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U.S. Online Travel Overview Tenth Edition
Report | Published: November 2010
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  • Summary
  • Contents
  • Methodology

Publication Summary

What goes down must come up.

The U.S. travel industry has proven its resiliency once again. After suffering an historic annual decline in 2009, the total U.S. travel market is projected to regain more than half of what it lost in 2010. Yet the recovery will be uneven and slow, with 2010 travel sales falling short of 2006 levels.

PhoCusWright's U.S. Online Travel Overview Tenth Edition is a comprehensive analysis of the U.S. travel industry, providing market sizing and growth forecasts through 2012. The report focuses on the U.S. online leisure/unmanaged business travel marketplace, highlighting marketing and distribution trends for all travel segments including air, hotel, car rental, vacation packaging, rail and cruise. It tracks distribution shifts among supplier websites and online travel agencies, as well as major offline channels. The report analyzes trends in market share, technological innovation and consumer behavior to provide a detailed overview of travel distribution in the U.S.

Topics include:


  • Size of the U.S. travel market
  • Market forecasts through 2012
  • Distribution patterns by segment and channel
  • In-depth analysis of all major travel supplier segments
  • Consumer and technology factors influencing travel marketing and distribution
  • Impact of macroeconomic changes
The total market will continue to rise annually over the next two years, finally reaching record highs again in 2012. The recession and recovery have triggered disruptive corporate and leisure travel patterns, temporarily bucking long-term patterns. In 2010, the total travel market will grow at a faster pace than the online market for the first time since PhoCusWright began tracking data trends in 1998.

PhoCusWright has followed the evolution of online travel purchasing from its inception. PhoCusWright's U.S. Online Travel Overview Tenth Edition is the industry standard for sizing and forecasting, providing deep, actionable insights into the U.S. travel market.

Table of Contents

96 Pages

Section One
Size and Structure of the U.S. Online Travel Market
Overview
Key Trends and Implications
Purpose of the Report
Methodology


Section Two
Online Travel Agencies: Recovery? What's the Rush?
Key Findings
Overview
Size of the Market
The Recession's Rising Tide
OTAs vs. Supplier Websites
Domestic Trends Become Exaggerated Overseas
Other OTA Trends

Section Three
Airlines: Recovering, as OTAs Soar
Key Findings
Overview
Size of the Market
Online Agencies vs. Supplier Websites
Frequent Travelers & the Airline Website Slump
Offline's Fleeting Resurgence
GDSs, OTAs, & the Ancillary Wars
Google-ITA: Flight Search Will Not Be the Same
Other Airline Trends and Assumptions

Section Four
Hotel & Lodging: A Future of Uncertain Promise
Key Findings
Overview
Size of the Market
Online Agencies vs. Supplier Websites
Distribution Channel Mix Stability
Recession and Recovery Shape Activities and Results

Section Five
Car Rental: Contraction, Cost Containment, and Experimentation
Key Findings
Overview
Size of the Market
Online Travel Agencies vs. Branded Sites
Prepaid Options: Still Early, but Evolving
No-Show Fees Arriving, but Still a Contentious Issue
Other Car Rental Trends

Section Six
Packaged Travel: Back from the Brink
Key Findings
Overview
Size of the Market
Online Packagers vs. Tour Operator Websites
Travel Agents Still Big - but Declining
Other Packaging Trends

Section Seven
Rail: Online Bookings Back on Track
Key Findings
Size of the Market
Online Sales Gain
Other Key Developments

Section Eight
Cruise: Channel Shift amid a Mixed Recovery
Key Findings
Overview
Size of the Market
Online Agencies vs. Branded Websites: Cruise Lines Gain
Shopping, Engaging, and Influencing Trump Booking
Expedia Steps It Up, While Others Play It Safe
Traditional Travel Agents Still Reign - for Now


LIST OF TABLES

Percent of Leisure Travelers by Age Group

Trip Budget Intentions by Annual Household Travel Spend

Total U.S. Travel Market, 2006-2012 (US$B)

Total U.S. Travel Market, 2007-2012, Year-Over-Year Change

Total U.S. Travel Market by Segment, 2009

Total U.S. Travel Market by Channel, 2009 & 2012

U.S. Travel Market, Year-Over-Year Channel Change, 2008-2012

U.S. Online Leisure/Unmanaged Business Travel Market, 2008-2012 (US$B)

Online vs. Total Travel Market Year-Over-Year Growth Rates, 2008-2012

U.S. Online Leisure/Unmanaged Business and Total Travel Gross Bookings, 2008-2012 (US$B) and Online Penetration

