Tourism Industry News

Highflying days over for online travel sites

01/12/2008 22:44

Not only are Americans flying less as the economy tanks, they're spending less time scouting the Internet for travel deals, creating an unprecedented drop in traffic for online travel agencies like Chicago-based Orbitz Worldwide Inc.

As days shorten and the air chills, consumers typically start to plan winter getaways, making October one of the busiest months of the year for Internet travel sites, analysts said.

Not this year. As consumer confidence reached historic lows in October, the volume of visitors to Web travel portals declined 14 percent, year over year, to 38.2 million, according to ComScore Inc. Web traffic fell for nearly every major airline site.

Hardest hit were the three online powerhouses that have dominated bookings for much of this decade. Web traffic at Expedia Inc. sites plunged 25 percent, to 18.2 million visitors, while LP and Orbitz saw 16 percent and 23 percent drops, respectively.


The falloff in traffic was unparalleled for the three online agencies, which grew by leaps and bounds during the economic slowdown that followed the Sept. 11 attacks as many consumers for the first time turned to the Internet to unearth bargains.

Anticipating tougher times ahead, Orbitz last month announced plans to reduce its U.S. workforce by 10 percent by the end of the year.

"The economy and industry outlook for the fourth quarter has deteriorated markedly over the past six weeks," said Steven Barnhart, chief executive and president of Orbitz.

It's the latest sign of new woes bewildering the travel industry. After dodging the effects of sky-high fuel prices during the first half of the year, airlines, hotels, rental car companies and tour operators are struggling with a steep and sudden drop-off in demand from both corporate and leisure travelers.

"What's happening in 2008 is a universal buckling down," said Sara Stevens, a vice president and head of the travel and retail practices for Virginia-based ComScore, a market research firm that tracks Internet traffic.

More than half of 1,000 consumers surveyed by ComScore in October planned to change their travel plans this holiday season. Of those altering plans, 39 percent said they would opt to stay at home.

However, ComScore's data did not present a complete picture of online travel activity since it measured only U.S. traffic and not overseas customers. For Expedia, "that's leaving out a huge chunk," said Amanda Hoffman, spokeswoman for the Bellevue, Wash.-based company.

Hoffman wouldn't disclose total traffic to Expedia's sites. But she conceded that the Web travel giant, which controls about 50 percent of the online travel market, did see a falloff during October.


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