1998 predictions: finally, profits?

Did you think this was a year for the books?

Sure, it had all the elements of a vintage season, with blockbuster deals, nail-biting dramas, and heartbreaking finales headlining the schedule.

Wait until next year. The deals will be even bigger, the growth faster, and maybe, just maybe, we’ll start to turn a profit, according to industry insiders. It seems unbelievable that anyone could expect that kind of encore. But quite a few folks are.

“There’s phenomenal growth potential,” observes Josh Herst, group product manager at Microsoft’s Expedia.com. “If we realize that less than 1 percent of the travel purchased is going through the Web, we have to realize that it will grow for many years to come.”

Indeed, Forrester Research, Cambridge, MA, projects $1.5 billion in online bookings next year. In 1997 it saw a comparatively small $654 million in travel-related sales. Microsoft thinks of interactive travel as a “floating hockey stick”: Somewhere down the line, online bookings will suddenly surge. Plotted on a flow chart, the pattern looks like a hockey stick, hence the name.

“When is that spike up going to happen?” asks Herst. “It could next year.”

Forrester agrees. Analyst Seema Williams predicts, “This is the year that everyone is going to realize that interactive travel is a big deal.” Accordingly, we should brace ourselves for lots of new players.

Expect well-branded travel agencies, in particular, to make new forays into the electronic travel arena. Retailers such as Carlson Wagonlit and Rosenbluth have already tested the interactive waters, but there will be many more, notably on the leisure side, that will join in 1998, according to Williams.

Kathleen Tucker, president of The Independent Traveler, which publishes The Independent Traveler and Cruise Critic on America Online, is looking for another trend to begin emerging next year: profitability.

“While many travel agencies feel the Internet will bring about the demise of their business, a small group of savvy travel agencies will creatively profit from the Internet and significantly grow their businesses with the help of the Internet,” she says. “While still very much in its infancy, some players will start to see a glimmer of reaching break-even or even small profitability.”

It won’t be that way for every interactive travel company, warns Charles Zug, vice president of Green Room Productions, Sausalito, CA. He believes airlines will reassert their control of travel distribution by launching major proprietary initiatives next year.

That kind of maneuvering killed PC Travel this year, and there could be other casualties soon. “Partly due to new airline distribution policies, competition, and continued consumer reluctance to book online, a major shakeout in the field of interactive travel will take place in 1998,” says Zug. “Look for many popular small, medium, and even large brand names in our industry to scale back operations, change their business models, or fold altogether.”

To Philip Wolf, president of interactive travel consultants PhoCusWright in Sherman, Conn., and editor at large of ITR, the inevitable consolidation represents an opportunity, not just for the big players involved in transactions, but also for the niche providers. Wolf likens the business to a snowball gaining momentum as it rolls down a hill, one that “as it keeps rolling will bring new business for all of us.”

“1998 will be a wonderfully unpredictable year,” he adds.

Christopher Elliott is the author of Scammed: How to Save Your Money and Find Better Service in a World of Schemes, Swindles, and Shady Deals. Critics have called it “eye-opening” and “inspiring” — it’ll “grab your attention and won’t let go.” Order your copy now on Amazon, Barnes & Noble or iTunes.

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