Online travel agencies and their owners may be facing a rough ride in 2005, predicts an analyst for Standard & Poor (S&P).
“S&P sees consolidations, spin-offs, tighter supplies, and global expansions dominating the industry in 2005,” said Scott H. Kessler, an internet analyst.
The last year was hardly a banner one for online travel companies and their shares, said Mr Kessler.
“At S&P, we believe the most significant issue for internet travel agencies is competition,” added Mr Kessler in BusinessWeek/online.
Not surprisingly, he added, travel suppliers such as airlines and hotels are increasingly focused on the internet for sales, marketing and customer service. He expects continued heavy investment in Web sites.
“Interesting, as competition has grown more intense, travel suppliers have provided less inventory to online travel agencies,” said Mr Kessler.
As travel demand has improved, however, hotel companies and others have taken control of their inventories and tried to direct would-be purchasers to their own Web sites.
“Would-be travelers often search third-party Web sites to obtain information and comparison shop, but make their own actual purchase via supplier sites,” he said.
With better-known brands and offers of loyalty benefits, Mr Kessler says his company believes travel suppliers post a substantial threat to the online travel agencies.
“Remember, you can’t get American Airlines Aadvantage miles or Marriott Rewards points by booking on Expedia, Orbitz, or Travelocity,” he said.
He added:
“We believe the world of online travel is growing increasingly challenging for the major agencies and their parents. For many in this sector, 2005 will be a year to forget – even before it really starts.”
Report by David Wilkening
