U.S. Online Travel Overview Twelfth Edition

U.S. Online Travel Overview Twelfth Edition Published November 2012 Analysts: Maggie Rauch, Carroll Rheem, Douglas Quinby, Lorraine Sileo


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The U.S. travel market remained resilient in 2012, despite ongoing economic malaise and a weak recovery. The year was marked by slow growth of gross domestic product (GDP), high unemployment, a feeble housing market and declines in household income. Yet travelers persevered, taking vacations and business trips despite the economy. Aided by rising prices and corporate travel demand, the total U.S. travel market reached new highs, with the online leisure/unmanaged business travel market sustaining double-digit growth. The outlook for 2013 remains guarded, as the U.S. fiscal cliff, European debt crisis and a slowing China economy fuel continued economic uncertainty.

Phocuswright's U.S. Online Travel Overview Twelfth Edition is a comprehensive analysis of the U.S. travel industry, providing market sizing and growth forecasts through 2014. 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. For the first time, the report also includes mobile market sizing and forecasts. This comprehensive research provides a detailed overview of travel distribution in the U.S., with rich insight into trends in market share, technological innovation and consumer behavior.

Topics include:

  • Size of the U.S. total and online travel markets
  • Market sizing and forecasts through 2014, including breakouts for air, car, hotel, tour, rail and OTAs
  • Mobile travel sizing and forecasts
  • Distribution patterns by segment and channel
  • In-depth analysis of air, hotel, car rental, vacation packaging, rail and cruise segments
  • Consumer and technology trends influencing travel marketing and distribution
  • Impact of macroeconomic changes

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

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  • Size and Structure of the U.S. Online Travel Market
    • Size of the Market
    • Composition of the U.S. Travel Market
      • Supplier Share
    • U.S. Travel Market – Channel Shift
    • Online Travel Outlook
    • Segment Share
    • Segment Change
    • Online Penetration by Segment
    • Supplier Websites vs. OTAs
    • The Plight of OTAs
    • Taking Aim at Mobile
    • Key Findings
    • Purpose of the Report
    • Methodology
      • Market Size and Forecasts
      • Consumer Travel and Behavioral Information
  • Online Travel Agencies: Settling Into Maturity
    • Key Findings
    • Overview
    • Size of the Market
    • Packaging Declines
    • OTAs vs. Supplier Websites
    • The Only Way to Grow Is to Steal Share
    • Conversion, Conversion, Conversion
    • International Markets Cool Off
    • Mobile: Now We’re Booking with Gas
    • Other OTA Trends
      • The Beginning of the End for the Merchant Model?
  • Airlines: Mercy is for the Weak
    • PhoCusWright's U.S. Online Travel Overview Twelfth Edition: AirlinesNovember 2012Key Findings:
    • Overview
    • Size of the Market
    • OTAs vs. Supplier Websites
    • Ancillaries and Direct Connects: Time to Make Nice?
    • Mobile’s Amazing Ascent
    • Google-ITA Flight Search: Still Not Much … Yet
    • Matrix Unloaded
  • Hotel and Lodging: Solid Performance Defies Economy
    • Key Findings:
    • Overview
    • Size of the Market
    • Distribution Channel Mix: Websites Gain
    • Mobile: Small but Significant
    • Social Networks: An Ongoing Experiment
    • Marketing: Google and TripAdvisor Take More Out of Budgets
    • Room Key Shakes Things Up
  • Car Rental: Speeding Up, but Still in Low Gear
    • Key Findings
    • Overview
    • Size of the Market
    • OTAs vs. Branded Sites
    • Mobile
    • Fleet Management
    • Other Car Rental Trends
      • Prepaid Rates, No-Show Fees Slowly Catching On
      • Industry Shrugs Off Ancillaries, Daily Deals
  • Packaged Travel: The Slow Slide Continues
    • Key Findings
    • Package Definitions
    • Overview
    • Size of the Market
    • Online Packagers vs. Tour Operator Websites
    • Travel Agent Distribution
  • Cruises: Online, Direct Channels Pulling Away
    • Key Findings:
    • Overview
    • Size of the Market
    • OTAs vs. Branded Websites: Suppliers to the Fore
    • Come On In, the Water’s Fine: Reaching First-Timers With Social Media
    • Mobile: All Onboard

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 online travel agencies. 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 business 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 Concur and Sabre/GetThere are excluded from this analysis.

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 online travel agencies. Phocuswright also reviewed data from Securities and Exchange Commission documents, company reports, and select third-party data sources.

Figures for 2010-2011 are based on actual company results. Projections for 2012-2014 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 upon passenger ticket revenue.

Where possible, travel that is researched online but booked offline using a toll-free telephone number provided on the website are 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.

Note that figures listed in tables do not always add precisely to column totals due to rounding.

Consumer Travel and Behavioral Information

Phocuswright fielded an online consumer survey January 13-23, 2012, through Global Market Insite, Inc., targeting the general U.S. adult population that has Internet access and travels for leisure.

To qualify for participation in the study, respondents had to indicate they had taken at least one leisure trip at least 75 miles from home in the past 12 months that included paid lodging and/or air travel. An additional screener required consumers to have played an active role in planning their leisure trips. Respondents who qualified are referred to as "U.S. travelers." The term "lodging" is used in this report to refer to the broad range of paid accommodations, including hotels and other nightly priced lodging products, as well as timeshares and vacation rentals.

Phocuswright received 2,036 qualified responses, and the weighted respondent pool can be projected with confidence to the U.S. adult population with Internet access. A total of 4,915 respondents were surveyed to obtain baseline metrics about travelers and non-travelers within the general online population. The error interval for analysis of the U.S. traveler population is +/-2.19% at a 95% confidence level. Significant differences noted in this report were identified at a 95% confidence level.

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CA $2,456 • £1,344 • €1,526
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