Phocuswright - The Leading Researcher at Your Next Travel Conference
The collection of markets that represent the foundation of the European travel conference industry has undergone significant change since the onset of 2008. Along with the rest of the globe, the economic softness that began to appear through the course of the year worsened abruptly in 4Q08. The prosperous early months of 2008 were followed by a summer of astronomical fuel prices and a fall season starved of the usual business travel swell, which left travel worse off than many other industries. While EU gross domestic product (GDP) grew 0.7%, the European travel market declined very slightly (-1%) from €241 billion in 2—7 to €238 billion in 2008. Results will be substantially worse for travel companies in 2009, as the market is projected to decline by 10.2% to €214 billion.
While common recessionary trends such as weakened consumer confidence have affected all nations, individual characteristics have exposed the strengths and weaknesses of each market (and its players) differently. Business/ leisure mix, rail infrastructure, currency fluctuations, inbound/outbound tourism and unemployment rates are just some of the factors that shape how various travel markets are reacting to the downturn.
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Internet booking channels continue to outperform market trends as more consumers turn to online options for the first time. Online leisure and unmanaged business travel gross bookings grew by an impressive 13% in 2008 to €68 billion, representing 28% of the total travel market. There is no doubt, however, that online channels will be hampered by the pervasive drop in travel demand in 2009. The double-digit growth seen in recent years will plummet to just 0.6%, and is not expected to return to pre-recession levels in the next several years – and possibly ever again. Travel conference penetration is projected to grow to 32% as other channels suffer harsh declines in 2009. Online sales are projected to surpass €79 billion by 2011 and reach a penetration rate of 37%.
Both supplier Web sites and online travel agencies (OTAs) grew their share of the total market in 2008, but this will likely not be the case in 2009. The continuous growth that supplier sites have seen since their inception is expected to grind to a halt, and bookings are projected to decline very slightly by 2% to €44.8 billion (see Figure 1.2). Though the overall supplier trend is stagnant, certain sectors and many individual supplier brands will deviate from this trend and grow their online bookings this year.
In contrast to supplier sites, OTAs are projected to grow by 6% in 2009 to reach €23.1 billion. Consumers gravitate to the pricing transparency, product breadth and shopping convenience of OTAs during price-sensitive periods, and they will therefore benefit from a slight countercyclical boost in bookings. Their rapid pace of growth is expected to abate somewhat when European economies begin to recover, particularly in more mature markets like the U.K. and Scandinavia. Attend Phocuswright’s European travel conference for more information and to meet the people leading this industry in the European market.