Online Travel Penetration of the Total Travel Market, Global Markets, 2008-2012

U.S. Online Leisure/Unmanaged Business Travel Market by Segment, 2008-2012 (US$M)

Total U.S. Online Leisure/Unmanaged Business Travel Market by Segment, 2009 and 2012

Online Leisure Unmanaged Business Growth Rates by Segment, 2009 and 2010

U.S. Online Leisure/Unmanaged Business Travel as Percentage of Total Travel Market: Online Penetration by Segment, 2008-2011

U.S. Online and Total Leisure/Unmanaged Business Travel Gross Bookings and Growth Rates and Total Online Penetration, 2008-2012 (US$M)

Online Travel Market Share: Supplier Websites vs. Online Travel Agencies, 2008-2012

Channel Market Share of Online Revenue by Segment, 2008-2012

U.S. Online Leisure/Unmanaged Business Travel Market by Channel, 2008-2012 (US$M)

Online Travel Agency Gross Bookings by Segment, 2008-2012 (US$M)

Online Packaging Gross Bookings and Share of Total OTA Market, 2008-2012 (US$M)

Lodging and Air Traveler Incidence

Quarterly Annual Change in U.S. Gross Bookings by Public OTAs, 2009-1H10

U.S. Market Share Among the Four Largest OTAs, 1H08 vs. 1H10

U.S. Supplier Website and OTA Share of Online Leisure/Unmanaged Business Travel Gross Bookings, 2008-2012

Conversion Rates for Air and Hotel Product Categories (Average Unique Monthly Bookers), 1H08-1H10

U.S. Supplier Website and Online Travel Agency Share of Total Travel Market, 2008-2012 (US$M)

U.S. and International Gross Bookings and Annual Change of the Three Global Public OTAs, 2009 (US$M)

U.S. Airlines Internet Leisure/Unmanaged Business Gross Bookings, 2008-2012 (US$M)

U.S. Passenger Revenue and Traffic Year-Over-Year Change for 1H10

Change in Global Air Tickets Sold by Online Travel Agencies vs. U.S. Airline Traffic, 3Q08 to 2Q10 (Year-Over-Year Change)

Annual Change in Total Online and Offline Air Sales, 2009-2012

Search Results Page in Ticket Counter, Delta Air Lines' Facebook Booking Engine

Airline Mobile Service Offerings: Current & Future

U.S Hotel Growth Rates in ADR & Occupancy, 2007-2012

U.S. Hotel Occupancy Growth, 2007-2012

Actual and Forecast Percent Growth in Major World Economies' GDP & U.S. Visitors, 2007-2014

U.S. Hotel vs. Economic Growth Metrics, 2010 Forecast

U.S. Hotel & Lodging Internet Leisure/Unmanaged Business Gross Bookings, 2008-2012 (US$M)

Online Leisure/Unmanaged Business Travel Share of Total U.S. Hotel & Lodging Market, 2009 and 2012

U.S. Hotel & Lodging Online Gross Bookings Share by Channel, 2009 and 2012

Typical Purchasing Channels, 2010

Estimated Distribution of U.S. Hotel Room Revenue (%), 2009 and 2012

U.S. Car Rental Internet Leisure/Unmanaged Business Gross Bookings, 2008-2012 (US$M)

U.S. Car Rental Internet Gross Bookings Share by Channel, 2009 through 2012

Typical Purchase Channel by Travel Component, 2008-2009

Car Shopping: Top Five Online Websites Per Channel by Unique Visitors, June 2010

U.S. Packaged Travel Internet Leisure/Unmanaged Business Gross Bookings, 2008-2012 (US$M)

Annual Growth of Online Packagers and Traditional Vacation Packagers and Online Packager Share of All Packaged Travel Sales, 2008-2012

Shifting Share: The Total Packaged Travel Market by Channel, 2008-2012

Online Share of Travel Agent Package Sales, 2008 & 2012

U.S. Rail Internet Leisure/Unmanaged Business Gross Bookings, 2008-2012 (US$M)

Channel Share of Amtrak Passenger Ticket Revenue, 2010 (Projected)

Projected Year-over-Year Change in Rail Passenger Ticket Revenue by Channel, 2009 vs. 2010 (US$M)

Amtrak Mobile: Key Statistics and Functionality

U.S. Cruise Line Internet Leisure/Unmanaged Business Gross Bookings, 2008-2012 (US$M)

Year-over-Year Change in Average Monthly Unique Visitors for the Compete Online Cruise Category for 1H09-1H10

Average Monthly Unique Visitors to Major Cruise Line Websites for September 2009-August 2010

The YouTube Vacationer Channel from NCL

Carnival Reviews on Carnival's Website

Cruise Booking Channel Share, 2008 & 2012

Methodology

Market Size and Forecasts

PhoCusWright has been tracking the financial results of the online travel industry since 1998. This report's estimates and forecasts cover U.S.-based travel businesses, including travel suppliers (airlines, hotels, car rental companies, packagers, railways, and cruise lines) and online travel agencies. The total market size includes sales of non-U.S. travel suppliers transacted via U.S.-based OTAs. All figures are in U.S. dollars unless otherwise stated.

