Online Travel Takes Off

Schlepping his burgundy leather briefcase and navy canvas travel bag through the Portland airport, George Bragg doesn’t care as much about how he gets his ticket as how soon he’ll get home to Dallas. He’d happily buy tickets from affiliates, discounters, travel agents or airlines.

With travel representing the single largest source of Internet commerce, travelers like Bragg have so many options "it’s hard to keep up with them any more," drawled the weary business traveler with five frequent-flyer cards in his wallet. Airlines and hotels sell directly from their own sites. Discounters offer an array of fares. Travel agencies – hit hard when airlines stopped paying commissions – offer online fares and more. That leaves affiliates with a hearty marketing challenge: reaching consumers and agents already bombarded by messages from the big brands and the discounters that resell the brands. But there’s hope in the numbers: "Close to 100 million people have purchased travel online at some point over the last year," said Melissa Derry, a spokeswoman for Expedia. "While there are 20 million people coming to Expedia’s site each month, there is still a huge number of people who are out there looking for a place online to get these services."

Though higher fuel prices may put a crimp in auto or jet travel, industry watchers still predict record years. Online bookings have never been more popular. Out of all flight and hotel reservations, 30 percent come from online bookings, reports travel researcher PhoCusWright. By 2005, it predicts half of all flight and hotel reservations will be made online. "It just continues to grow," said Bill McGee, a consultant who watches the sector for Consumer WebWatch. "A few years ago, it was mostly business travelers, but now it’s really across the board. It’s used by leisure travelers, by families, by just about everybody."

Airlines, hotels, cruise lines, rental car companies and travel discounters see this huge market, and know their marketing can’t capture it all. So they turn to affiliates. "We think of them as an extended sales force," said Blagica Stefanovski, online marketing and affiliate manager at Orbitz.com. Nearly any site can sell flight, hotel or rental car bookings, whether it’s a sophisticated rewards site or a simple Web page put up by a neighborhood association to fund speed bumps or stop signs. "There are so many opportunities for travel on the local level," said Jason Price, vice president of marketing at Hospitality eBusiness, an Internet consultancy for hotels. "You can post local news or sports information, and provide a travel link to help fund the site. Maybe some kid in his basement wants to talk about high school sports in the area – why not have a Marriott button there for the hotel around the corner?"

Whatever the site, now is the best time for sales. "We’re [in] our best seasonality – the peak summer travel season – so it’s a great time for affiliates of travel merchants to promote their travel options and improve their placement or for new affiliates to give it a try," said Veronica Young, affiliate marketing manager at Hotwire.com. "The winter holidays are another big travel season: Thanksgiving, Christmas, New Year’s."

Travel is perhaps the easiest entry for new affiliates. They are credited for sales up to 30 days after customers click through their links, even if customers don’t go through the affiliate when they actually buy. New banner and link codes are sent within emails so affiliates don’t have to log into an interface. Many travel affiliates don’t even update their codes anymore. Their merchants do it for them using dynamic rich media. Travel merchants often have teams of "program managers," rather than one affiliate manager, to give personalized service to affiliates. "It’s certainly an ongoing challenge to stay on top of all the changes," said Michael Bauer, senior vice president of affiliate marketing for Hotels.com, which offers an online "university" for new affiliates. "What we offer affiliates is we are the eyes and ears of our industry. If there’s a swing, we identify it."

Travel merchants also actively help affiliates convert the curious into buyers. Interactive banners, for instance, are the hottest buzz in this industry and are offered by most travel merchants: Customers input their destination and dates at the affiliate’s site first, moving them further into the search and committal process.

Since the peak summer travel season is in full throttle and holiday travel is just around the corner, these perks should prove beneficial to affiliates trying their hand at the high-flying online travel industry.

Hotels

So what’s the hottest-selling travel product now? Hotels top the list. Eighty percent of active business travelers and 73 percent of active leisure travelers went online for hotel reservations in the past 12 months, according to the 2004 National Travel Monitor (NTM).

Affiliates could work directly with the brands, but few offer affiliate programs. "Only two or three brands have actually launched an affiliate program – only in the past two or three years and with moderate success," said Price, who cites Accor Hotel’s worldwide affiliate program with 3,700 hotels. "The rest of the brands have not embraced the affiliate market. As soon as these early adopters come out with performance, the others will jump on." Individual hotel properties may be willing to negotiate with affiliates who can give them Web bookings. Try it.

Affiliates can work with discount sites that show fares for dozens of hotel partners, ranked by price or brand. They can work with "opaque" sites like Priceline and Hotwire, which rank unbooked hotel rooms – along with excess airline seats, car rentals, vacation packages and cruises. Both pay 2 percent commissions to affiliates. "We’re kind of the Costco of the online travel industry," Young said. "Any affiliate that has a site where customers are going to be looking for cheap prices is a great fit for our program: a travel site, a discount site, a coupon site."

Affiliates also can work with affiliate-only networks like World Choice Travel. World Choice offers fully branded travel search pages, with an underlying software that combs the Web for lowest fares. World Choice pays 5 to 10 percent on hotel bookings, plus half of any transaction fee.

