Internet agencies

If 1996 was the year when Internet became the word most used without any real understanding, then 1997 may well be the year when we work it all out.

Last year, Internet panic swept through the travel industry as companies wondered and worried about the effect of this new medium. One moment an ugly rumour swept through the business that all customers were going to choose their holidays on the Internet, the next every customer was going to book and pay for their holiday on it too.

The problem with the Internet was that there were no experts. IT directors were often as desperate as chairmen to find out what was happening.

Although the Internet had been around for years, as a means of communication for scientists and defence experts, it was only recently that companies and individuals began creating electronic billboards on the multimedia section of the Net, the World Wide Web.

Suddenly, Internet departments were being set up just to find out what to do next. Web sites were being built and paid for without any real idea of what benefits they could bring or who would use them.

In the world of travel, hotel companies were the first sector to clasp the idea of Internet booking to their corporate bosoms. They viewed the Internet as an electronic brochure, with colour pictures and even 3-D tours.

The hotel industry recognised the potential of the Internet to reach a global audience, but no-one could accurately estimate how big it was – figures veered from 30 million to 300 million. Hotels recognised that many travellers were happy to book a night in a hotel over the Net without a formal ticket, thereby overcoming one of the biggest obstacles that the airline industry has had to face over Internet use – how to deliver the ticket.

While airlines are still trying to work that one out, they have been heartened by the arrival of "ticketless travel" – which does away with the need for traditional tickets and provides travellers with the alternative of using a credit card or frequent flier card instead.

British Airways now offers the ticketless option on all domestic routes. There is no need for a ticket – passengers simply use a machine at the airport to check in and select a seat, using a card for identification.

BA is not yet linking its electronic ticketing with its bookable Internet site, but it is a likely move. The airline revamped its Internet site in January and is now selling all its World Offer fares from the UK on the service. But BA is finding, like other airlines, that initial sales are slow.

Airlines estimate that about 80 per cent of their sales are made through travel agents, compared to less than 1 per cent via the Internet.

Estimates vary about how quickly Internet sales will grow. They range from between 15 per cnet and 25 per cent over the next five years, but the more straight-talking Internet companies will admit no-one really knows. However, there have been some signs that there is a potential group of wealthy travellers who will use the Internet.

In a report on travellers using the Web published last year, US-based research company CIC Research found that "the people who are currently the Internet's biggest users, have the disposable incomes to travel and, increasingly, they will carry out research, shop and negotiate through the on-line marketplace".

The report found 4 out of 10 people surveyed expressed a high level of interest in booking travel through the Internet. It concluded: "The Web's ability to show off a destination is unparalleled."

The report also pointed out that the Internet could potentially devastate travel agency business. Travel agencies have responded to this threat in different ways. Some have created their own sites, others have linked up with Internet "shopping markets" or created intranets for customers.

Intranets, which are private sections of the Internet that are open to a defined group, have gained in popularity over the last few months. Leisure travel agents are expecting to use them to communicate with their suppliers and tour operators, and business travel agents are developing intranets for their corporate customers.

Intranets will use the best technology of the Internet, but add other "bells and whistles" devoted to a customer's needs.

American Express is working with Microsoft on developing a booking system for its business travellers, while high-street chain AT Mays signed a partnership with Microsoft to handle UK bookings from the technology giant's Internet travel site, Expedia.

But while these developments continue to cater for companies that want to harness technological advances, most still prefer to use people and telephones to book travel.