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.
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