Online Leisure Travel Market will surpass $94 billion

Michael Verikios, writing for Tourism Exchange, summarizes a recent PhoCusWright report:

The U.S. online leisure/unmanaged business travel market continues to grow at a pace that far exceeds the overall travel market’s rate of growth, according to the new report, PhoCusWright’s U.S. Online Travel Overview Seventh Edition.  PhoCusWright finds that the online leisure/unmanaged business travel market will surpass US$94 billion in 2007, to comprise more than one-third of the total travel market. The total travel market encompasses offline leisure/unmanaged business and on- and offline corporate travel.

“It’s interesting to note that while online travel’s growth continues to exceed that of the market as a whole, that growth has slowed compared to recent years,” notes Lorraine Sileo, Vice President, research at PhoCusWright. “This is especially true for online travel agencies, which have seen their packaging sales slow considerably.”

Among the findings about the trends and competitive efforts that are driving change in the industry are:

* While suppliers are gaining share in most segments (air, car, hotel), online travel agencies are competing via packaging and add-ons, corporate tools, distressed inventory, international expansion in Europe and Asia, independent hotel properties, U.S. chains, and cross-product and -provider customer service initiatives.

* Search and metasearch continue to work in favor of suppliers as they drive traffic to their Web sites to book after their comparative shopping experience.

* All travel companies must embrace the consumer desire to shift among online and offline channels. As each channel varies in distribution costs, suppliers must execute unique strategies for each channel based on their yield/value.

The report also analyzes distribution shifts in each travel supplier segment (airline, hotel, car rental, vacation packages, rail and cruise), online travel agency developments and the outlook for this channel, evolving technologies and consumer behaviors, and more. It includes historical and projected segment gross bookings and growth trends, as well as channel sales analysis.