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Published on Tuesday, April 3, 2007

Online travel market: tighten your seat belt

The fast-growing online travel market has been a huge success but there’s trouble in its future path, says eMarketer.

They estimate that in the US, online consumer travel sales were $79 billion last year and will grow at a 17% annual rate to reach $146 billion in 2010.

Growth is slowing, however.

And while 17% is respectable growth, it falls short of the 28% annual growth rate posted from 2002 to 2006.

eMarketer is not alone in its opinion, however.

PhoCusWright, Forrester Research and comScore NetWorks all agree that online travel sales growth is declining.

And that’s not the only problem.

"The travel industry is undergoing a revolution that is redefining the rules of engagement between travel firms and consumers," says Jeffrey Grau, Senior Analyst and the author of the new US Online Travel: The Threat of Commodization report. He adds:

"In addition, a tighter market will exacerbate the fierce competition between online travel agencies and travel suppliers in an already commoditized market."

Lower industry entry barriers are paving the way for new online travel business models, said Mr Grau. He added:

"In this dynamic environment, current industry players must stay alert or risk being blindsided by new competitors that fall under their radar screens."

The online travel market is a hotbed for experimentation, with new travel sites popping up weekly.

"Internet-savvy consumers are exploiting powerful online resources to find information about travel products and pricing," says Mr Grau.

Report by David Wilkening

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  • Which is it, online travel up or down?

    Sure growth is slowing, isnt that a natural thing? And in the report today an article says that online business bookings are increasing drastically. Bookings online are up, offline are down and if anyone ever gets around the CC proplem watch out.

    By Bill Fogarty, Tuesday, April 24, 2007

  • The more site more sensible and witty customers

    It is indeed true that online customers now have even started bargaining or window shopping. They like to go to different travel sites compare prices and many of them turn to the cheapest available local conventional agent or find their way to the big Fish in the market like Travelocity Priceline etc. In my experience I have found sites like virtualtourist and tripadvisor are the biggest pain in the butt they give nothing to customers except ads yet search engines like Google place them on top this makes the customers go astray. In my humble openion the best way to cope with this situation is to basically put focus on advertising and exploring the conventional market and also put some interest in online advertising. I am doing online travel selling since 1997. But Now would rather like to have a job. Jamal Panhwar

    By Jamal Panhwar, Monday, April 9, 2007

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