• by Wendy Davis , Staff Writer @wendyndavis, April 4, 2007

U.S. customers spent $79 billion on online travel last year, according to a new report released today by eMarketer. The research firm predicts that spending in this category will grow at around 17% a year for the next five years, totaling $146 billion by 2010.

Although online travel has been thriving for several years now, the industry appears to be in considerable flux, at least according to the report. "The online travel market is a hotbed for experimentation, with new travel sites seemingly popping up weekly," states senior analyst Jeffrey Grau in the report.

One of the most notable recent changes, according to the report, is the explosion of social networking sites, where people can share information and itineraries, post travel blogs and upload videos of their trips. Even sites not specifically aimed at travelers, like the Baby Boomer-focused Eons, launched last August by Monster.com founder Jeff Taylor, offer travel sections.

The report also noted that online travel agencies are facing increasing pressure, as consumers who use social networks now offer fellow travelers their own advice and recommendations. And that's in addition to the pricing pressure from airlines and hotels, which sell to consumers directly from their Web sites.

How, then, can online travel agencies like Expedia and Travelocity remain competitive? The report suggests that travel providers will have to be more creative in their packages, moving "from a service model based on mass consumption to one centered on creating customized packages for groups of travelers with unique interests and needs."