Flights

Nearly 75 percent of consumers who researched travel online bought their airline tickets online in 2003, reports NTM. The incentive for online bookings is there: Internet fares are now, for the first time, the cheapest way to buy airline tickets, according to Consumer WebWatch.

Affiliates can sign up with specific airlines like Alaska Airlines/Horizon Air, which pays $2 for every ticket booked. Affiliates can sign up with discount sites that rank searches by price, flight times or airline. The largest are Expedia, Orbitz, Travelocity, CheapTickets, OneTravel and TravelNow. Consumer WebWatch found that Expedia leads in the greatest number of lowest fares but Travelocity, which has the best booking tools, has the largest array of flight times and low fares.

There’s also World Choice’s branded program, which searches anywhere in the US, Canada, UK or Europe for the lowest prices from about 30 airline and booking sites. Affiliates earn 5 percent on online sales and 3 percent on call center sales.

Car Rentals

Forty-five percent of active business travelers and 32 percent of active leisure travelers went online to rent a car during the past 12 months, reports NTM. Those numbers should only grow, as insiders predict that more than 20 percent of all car rental bookings will be made over the Internet this year. Alamo’s program pays 3 percent of time and mileage, with checks mailed monthly (no minimums). Expedia and Travelocity pay 2 percent commissions, and Orbitz pays a flat $2 per rental. World Choice Travel searches 28 worldwide car rental companies for best fares and pays 5 percent on any of those booking. Plus affiliates can split the optional $2.99 to $6.99 transaction fee.

Cruises

In the first quarter of 2003, more than 2.2 million travelers worldwide took a vacation with major cruise lines – a whopping 23 percent increase over 2002, reports the Cruise Lines International Assoc. (CLIA). "As the cruise industry has grown and as more people take cruises and become confident with the components of the cruise, they’re becoming more confident with booking online," said Brian Major at CLIA. "A lot" of affiliates, he said, have benefited as a result – most notably CruiseCritic.com with 110,000 registered members, as well as affiliates CruiseMates.com and Cruise Addicts.com.

Packages

Packaged travel is emerging as a solid moneymaker. More than 68 percent of online travel buyers buy more than one component, reports PhoCusWright. Among active leisure travelers during the previous 12 months, 20 percent went online to book a complete vacation package with flight, hotel and often car rentals in one transaction. "If you look at the online travel space, 2003 was the year of the package," said Joel Frey, a spokesman for Travelocity. Sites like Expedia have even added theater reservations, sports tickets and transportation to and from the airport. Flights are now "like the milk at the back of the store," said Derry at Expedia.com. "By packaging options together we can afford customers better pricing and affiliates better commissions." Now affiliates can get paid for the whole trip and not just one flight.

Affiliate Options

Affiliates have a number of ways to get into the travel industry.

Link or banner: You don’t have to be a travel site to make use of affiliate links. Webmasters with sites touting everything from book reviews to financial advice have travel banners on their home pages, suggesting that the appearance of having advertising support from a big travel provider has its benefits.

Powered by: More travel-specific sites often go with co-branded versions of the merchant’s site. Visitors make their reservations on a page of the affiliate site that is "powered by" a merchant. After typing in their destination and time frame, their travel options are displayed on the merchant’s site.

Private label: With this option, affiliates can carry their own site design onto every one of the travel reservation pages. And affiliates can offer personalized call center services to buyers. Options are either a generic toll-free number, where the call center asks for the discount code or special Internet code from the affiliate’s site, or a dedicated private toll-free number answered on behalf of the affiliate and its brand. "We are usually the ones that come to the affiliate and say, ÔI think it’s a good time to offer this customized toll-free number,’ which doesn’t cost any additional dollars," said Bauer from Hotels.com. World Choice Travel’s private label program even puts the affiliate site’s name on consumer credit card statements.

Trends

The implementation of account management teams is enabling more personalized services for new and existing travel affiliates. "There’s a lot of competition, so merchants have to differentiate themselves from the competition," said Young of Hotwire. "Part of that is how they treat their affiliates."

Globalization is another big trend. The Internet has no borders, so these days an affiliate in Europe can be a merchant’s top producer of US travel bookings and an affiliate in the US can produce great bookings for an Italian air travel site. "We encourage our affiliates to think outside of their boundaries," Bauer said. "No matter where they are in the world it’s up to them what region they want to target." Hotels.com supports five different languages and 13 different currencies through its US, European and Asia/Pacific affiliate networks.

Meanwhile, last-minute bookings are moving online. Several integrated sites like Travelocity offer cheap rates up to three days prior to a trip.

Bus and train bookings online are still in their infancy in the US. In Europe, Euro Railways is ahead of the game, offering 5 percent affiliate commissions on discount rail passes.

"For me," said businessman Bragg, ready to board a flight to Dallas for the 12th time this year, "it’s all about price and convenience and the simplicity of the site." Affiliates or not, sites offering those features have the potential to get him, and 100 million others, on board.

JENNIFER MEACHAM is a freelance writer who has worked for The Seattle Times, The Columbian, Vancouver Business Journal and Emerging Business magazine.