorial content to help consumers, as well as to enable the site to be picked up by Google in natural searches.

In the UK, traditional tour operators have made significant progress with their websites, and now rank among the major online travel sites in terms of visitors. For example, in the week to 13 January 2007, Hitwise, monitors of internet usage, reported that MyTravel had overtaken the online travel agency, lastminute.com, for the first time, with a 5.2 percent share of visits to travel agency websites.