Both leisure and unmanaged business travel services are included in the online travel market size and forecast figures. Unless otherwise indicated, all online gross bookings and share figures refer to leisure/unmanaged travel. Unmanaged business travel refers to all air, car, and hotel expenses associated with business travel in firms that do not have a travel policy dictating the channel, type of travel, supplier, or fare/rate uses. Corporate online booking systems such as Sabre/GetThere and Amadeus/e-Travel are excluded from this analysis (for more information on the corporate travel market, see PhoCusWright's U.S. Corporate Travel Distribution Fourth Edition, July 2009). This report does include corporate travel bookings in the total travel market figures and in the total revenues for each segment, but does not directly address the size and dynamics of the corporate travel market, except to the extent that they shape key trends affecting the size and development of the total and online travel markets.

PhoCusWright builds its estimates and forecasts from discussions with more than 80 travel executives regarding their companies' Internet sales, marketing and technology investments, challenges, strategies, and expectations. Their responses have been vetted and aggregated to determine market size for supplier websites and OTAs. PhoCusWright also reviews data from Securities and Exchange Commission documents, company reports, and select third-party data sources.

Figures for 2008-2009 are based on actual company results. Projections for 2010-2012 are based on company interviews, consumer research, and market developments. PhoCusWright also considers historical growth and economic trends when developing its forecasts. Estimates and projections are for gross bookings - the retail value of travel sold over the Internet - after cancellations. Figures for airlines are based on flown (passenger) revenue. Hotel figures are based on room revenue. Figures for car rental are based on domestic U.S. revenues, excluding insurance replacement revenue. Figures for cruise lines and tour operators are based on U.S. outbound passenger revenue. Figures for rail are based on passenger ticket revenue.


Travel that is researched online but booked offline using toll-free telephone numbers provided on the websites is, where possible, excluded from online gross bookings figures. Total travel figures (online and offline) are used to determine Internet penetration for each market segment. Total travel figures are either derived from third-party sources or are PhoCusWright estimates.

Figures listed in tables do not always add precisely to column totals due to rounding.

PhoCusWright has revised its historical figures and forecasts from previous editions of its U.S. Online Travel Overview based on the following:

1. Revised information derived directly from the travel companies interviewed and related sources;

2. Revised economic and industry data forecasts from third parties;

3. Revised outlook based on PhoCusWright's consumer surveys and other ongoing research efforts.

Consumer Travel and Behavioral Information

PhoCusWright conducts an annual consumer survey for its Consumer Travel Report series. PhoCusWright's U.S. Online Travel Overview Tenth Edition draws frequently from PhoCusWright's Consumer Travel Report Second Edition (May 2010). For the latter report, PhoCusWright fielded an online consumer survey during January 12-28, 2010 through Global Market Insite, Inc., targeting the general U.S. population that has Internet access and travels for leisure.


To qualify for participation in the study, respondents had to indicate that they had taken at least one leisure trip at least 75 miles from home in the past 12 months and that the trip included paid accommodations and/or air travel. They were also required to have played an active role in planning their leisure trips. Respondents who qualified are referred to as "U.S. travelers." Paid accommodations include hotels and other nightly priced lodging products, as well as timeshare and vacation rentals.


PhoCusWright received 2,763 qualified responses, and the weighted respondent pool can be projected with confidence to the U.S. adult population with Internet access. To accurately measure incidence of travel within certain segments, an additional 1,280 respondents were surveyed to obtain baseline metrics about travelers and nontravelers within the general online population. The error interval for analysis of the U.S. traveler population is +/-1.9% at a 95% confidence level. Significant differences noted in this report were identified at a 95% confidence level.

Based on data from the U.S. Census Bureau and Harris Interactive, PhoCusWright projects the number of U.S. adults with Internet access who took at least one leisure trip (as previously defined) in 2009 to be 112 million people. These travelers represent 49% of the total U.S. population. The additional requirement for respondents to have played an active role in travel planning further tightens the focus of the study, as 11% of U.S. travelers were consequently disqualified. PhoCusWright's Consumer Travel Report Second Edition examines U.S. travelers who played an active role in planning their trips. These travelers represent 73 million consumers and 40% of the total U.S. adult population.