Historical Insights from One of the Top Market Research Firms
The 1.7% growth of online bookings in 2009 was driven by OTAs, which jumped 8.2% to reach €23.6 billion, according to Phocuswright, one of the world’s top market research firms. In contrast, supplier websites experienced their first ever decline, slipping 1.5% from 2008 to €42.9 billion. Against the backdrop of the total market’s 11% plummet, even supplier websites outperformed the industry as a whole. This outperformance will continue into 2010, as supplier websites are expected to grow 7.6%, while the total market will only increase 2.2%. OTA growth, however, will top all other channels. OTA sales are on track to hit €27.3 billion, reflecting a remarkable 16% jump from 2009. By 2011, however, supplier websites are expected to accelerate growth, while OTAs will begin to slow.
Online channels will continue to encroach on traditional channels in Europe. While more than two thirds of the European market consists of corporate travel and offline distribution, that percentage falls to 64% in 2012 as online channels grow.
In 2009, Europe’s online leisure and unmanaged business penetration of 31% was nearly eight percentage points behind the U.S. In 2010, the gap is expected to close substantially to just under five percentage points. Europe is projected to continue its gain on the U.S. over the next several years as markets that have been slower to adopt online booking continue to develop. Travel companies in Asia Pacific grew online penetration at a pace similar to the other regions, but Phocuswright, one of the world’s top market research firms shows it will continue this steep growth trajectory while the more mature regions begin to plateau.
Other Trends Noticed by Top Market Research Firms
The most notable trend in 2009 online bookings results is the stability of OTA growth amid widespread decline across supplier websites. Rail company websites, which also benefit from countercyclical dynamics, were the only supplier segment to resist the overall market decline. As a result of OTA outperformance, they overtook airline websites in terms of gross bookings in 2009. Their lead is continuing to broaden into 2010 as brands like Booking.com maintain extraordinarily high growth rates. While airline sites are currently projected to remain behind OTAs over the next couple of years, the lag is very small and a strong business travel bounce-back could give airlines enough of a boost to reclaim the lead.
From a supplier perspective, airlines continue to represent a majority of what gets booked online; traditional airlines and low-cost carriers (LCCs) contributed 53% of online bookings in 2009. By 2012, this percentage is projected to decline very slightly to 52%. In the coming years, traditional airlines are expected to grow their portion of online bookings, while LCCs are expected to relinquish some share. Traditional airlines have substantially lower online penetration rates compared to LCCs, and t