Travel companies are using the Web to reach consumers during the planning phase, as well as to target those who have booked certain trips or are traveling for business.

Travel seems to be one of those categories that is tailor-made for the Web. There is certainly no lack of travel-related information on the Internet, and consumers seem to be hungry for this flavor of information. Back in April, Nielsen/Netratings released statistics showing that 43% of all online consumers in the United States had visited a travel-related Website in March of this year.

With such a significant percentage of travel consumers seeking information online, travel companies have gone out of their way to encourage consumers to book travel plans online. U.S. travelers are receptive to travel e-commerce as well – eMarketer reports that 32% of the U.S. travel market went online to book travel arrangements in 2002. If you're wondering what this means in terms of dollars and cents, Reuters reports that online consumers spent nearly $7 billion on travel through e-commerce sites in the first quarter of 2002 alone. This represents a more than 50% jump over the same time period last year.

"But aren't people afraid to travel in a post 9/11 world?" you might be asking yourself. Apparently not. Online travel sales dipped 13% in the fourth quarter of 2001, but surged nearly 40% in the first quarter of this year.

What's more, consumers apparently plan to keep their travel plans intact, despite the current economic climate. A survey of more than 800 respondents issued at the end of July by Yesawich, Pepperdine & Brown showed that approximately 95% of adults who planned a trip between now and the end of the year still plan to take that trip.

How Do Travel Companies Get Their Slice of the Pie?

It's tough to get in front of a consumer when they're ready to purchase a travel package. Plane tickets and hotel bookings are not typically impulse purchases, so it's important to be in front of the consumer during the consideration process. Many airlines and hospitality advertisers do exactly that, covering vacation-related content and other venues that discuss vacation destinations. But some travel advertisers are realizing that a significant length of time might pass between consideration and actual purchase.

"Despite it being a very robust category for content and commerce, we find that the most effective means of driving ROI is the same as for other categories – search engine text links," says buying director Scott Symonds from Exile on 7th. "We have had excellent initial results from ISPs."

Might this suggest that the search engines play a significant role in directing travelers to booking engines once they're ready to purchase?

"With search engines, you see a great many more click-throughs to purchase, showing that indeed they are much closer to the lower end of the purchasing funnel -- much closer to the purchase decision," says Lisa Kirstein of Semaphore Partners, who has worked with both Orbitz and Continental Airlines. "The content sites are much more about view-through purchases, and it does make sense in terms of where you are in the mind-set."

Of course, many travel companies make their money by following in the wake of hotel and airfare bookings. Car rental and tour companies immediately come to mind. Many of these companies make their money by up selling to people who have recently booked travel packages. Travel sites can make money by selling targeted advertising to these companies, which makes it important for travel sites to know as much as they can about their consumers and have the ability to serve ads to targeted segments of travelers.

Targeted advertising opportunities make sites like Sabre's Virtually There a great venue for travel-related advertising.

"We are an itinerary document that travelers have to use in order to get their travel information, and so to the extent that we know that these people are confirmed travelers, as opposed to shoppers, we know that they are leaving from Chicago on this date, and arriving in New York on that date, we know that they have a hotel or they don’t, or they have a car rental or they don’t, we know what airlines they are on," says Darlene Rondeau, vice president of sales for Virtually There. "Because we have visibility into the deepest aspects of their travel experience, we can then use that data to target for the travel suppliers."

In particular, Virtually There was able to structure compelling online marketing campaigns for The Parking Spot, a service for travelers seeking quick and easy parking at airports. (See our accompanying case study.) Virtually There was able to lift The Parking Spot's ROI significantly when its sales staff engaged in some analysis and audience segmentation on behalf of the service. The company found a targeted segment (travelers who stay overnight) that, when addressed specifically, resulted in a doubling of initial response.

Is Targeting the Magic Bullet?

Traditionally, airlines and hospitality companies have treated business travelers and pleasure travelers in vastly different ways. In offline media, this often translates to advertising loyalty programs and other value-add services in business media, while advertising to vacationers with a price-focused message in consumer venues.

This tactic also works in online media. However, the two-way nature of interactive media presents some interesting possibilities with regard to separating business and leisure travelers. For instance, leisure travelers often identify themselves to marketers through their online behavior. They often are more flexible with regard to the dates and times that they will fly, and they tend to be a lot more price-sensitive than business travelers.

"Business travelers will book point-to-point on the likes of Orbitz, Travelocity and Expedia," says Ritesh Patel, a 20-year veteran of the travel industry and CTO of Agency.com, which counts British Airways, Fairmont Hotels & Resorts, and Hilton International among its clients. "They are keen to get from here to there in the shortest timeframes with a good deal. Leisure travelers are interested in the destination and the cheapest deal and hence are willing to give up some of the stringent requirements and fly at 6 a.m. or 9 p.m."

