The Tipping Point: Online Travel Growth Slows When Penetration Tops 35%

Published May 2011 Analyst: David Juman


The Tipping Point: Online Travel Growth Slows When Penetration Tops 35%

When considering online travel penetration, bigger isn't always better. In fact, travel companies seeking the highest growth opportunities should look to travel markets with online penetration below 35%, according to Phocuswright's Global Online Travel Overview Second Edition. Once a travel market's online penetration passes this point, growth in online travel share is likely to slow to single digits.

Phocuswright analyzed 18 individual markets in four major regions – Europe, U.S., Asia-Pacific and Latin America – and found only three travel markets with penetration rates above the critical 35% level. While the U.S., U.K. and Scandinavia have reached the tipping point, the remaining fifteen markets have significant growth potential, including those in Asia Pacific and Latin America.

In Scandinavia, which broke the 40% penetration mark in 2010, online penetration is projected to grow just two percentage points over the next two years. In comparison, one of the fastest growing markets, Colombia, has online penetration of just over 4%. With growth rates likely to slow as more countries surpass the 35% tipping point, the global online travel opportunity is clearly not limitless. However, a majority of global online travel markets have a long way to go before reaching maturity – good news for travel companies seeking to cash in as a growing share of travelers worldwide embrace online booking.

Phocuswright's Global Online Travel Overview Second Edition compares online travel bookings in four regions: Europe, the U.S., Asia Pacific and Latin America. The report features market sizing and growth forecasts through 2012 for the total travel market and the online leisure/unmanaged business category. Other key topics include:

  • Global market share by region
  • Online travel penetration and regional growth potential
  • Analysis of supplier-intermediary dynamics and variation by region
  • Market trends for key countries in each region

Despite cultural and technological challenges, more and more consumers prefer to book online and seek the opportunity to do so. Purchase Phocuswright's Global Online Travel Overview Second Edition (US$695), a Global and European Edition publication, to understand the complex growth dynamics shaping the global online travel market.

Note: The market sizing and projections for Japan in this report have been built upon market data collected before March 2011 as part of Phocuswright's Asia Pacific Online Travel Overview. In response to the devastating earthquake and resulting tsunami that occurred in Japan on March 11, Phocuswright will provide all report purchasers with a separate update on Japan and the Asia Pacific region in the second half of 2011, including updated market size and forecasts.