provider of ‘hosted’ technology products for business travel, the British online Travel agency, Quest Travel, specializing in overseas travel, French Vivacances, Italian E-viaggi and Scandinavian Travellink. Furthermore, together with nine European airlines, Amadeus set up the online travel agency, Opodo.46 Through Amadeus e-Travel Management, Amadeus provides travel solutions and information for leading European corporations and governments, too.
As a consequence of this massive offensive and strategic remodelling, Amadeus is able to meet the challenges of the Internet and consolidate its position as one of three leading global travel intermediaries. Furthermore, Amadeus is a global leader in IT and web-solutions to the same group of travel providers and is partnering with ITA, BroadVision and SAP to develop new and more advanced e-commerce solutions to the travel industry. Partnerships with Terra Lycos, the world’s third largest general web portal, and the travel portals of Spanish Rumbo and French Vivacances in cooperation with Groupe Galeries Lafayette is meant to strengthen Amadeus’ sales channels to consumers. By way of the Internet and changing strategies, Amadeus connectes more closely with travel producers and consumers, providing total solutions and also being part of a global consolidation that blurs traditional boundaries of industries.
Expedia
Since 2005, Expedia is the largest online travel agency of the expanding online market.47 Expedia, Inc. is the parent company of some of the world’s leading travel companies that provide travel products and services for holiday and business travel in the United States and the rest of the world. Until 2005, Expedia is part of the investor group InterActive Corp. (IAC). During the second-half of the 1990s and the early 2000s, IAC launches a comprehensive acquisition process of companies in e-commerce, including online travel agencies such as Expedia.com and Hotels.com. A business unit of online travel agencies is concentrated under Expedia, Inc., including Expedia.com, Hotels.com, Hotwire.com, TripAdvisor, Expedia Corporate Travel and Classic Vacations, among many other US and international companies. Its main market is the United States. In 2005, Expedia had revenues of almost $3 billion. Like other leading online travel agencies, Expedia provides travel information for many airlines, hotels, cruise lines, car rental companies, etc. and for consumers everywhere. Towards consumers, Expedia uses the ‘merchant’ business model that allows people to book tickets, rooms, etc. directly on the web, while the ‘agency’ business model just takes care of transactions for other travel providers. Unlike the other online travel agencies, Expedia has no historic links to the leading airlines.
Expedia competes in a rapidly developing market of increasingly intense competition. Online travel services are a strongly growing market. From a small start in the early 2000s, it is expanding enormously to cover about one-third of the US market in 2005 but just one-tenth of the European market. By 2010 however, online travel booking and sales is projected to be the most common distribution form.
Expedia competes with online as well as offline travel companies and any other travel provider for that matter. The strength of Expedia is its ability to provide services to many suppliers. Expedia feels the increasing competition from the vertically expanding travel providers and distribution companies as well as new competitors such as search machine operators that collect prices and other information from many sites, especially Google and Yahoo.
The global online travel agency companies are concentrated in the US. The US online travel market is also the largest in the world, followed by Western Europe and Eastern Asia, mainly Japan (Table 6).
TABLE 6 The Global Online Travel Agencies Market in $bn and % Shares, 2001-2010
Source: Markussen, Carl H. (2003). Trends in the US Online Travel Market 2000-2002: www.crt.dk. Clikz. The US Online Travel Market, 10.11.2004: www.clickz.com. New Media Review (2006). The Online Travel Market: www.etcnewmedia.com. Markussen, Carl H. (2007). Trends in European Internet Distribution of Travel and Tourism Services: www.crt.dk ‘The Rest of the World’ is estimated.
Social Travel Networking
So, online you can access one of the big travel agencies such as Expedia, Travelocity and Orbitz for airfare, hotel and car rental, etc. But innovation and competition do not stop there. A whole new set of travel websites and services have emerged within recent years.48 One response is to pull data from a variety of sources enabling you to compare airfares, hotel prices, etc.
Kayak.com is such an aggregator of travel information, finding the perfect flight, hotel, cruise, or rental car.49 Once the choice is made, the consumer is linked to the travel sites to make his purchase at will. Unlike online travel agencies, Kayak is not a store and does not sell anything. It just searches for travel goods across the Web and provides details on hundreds of options without any hidden agenda or biased displays. And the information is free to use. Kayak was started in 2004 by the founders of Orbitz, Travelocity and Expedia, the three worldwide leading online travel agencies, who wanted to create a better and more user-oriented online travel service. Kayak makes money when travelers click on its advertisements and on the results from travel suppliers such as airlines, hotels and rental car companies. This is a revenue model similar to Google and Yahoo. Yahoo and Google have developed aggregate travel services, too, and form tough competitors to Kayak in the rising industry of aggregate travel information that also includes SideStep and Farecast. This industry of consolidated travel information and supplier links is directly challenging the online agencies.
A different source of innovation and competition to online travel agencies springs from the rapid rise of virtual communities on the Internet. Since 2007, some few hundred million users have joined large communities such as YouTube, MySpace and Facebook.50 The success of these communities quickly caught the interest of leading media and online companies. In 2006, the media conglomerate News Corp. acquired MySpace and Google bought YouTube. In 2007, Microsoft followed suit and invested in Facebook. These three broad community sites function as widely-used communication forums for the new Internet generation. By way of expensive advertisement deals, the leading search engines of Google, Yahoo and Microsoft make sure that they have access to a worldwide audience through three communities.
Soon people with like interests began to divert into specialized sites. Some of these sites deal with traveling. Travelers meet on the Internet to share information on destinations, means of transportation, hotels, etc. in several sites. TripAdvisor is perhaps the largest travel community in the world, attracting more than 30 million monthly visitors.51 What TripAdvisor does is to provide travel information by creating a web service open for travelers, but does not take reservations. It is a free travel guide that offers reviews and information to help plan a vacation.
TripAdvisor is an example of a new and growing trend of consumer generated media and recommendations that are shown to have a big impact on buyer choices. Just as the general communities of YouTube, MySpace and Facebook caught the interest of leading search engine providers and led to mergers, so the challenged group of online agencies has moved quickly to become part of these new developments. Accordingly Expedia has taken over the ownership of TripAdvisor.52 Travelocity and Orbitz are moving in the same direction, offering a new social networking component with realtime updates and tips from travelers. Professionals also offer reviewing
