U.S. online travel leadership is not in numbers alone

November 09, 2006 |

In 2005, the U.S. represented just one third of the total travel gross bookings in the three key economic regions of the world – North America, Western Europe and Asia Pacific. But according to an upcoming report over 60% of these markets' total online travel bookings

By Michael Cannizzaro

In 2005, the U.S. represented just one third of the total travel gross bookings in the three key economic regions of the world – North America, Western Europe and Asia Pacific (APAC). But according to the upcoming report PhoCusWright’s U.S. Online Travel Overview Sixth Edition, America registered over 60% of these markets’ total online travel bookings (see Table 1).

American intermediary conglomerates wield significant clout in Europe and are pressing ahead in APAC. Many technologies and techniques such as dynamic packaging and metasearch have incubated in the U.S. before expanding to other markets. Yet the providers of next-generation travel distribution and marketing technologies are not exclusively American, and the U.S. share of travel gross bookings in the three key markets will actually slip to just over half by 2008.

So why should the U.S. market remain such a bellwether and spectacle for businesses with stakes in the world travel market?

The answer is not just in the numbers; it is in the behavior and demands of the consumer. The leadership of the U.S. is not limited to the clout of consolidation, the weight of revenue share, or the local introduction of new technologies and business models. Though the regional markets differ vastly in many crucial areas, much of the world looks to the U.S. to visualize the impact and results of a travel market that is increasingly dominated by Internet channels and online marketing venues.

In 2005, travel revenue totaled nearly US$700 billion in North America, Western Europe and Asia combined, and close to one quarter of that total was spent online (see Table 2). That fraction, comprised of both online leisure/unmanaged business and corporate travel, is projected to surpass two fifths by 2008. This matches the ratio of all travel revenue in the U.S. that was booked online in 2005, rendering the American market a valuable source of understanding the intersection of consumer empowerment and the coming dominion of the Web as a point of purchase.

The greater the proportion of travel bookings that are transacted online, the more travel consumers move beyond the convenience and power of the online transaction itself. They seek to take control of their travel experience, from planning to execution to sharing. Both in advance and in the wake of these demands flow a vast range of businesses and products worldwide that have been dubbed Travel 2.0.

The tide does not flow from just one source, however. Increasingly sophisticated and plugged-in trip planning tools are found both in pure play sites and integrated into travel portals or agency sites. User-generated content proliferates both on dedicated sites and as an element of established sites. Travel-focused blogs and travel social networking sites invite interaction and even offline connections manifested in in-person gatherings. Combinations of all of these pop up everywhere in homegrown mashups, and seem destined to be essential to any content- or product-peddling portal on the Net.

PhoCusWright’s U.S. Online Travel Overview Sixth Edition tracks the application of these trends, and illustrates growth and share curves for all segments and channels of the market over the five-year period ending in 2008. The report is a snapshot of the U.S. travel industry with a focus on the purchase, distribution and marketing of travel booked by the leisure or unmanaged business traveler. Tracking data trends since 1998, PhoCusWright has followed the evolution of online travel purchasing from an ancillary service of supplier companies and agencies to the most influential and potentially most transformative purchase channel.

The report discusses distribution shifts in travel supplier segments – airlines, hotels, car rental companies, vacation packagers, railways and cruise lines – from both a supplier and online travel agency perspective. It also highlights the brands that have particularly driven the growth of the online channel. The result is a comprehensive overview of travel distribution in the U.S., and the underlying shifts in share, technological innovation and consumer behavior impacting the marketplace, including industry results and a three-year outlook of coming changes.