• by April 5, 2007

Sales of online travel services could reach $146 billion by 2010, but year-to-year growth rates are cooling, according to a new research report from eMarketer. The online industry researcher's forecast includes all leisure and unmanaged business travel sales, including sales of airline tickets, hotel rooms, cruises and rental cars, but not meals or event tickets.

"Sales are still growing at a nice clip, although that growth rate is declining," said Jeffrey Grau, senior analyst, eMarketer, who said the rate of growth is pegged at the mid- to upper teens.

"Travel suppliers need to find new ways to meaningfully differentiate and create value for customers because consumers have more and more tools," Grau noted. While it remains difficult for airlines, for example, to overcome commoditization, hotels are all about the experience, so there's more opportunity to differentiate there."

Price comparison sites like FareChase and FareCompare, search tools, and social networks are increasingly empowering consumers to find the best possible deals on fares and travel bookings. Online photo-sharing sites and tools that enable the sharing of itineraries and other information are chipping away at online travel bookers' reason for being.

As online travel becomes more commoditized, Grau suggested, travel category advertisers tap into social networking sites that are increasingly becoming more specialized to find passionate travelers aligned around a particular interest in, say, backpacking through Europe.

"It's easier for people to find like-minded people on social networking sites. People like to discuss travel. An advertiser could monitor these sites and see what peoples' travel desires are," Grau said. He also said category advertisers should form partnerships with other kinds of service businesses.

For the first time, eMarketer noted that online travel bookings in the U.S. will surpass offline bookings in volume this year, according to PhoCusWright. In 2007, eMarketer estimates that 41.3 million U.S. households will book travel online, representing 52.5% of all U.S. online households. This year, U.S. online consumer travel sales will reach $94 billion, up 19% over 2006, according to eMarketer estimates.

The report also noted that in 2006, an estimated 37.1 million households booked travel online, which is 49.8% of the total online households in the U.S. In 2010, eMarketer estimated there will be 51.1 million households booking travel online, representing 55.3% of online households in the U.S.

Two weeks ago, Priceline announced the addition of free-access Zagat hotel reviews to its Web site. Orbitz offers customer-generated reviews and last year created a branded "TLC" services suite. Staffed by former military air controllers and travel experts offering continuously updated information on flight and gate changes, among other travel-related issues. Expedia introduced a loyalty program and offers a "Best Price Guarantee."