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 Expedia and Orbitz Worldwide.
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 Expedia and Orbitz Worldwide.
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.
Web traffic fell for nearly every major airline site.
- With death on table, McEnroe jury's friendships crumbled
- To retire at 55 takes big savings
- Salary cap expert Joel Corry with another look at Russell Wilson's contract
- Microsoft employees -- past and present -- look back over the years
- No time to eat in Silicon Valley, so techies chug their protein
Most Read Stories
Hardest hit were the three online powerhouses that have dominated travel bookings for much of this decade.
Web traffic at Bellevue-based Expedia sites plunged 25 percent, to 18.2 million visitors, while Travelocity.com and Orbitz saw 16 percent and 23 percent drops, respectively.
The falloff was unparalleled for the three online agencies, which grew by leaps and bounds during the economic slowdown after the Sept. 11 attacks as many consumers began surfing the Internet to unearth bargains.
Anticipating tougher times ahead, Orbitz last month announced plans to reduce its U.S. work force 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 Chief Executive Steven Barnhart.
It’s the latest sign of new woes for 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 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 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 spokeswoman Amanda Hoffman.
Hoffman wouldn’t disclose total traffic to Expedia’s sites. But she conceded the Web travel giant, which controls about 50 percent of the online travel market, did see a falloff during October.
“The travel industry is hurting right now, and certainly online travel agencies aren’t immune,” Hoffman added.
Bucking the trend were two Web sites that help budget-minded travelers drive better deals. Priceline.com saw a 24 percent jump in visitors during October, while traffic to Kayak.com surged 93 percent, to 7.9 million visitors.
Both use models that have held up well in the online retail sector, which, too, has been hurt by the global economic downturn, Stevens said.
Kayak features a comparison-shopping search engine, while Priceline allows consumers to bid on goods they are interested in buying.
“In tough economic times, people care a lot more about the money they’re spending,” said Drew Patterson, vice president for marketing with Kayak. “In that environment, we can be a lot more successful.”
Kayak, founded by members of the teams that helped start Orbitz, Expedia and Travelocity, steers consumers to the best deals available on the Internet and makes its money through clicks on its advertising.
It has also gained a following among younger, tech-savvy consumers for innovations that include a tool allowing groups of friends to plan their travel together and a search “wiki” that lets users manipulate results to showcase items of greatest interest to them.
While Orbitz has predicted its bookings would remain weak through early 2009, it should benefit eventually as consumers take advantage of cheaper airfares and hotel rooms, as well as a new feature that promises refunds if prices drop after tickets have been purchased, said Brian Hoyt, a company spokesman.
“It’s an incredible time to travel if you have discretionary income,” he added.