Report: Electronic-Travel Industry Faces Shakeout

FRAMINGHAM (04/18/2000) - Increasing competition combined with a rapid growth in online sales will drive 80 percent of travel-related Web sites out of business over the next few years, according to a new report issued by Bear, Stearns & Co.

"The sites which are in the greatest jeopardy are low value-added, 'me-too' sites that offer neither unique content nor customers and will therefore be cruelly bypassed in the consolidation process," said Bear, Stearns associate director Robert LaFleur in a statement. LaFleur was a contributor to the report.

Bear Stearns estimates there are approximately 1,000 travel-related Web sites.

Forrester Research Inc. in Cambridge, Massachusetts, estimates that travel-related e-commerce will grow to a $29 billion industry by 2003.

As airline companies ramp up their e-commerce initiatives, they will likely freeze out discount ticket sites by cutting off their supply, the Bear Stearns report said.

Although suppliers will heighten competition in the Internet travel industry, they won't replace online booking services, according to the Bear Stearns report. Suppliers and online travel agencies will split the e-commerce market.

Sites that have begun to establish brand identity or offer unique services, as Travelocity.com LP, Expedia Inc. and Priceline.com Inc. have done, will fare better, the report said.

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