Then there's the classic marketing tactic of separating business and leisure travelers by gauging their willingness to stay the weekend. Most business travelers want to fly back to their home destination before the weekend, so airlines and hotels typically segment their offerings by allowing people who stay the weekend a lower rate. This keeps costs for pleasure travel in line with consumer expectations while allowing travel companies to charge the business traveler accordingly.

"We find that a lot of travel suppliers are looking to build out their city-based hotel offers on the weekend," says Amy Adams, director of east coast sales and marketing for LastMinuteTravel.com. "We built a weekends channel, for example, to move distressed weekend inventory.

"Micro-targeting is evidenced in the way we rebuilt and relaunched LastMinuteTravel.com," says Adams. "We saw the need for this kind of inventory, so we built our site around destination and lifestyle channels. We were lucky in that we were able to take all the travel learning from the last seven years and relaunch our site. That’s what marketers asked for and that’s how we built it."

Symonds buys media for AmericaWest Airlines. He says, “I believe destination targeting is more effective for leisure travel. For instance, Las Vegas themed placements are very effective for us."

What Do Online Media Mean to the Future of the Category?

According to eMarketer, online ticket sales represented nearly 8% of total sales for the major airlines last year. And online's share of the pie is expected to grow significantly over the next few years. But this growth comes at a price – customer expectations of online travel sites are at an all-time high.

A Jupiter Media Metrix survey, results of which were released in late March of this year, showed that nearly half of all consumers rank travel as the top retail category in which customer service is the most important factor influencing their decision to buy. According to Jupiter, 79% of consumers said they would be less likely to purchase airline tickets from a company with which they previously had a negative customer service experience. That figure climbs to 85% in relation to consumers who spent more than $500 online in the six months prior to responding to the survey.

But what customer service options are most satisfying to the consumer? According to Jupiter, 62% of consumers simply want airlines to keep them updated with respect to delays either by e-mail or phone. Fifty-four percent want airlines to improve their response time to e-mail inquiries. “The ongoing challenge to travel sites across the board is how to innovate to provide unique and differentiating benefits to that customer who already expects everything at their fingertips,” says James Hering, senior vice president and director of interactive marketing for Temerlin McClain, which has American Airlines as a client.

"Making your most important customers feel that they are the most important to you is huge," says Kirstein, "and the online channel will be the leader in this effort, in terms of getting out the right communications and speaking to the different audiences differently."

Selling Ice

“Selling travel is like selling an ice-cube: It has an expiration date, it has a melting point,” comments Adams. “You can’t sleep at night because the ice is always melting…and that’s what travel suppliers are up against these days.” Indeed, according to a recent study by CSFB, $20 to $30 billion of travel inventory will go unsold this year. And that means putting heads in beds and turning lookers into bookers.

When American Express surveyed travelers recently, it found that almost 50% of travelers considered themselves to be last-minute travelers, and research from TIA back in March of 2001 found that 20% of all online booking is done within one week of departure. “It’s only moved towards increased impulse gratification since then,” notes Adams.

While sites like Travelocity and Expedia have to spread their interests across multiple carriers, brand sites have the opportunity to capture fare-seekers looking for the best deals on distressed inventory. For example, with the recent relaunch of AA.com, a ‘NetSaaver’ area was created “where everything that is on sale is conveniently listed on one page at a glance,” says Hering. “Here I can shop instantly at a glance among all of the great fare offers…so if I happen to see that Dallas to Orlando is $189.00 while I was thinking of going to Tampa, it’s still Florida, and I could be saving $50.00 or more on the flight. You don’t get that if you’re trying to promote down to the city-pair level.”

And the Big Picture?

"Travel commerce is exploding despite the fact that travel as an industry has declined," says Symonds. "That's very compelling for the client."

Indeed, online travel bookings are representing a bigger piece of overall bookings for the travel industry as a whole, and this trend is expected to continue.

"United Airlines has already said that they are going to remove paper ticketing in the next few years, which will further cut down costs," says Adams.

"Through the Website, we have a really strong point-of-sale tool, we know that they are going, and we serve up travel supplier ads, but we also have a great way to influence future travel, because we know that on average, our people travel on business trips 11 times a year, and leisure three times a year," says Renee Cashion of Sabre. "We can make some assumptions on their travel patterns to speak to them in a more appropriate manner for their future travel. And we’re getting to the point where we have quantities that allow us to aggregate and speak to a broad audience in regards to the same type of information."