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Booker Loyalty Lags As Online Travel Market Matures, Predicts Forrester Research

Cambridge, Mass., January 11, 2000 . . . Due to a combination of new bookers and the increasing amounts consumers are spending, the online travel market continues to boom. However, according to a new Technographics® Report from Forrester Research, Inc. (Nasdaq: FORR), travel sites face the same challenges that online retailers struggle with -- most consumers are not loyal. Web travelers rely upon convenience, abundant information, and low prices found online, and they are willing to research multiple sites for the best deals.

"Forrester found that nearly 70% of bookers use multiple sites when arranging travel on the Net," said Christopher M. Kelley, associate analyst in Technographics Data & Analysis. "Web travelers can't resist the convenience of booking during off-hours, comparing competitor rates, and ultimately, finding the best fares online."

Consumers have various reasons for booking online travel as they do. Forrester breaks them into three segments: disloyal, curious, and loyal bookers. Disloyal bookers, customers who research and book at multiple sites, search far and wide to find travel sites that will give them the best deals for their sophisticated travel needs, including the lowest prices, enticing special offers, and exacting itinerary requirements. Curious bookers research multiple sites yet return to the same site, while loyal customers research and book at one site. Both curious and loyal consumers rely on one site due to easy site navigation, favorable previous experiences, and low prices.

Even with an overwhelming majority of disloyal travel bookers, some sites attract more loyalty than other sites. The one-stop-shop nature of online travel agencies effectively attracts bookers that rely on one site for all their booking needs. Suppliers, on the other hand, have a hard time attracting loyal bookers, but they successfully lure disloyal bookers away from agencies with special fares and mileage perks available exclusively online. Although portals have the greatest reach of all travel sites, they get the lowest percentage of bookers from all three segments.

To combat online booker disloyalty, suppliers, agencies, and portals must take lessons from online retailers on how to encourage loyalty. Suppliers must establish dynamic partnerships with suppliers in other travel categories that allow consumers to book flights, hotels, and car rentals at the same site. Large agencies must sell adjacent categories of products and services. Small agencies will see their modest booking base diminish as the most disloyal bookers settle down and pick one agency and several suppliers for all their booking needs. They should consider either specializing in niche travel or getting bought out. Portals must let the agencies and suppliers fight over bookers and instead focus on what portals do best -- offer information to consumers.

"We see little changing in the way of online travel loyalty, with the exception of disloyal travel bookers eventually settling down and booking at only three or four sites, versus the current eight or more," added Kelley. "Conversely, both loyal and curious bookers will be tempted to stray as they become more experienced and are exposed to travel deals from other sites."

For the Report "Travel Bookers Aren't Loyal," Forrester surveyed nearly 10,000 individuals from Greenfield Online's marketing research panel about adoption and behavior regarding booking leisure and business travel on the Internet. Nine million online households have already adopted Internet travel booking, which will grow to 26 million by 2003.

Forrester Research is a leading independent research firm that analyzes technology change and its impact on business, consumers, and society. Forrester's "whole view" of the Internet economy enables clients to weave together Internet commerce initiatives with corporate systems to satisfy the customer's changing needs. Clients receive continuous research and analysis through Forrester's unique eResearch™ Reports, an array of advisory services, and topical events. Forrester PowerRankings™ provide consumers with unbiased assessments of the leading eCommerce sites in the most popular shopping categories. Established in 1983, Forrester is headquartered in Cambridge, Mass. Forrester's European Research Center is located in Amsterdam, Netherlands. With the November 1999 acquisition of Fletcher Research, Forrester also maintains an office in London. Additional information about Forrester Research can be found at www.forrester.com.

Contact:

Mariko Zapf
Manager, Public Relations
Forrester Research, Inc.
+1 617/613-6255
press@forrester.com