Online Traveling Agencies

Even though online travel booking declined substantially from $112.9 billion in 2008 to $104.3 billion in 2009 (down 7.6%), it is expected that future spending will increase due to a slowly improving economy.1 “In fact, Forrester is projecting that overall online bookings will trend up an average 8.1% each year from 2009 to 2014, when consumers will spend more than $153 billion booking travel online.1” This steady increase in online bookings will allow online travel agencies to focus on providing customers with faster service, cheaper travel packages, and preference over substitutes.

With the travel industry being highly competitive among various companies, buyers are well informed about sellers’ products, prices, and costs. Among leisure travelers researching their trip in 2010, 66% looked into search engines, 40% airline websites, 36% hotel websites, 40% destination websites, 31% travel websites, 25% online travel agencies, 15% travel agents, 11% car rental websites, and 10% social networking websites.2 The future for online travel agencies could be a daunting one with increasing number of people choosing to switch to competitors with greater financial, marketing, and personnel skills.3 Bargain hunters are able to shop around for the best deal on the Internet and use that knowledge to limit industry profit by receiving travel packages at a cheaper price, higher quality, and faster service.

The online travel industry is exposed to risks associated with online commerce security and credit card fraud.4 Credit card fraud on the Internet in the context of domestic transactions grew to 0.276% in 2010 from 0.263% in 2009.5 “U.S. credit and debit card fraud is on the rise.”6

With credit card fraud expecting to rise, the online travel industry may experience loss of potential or existing customers, interruption of operations, or even security breaches.4 The uncertainty of these risks may lead customers to alternative routes of booking travel, increase competition...