U.K. retains position as largest online travel market in Europe

November 09, 2009 | Online Travel

Even as the U.K. travel market struggles under the weight of global economic pressure, online travel bookings are projected to increase by 3% in 2009 according to PhoCusWright. With online leisure and unmanaged business sales of nearly £17.1 billion, nearly half of the U.K. travel market is booked online. U.K.

The overall U.K. travel market is expected to contract by 8.9% in 2009. Gross bookings will fall to approximately £37.6 billion for the year. Nearly all segments of the mar ket have been affected, although traditional carriers and hotels are bearing the brunt of the slowdown. The short-term outlook remains bleak, with a return to 2007 booking levels not expected until 2012.

“British travelers have had to cope with currency devaluation on top of the recession, and both have driven significant changes in travel patterns,” says Carroll Rheem, director, research at PhoCusWright. “For example, the blow to domestic travel has been relatively soft while the fall-off in U.K. visitors to the Mediterranean has been significant. Online channels also benefit from these trends as consumers turn to the Internet to help them discover and sift through the many attractive holiday options in the marketplace.”

Although approaching maturity, U.K. online travel penetration continues to grow in 2009 as online channels outperform other booking methods. Airline Web sites dominate other suppliers online, representing over half of online direct sales in the U.K. Hotel company Web sites are expected to grow in line with the market, and tour opera tors are projected to make the greatest gains online among suppliers.

“U.K. tour operators have invested heavily in marketing efforts to drive customers online and in technology to enhance the user experi ence,” says Peter O’Connor, PhoCusWright’s market analyst, U.K. and France. “Selling a combination of pre-packaged, dynamically packaged and decoupled travel components, their share of U.K. online direct travel is expected to increase through 2011.”

Despite the strides tour operators have made, online travel agencies (OTAs) will lead growth for all online channels in 2009 and help the U.K. online travel market continue to mature and retain its current position as the largest online travel market in Europe.