Online Channels to Generate 60 Percent of U.S. Travel Bookings by 2008

May 17, 2006

Online Channels to Generate 60 Percent of U.S. Travel Bookings by 2008
May 17, 2006 – PhoCusWright Channel, an annual, subscription-based, syndicated research service, has released results from its latest survey on trends in the U.S. travel market. Online channels are projected to generate 60 percent of all U.S. travel gross bookings by 2008. Results show that offline leisure and unmanaged business gross bookings are expected to continue to decline over the next three years, and offline corporate gross bookings will follow, narrowing at a more measured pace through 2008. Online gross bookings growth will reflect not only the gains of the entire U.S. travel market, but the ongoing movement to online booking channels in all segments.

PhoCusWright projects that 64 percent of all leisure gross bookings will be made online by 2008, versus 45 percent in 2005. Similarly, 48 percent of all corporate gross bookings will be online by 2008, compared to 31 percent in 2005.

The total U.S. travel market continues to expand. In 2005, total travel bookings reached US$224.4 billion, the second consecutive year of more than 7 percent annual growth. These increases are the result of a healthier travel market and escalating economic forces.

Healthy overall growth rates in both 2004 and 2005 results reflect renewed corporate confidence in the travel industry, the continuing willingness of consumers to travel, and broader access to content and inventory. However, this growth has also been boosted by increased rates and fares, largely due to higher fuel prices and city and airport taxes, and increased demand.

These conditions are likely to continue through 2008. Yet U.S. market expansion is expected to taper off as a result of slower economic growth in general, the possibility of further fuel price spikes, slight declines in the number of travelers, tighter control on corporate travel spend as well as lingering security concerns. Thus, growth in the travel market in 2006 and 2007 will be stimulated largely by increased pricing (driven by both demand and expenses), as well as growth in expenditures rather than in numbers of travelers.

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