Online Travel Bookings to Surpass Offline Bookings in 2007

December 28, 2006

Online Travel Bookings to Surpass Offline Bookings in 2007
Dec. 28, 2006 – According to a new report from PhoCusWright Inc., transactions on the Internet will account for over half of all U.S. travel bookings next year for the first time ever.

As part of the study, PhoCusWright’s U.S. Online Travel Overview looks at how suppliers have been outperforming online travel agencies like Expedia, Orbitz and Priceline since 2000. It suggests that growth rates for the two channels will converge by 2008 as the suppliers’ online advantage is disappearing with the majority of travel transactions moving to the Web.

Other insights from PhoCusWright’s U.S. Online Travel Overview include:

• While the U.S. represented just one third of total online and offline travel bookings of the combined North America, Western Europe and Asia Pacific markets in 2005, the U.S. share of online bookings was over 60 percent of all online bookings.

   

• Growth of dynamic packaging – the ability of consumers to easily combine airline, hotel, rental car and other product purchases online – is projected to slow significantly from 51 percent in 2005 to 18 percent in 2008. This trend is partly attributable to the current tight supply of bulk airfares and merchant hotel rates available for packages, thanks to higher load factors and occupancy as suppliers enjoyed strong sales during the recent robust economy.

   

• Hotels will be the fastest growing segment online, surpassing air travel, which until 2006 had long been the fastest growing product segment.

   

• The advanced level of the U.S. online travel market creates an atmosphere in which many innovations such as dynamic packaging, metasearch and user-generated content incubate in the U.S. before expanding to other global markets. Many of these innovations include the new online capabilities that PhoCusWright has termed Travel 2.0 – the travel industry’s application of Web 2.0 practices empowering the online consumer.

   

• The tipping point of the travel market, with the online channel becoming the norm for travel purchases, is going to further shape consumer behavior that utilizes Travel 2.0 tools and applications.

PhoCusWright’s U.S. Online Travel Overview Sixth Edition is available, along with the company’s other research and analysis reports, at www.store.phocuswright.com/reports.html.