Online bookings will surpass offline for first time
Next year for the first time, internet transactions will account for over half of all US travel bookings, according to a new report from PhoCusWright.
Their US Online Travel Overview, now in its sixth edition, analyzes the travel market by segment, channel and major players, projecting trends through 2008.
After years of suppliers such as airlines and hotels outperforming online travel agencies such as Expedia and Orbitz and Priceline, growth rates for both channels will converge by 2008, the report says, with 54% of bookings made over the internet.
“Suppliers have enjoyed an advantage over online travel agencies due to the relatively inexpensive task of acquiring online customers from their own offline channels. This advantage, however, is disappearing,” according to PhoCusWright.
Other insights from the report:
—While the US 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 US share of online bookings was over 60% 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% growth in 2005 to 18% in 2008.
—Hotels will be the fastest growing segment online, surpassing air travel, which until 2006 had long been the fastest growing product segment.
—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
The advanced level of the US online travel market creates an atmosphere in which many innovations such as dynamic packaging, meta-search and user-generated content start in the US before expanding to other global markets, the report found.
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.
Report by David Wilkening
David
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