Prediction: Online booking will push prices down
By CNN Interactive Writer Marla Edwards
(CNN) -- Like other kinds of virtual shopping, booking travel online is no less secure than using your credit card in a shop or restaurant in the off-line world, according to some industry experts.
"I think it's probably very safe to make travel arrangements online. The chances of somebody hacking in and getting your credit card number are about as good or bad as somebody picking up the slips from your card that you use in a restaurant," said Laurie Berger, editor of Consumer Reports Travel Letter.
Many travelers are nevertheless nervous about using their credit cards to book online.
"They seem to have this vision of people listening to a wire and stealing credit cards out of the ether, but that just doesn't happen," said Terry Jones, president of Travelocity.
Online travel agencies such as Travelocity, Preview Travel, Microsoft Expedia and Internet Travel Network (which powers CNN Interactive's Reservation Desk), typically switch their customers' Internet browsers to secure mode when credit card numbers are entered. Most popular browsers, including Netscape and Microsoft Explorer, use Secure Sockets Layer (SSL) technology.
That technology takes the credit card numbers and encrypts them, making them unreadable to humans and most computers.
The browser then sends the information across the Internet. The online travel agency's server receives it and has the ability to decode the data. Encryption allows the transmission of sensitive information, such as credit card numbers, without much risk that someone will access it.
Online agencies offer bargains
Berger believes that booking travel online is not only secure, but also offers bargains to the consumer at a time when demand is heavy for air travel and for hotels.
"Vendors have been able to increase their rates to an unprecedented level in recent years," she said. "There are so few things that are happening now to give consumers a break. One of the things that has come along is the Web... If you know how to research the Web and use the Web, there are definitely opportunities to decrease your costs."
The reason why there are lower prices available online is simple:
"Basically, the Web presents travel vendors with an opportunity to sell their product at a lower cost. If they can sell it at a lower cost, they can also pass on those savings to the consumer," Berger said.
The bargains encourage people to get over their fear of using the Web to book travel, but Berger wonders if they will continue as more people begin to use the Internet to make travel purchases.
"Right now, they're basically incentives to make people change behavior. In the future, I don't know how that will pan out," she said.
Jones agrees that online agencies like Travelocity are interested in attracting first-time buyers.
"If we can get them to buy once, then they'll come back. We'll always have sales but at some point in any business, you don't have to keep doing the 'grand opening,'" he said.
Last-minute airfare deals expected to continue
However, Jones predicts last-minute airfare bargains will continue because it's less expensive for airlines to put their flights on the Internet or send e-mail to interested travelers than to buy television or radio time to advertise, Jones said.
"Airlines need to sell seats," he said.
Online travel agencies allow users to sign up to watch the airfares to their choice of destinations. The sites send out e-mail to update the users on the latest fares.
"Those kinds of things I think will stay and get more sophisticated. I think it's going to be very tailored for the customer," Jones said.
The profile of the traveler who books online matches that of the frequent traveler, Jones said. Travelocity's customers are 60 percent male, 40 percent female, are highly educated and earn annual incomes in the $75,000 to $80,000 range, Jones said.
"These are not über dweebs. Clearly, they are people who are comfortable with the Internet, but they come from all walks of life," he said. "They are people who are travelers and probably do-it-yourselfers."
Ken Orton, CEO of Preview Travel, said consumers are realizing that credit card companies protect them from loss when they book online. Consumers are generally held liable for only the first $50 in charges if there is an unauthorized use of their credit card.
Major online travel agencies promise to cover that first $50 if there is an unauthorized use of a customer's card.
Convenience a big plus for consumers
Perhaps the most obvious advantage of using online travel agencies is their convenience, said Lois Shore, ITN's vice president for marketing. The Internet offers 24-hour-a-day, seven-day-a-week service.
"You just have access to tremendous amounts of information that can help you make a better or more cost-effective decision," Shore said.
There is also the convenience of electronic ticketing: "You can print off your own receipt and you're done," she said.
Some online agencies also allow consumers to see seat maps, so that they can pick their seat when booking a ticket.
"Some people are passionate about aisles, others about window seats," said Jones, of Travelocity.
Preview Travel's Orton said consumers are accepting e-commerce, particularly online travel, more quickly than had been anticipated.
"It's really way ahead of where we predicted. We expected a much lower ramp," he said.
Fueling that growth is consumers' discovery that airfare pricing is much more complex than they had previously known, Orton said.
"If they buy over the phone, for some reason they didn't quite get the best deal as the person sitting next to them on the plane," he said.
Online travel agencies allow the consumer to research the complex system of pricing, in which there can be 50 to 60 different fare classes on any given flight, Orton said.
Prediction: Online booking will push prices down
Orton believes that online bookings will have a leveling effect on airfare prices over the long term. "Supply and demand can be changed moment by moment. Airlines will fly fuller, which ultimately has the impact of prices coming down," Orton said.
ITN's Shore said "using your curiosity, playing around with variables" is one of the best ways to find bargains when you're booking travel online.
She uses an example from her own life: On a recent search for airfare from San Francisco to Chicago, the best fare she could come up with at first was $1,000. She checked out the fares from San Jose to Chicago and found a special for $440.
"That was just my own curiosity to check another Bay Area airport," she said.
Along with airline tickets, the online travel agencies are offering vacation packages and discounted hotel inventory. Some are selling travel-related merchandise.
Jones, of Travelocity, said customers seem to be pleased with what they're getting online.
"People come on and say, 'This is a lot better than the old way.' That's what we want," he said.
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