Growth of the Travel Industry Online

The origin of the online travel industry can surprisingly be traced back to American Airlines. In the late 1970s, American granted travel agents access to its SABRE reservation system. In the 1980s, this access was extended to CompuServe users as "EAASY SABRE" and then it was granted to AOL members in the 90s. In the late 1990s, EAASY SABRE was rebranded as "Travelocity." This online service is the sixth-largest travel agency in the United States and it is the number two online agency, second only to Orbitz. Other major players in the online travel industry include Expedia, Yahoo Travel, Priceline and Cheap Tickets. From its modest beginnings as a dial-up service only available to a select few, the online travel industry has become a giant.

Growing Numbers

The online travel industry has grown at an amazing rate. In 1999, the Travel Industry Association of America noted that 15.1 million consumers in the United States booked their travel online. That number has grown to nearly 70 million today as the online travel industry looks to top $125 billion in booking by the end of 2011 according to analytics firm Jupiter Research. While that is down from the 2010 number of $146 billion, there's no denying that online travel has become a big business. More than 38% of travel planning is now done online now instead of through a traditional travel agent. The model for purchasing travel, including airfare, hotels and car rentals, has changed.

Travel Agents Try to Keep Up

The United States Department of Labor is predicting that travel agent employment will continue to decrease in the coming years. While over 60% of travel planning is still done offline, that number is rapidly decreasing. Some travel agencies are changing their business model to a more web-friendly approach in order to compete. These companies offer both online and bricks-and-mortar services to lure customers. Still, the convenience of booking online and saving on agents' fees is enough to keep many travelers at home.

Slow but Steady Growth

In 2006, research group PhoCusWright predicted the online travel industry would reach $190 billion and would own over half the travel-related transactions in the U.S. This outlook proved a bit too optimistic as the economic downturn hurt the industry, which saw only single-digit growth in 2009. Still, when businesses are failing, banks are being bailed out and other markets like real estate have bottomed out, single-digit growth is far from a failure. eMarketer predicts continued increases as consumers in this down economy still want to travel and want to save money doing it. Consumers simply see booking travel plans online as the best way to get the most for their money.

A Look Ahead

Online UK travel agent On The Beach predicts further industry growth in 2012 and has gone so far as to predict the online travel industry's numbers will double in the coming decade. This means online travel could be a $250 billion business in the U.S. with over 75% of travel plans being made exclusively online. Google predicts that the rise in mobile devices like smartphones and tablets will have a major impact on online travel as 8% of their users and growing will book travel on-the-go. This too could have a major impact on the decline of the in-person travel industry.

The online travel industry has come a long way. In 1996, dial-up Internet users could browse a rudimentary listing of American Airlines airfares and play travel agent, scouring the site for the best deals they could manage. Today, iPad enthusiasts can compare travel package rates across multiple online vendors from anywhere. Online travel sites have fundamentally changed the travel and tourism industry and the changes aren't finished yet.