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HomeMICE IndustryBusiness TravelLeisure and unmanaged business travel sites account for one-fifth of all travel sold in U.S
New PhoCusWright online travel forecasts

Leisure and unmanaged business travel sites account for one-fifth of all travel sold in U.S

Segments of the U.S. travel industry continue to take divergent paths. The industry as a whole has recovered slowly …

Segments of the U.S. travel industry continue to take divergent paths. The industry as a whole has recovered slowly (achieving growth rates of 2-3%), while the online channel has been feasting on annual increases of more than 30%. This dynamic, driven by share shift, is expected to continue at declining but still substantial rates through 2006, according to a new report issued by PhoCusWright Inc.



PhoCusWright`s Online Travel Overview: Market Size and Forecasts 2004-2006 estimates that while total travel industry growth rates will increase slightly each year, the online share of that market will continue to rise. The result of this continuing shift of travel bookings to the Internet is that PhoCusWright projects more than one-third of all U.S. travel to be booked online by leisure and unmanaged business travel sites in 2006, up from 15% in 2002 and 20% in 2003.



Many segments of the industry are walking a tightrope, with suppliers continuing to seek greater control over their inventory by drawing sales to their Web sites without alienating the online travel agencies that, in many cases, introduced them to Internet marketing. Within segments, there are varied differences. For example, independent hotel companies and cruise lines rely heavily on third party sites, while airlines, railways and car rental companies have strong online direct distribution.



In 2003, an even split marked the balance between online travel agency bookings and those completed on the supplier sites of airlines, hotels, car rental companies, traditional vacation packagers and cruise lines. This balance has been achieved following faster growth in supplier bookings in 2003, and is expected to remain constant as growth rates for both channels settle to comparable levels through 2006.



Despite strong growth rates, there are barriers to online penetration thatcompanies are aiming to eliminate. Limitations to online sales in certain markets include the customer service requirements of cruise bookings, which entail many add-ons and options, and multi-leg air reservations. Just as the major online agencies helped to overcome earlier technological hurdles, suppliers have been upgrading their online customer service capabilities in an effort to bring the more complicated transactions, such as refunds/reissues/cancellations, online.



Other key findings from PhoCusWright`s Online Travel Overview: Market Size and Forecasts 2004-2006:




  • U.S. leisure/unmanaged business online travel sales reached US$39.4 billion in 2003,up 37% from 2002.

  • The market is expected to increase 34% to reach $52.8 billion in 2004

  • Airline tickets as a percentage of total online sales will decline from 51% in 2003 to 45% in 2006

  • Expedia, Travelocity and Orbitz represent nearly one-third of all Internet-driven hotel sales

  • American recorded the highest Internet sales among the airlines, but jetblue.com showed the greatest year-over-year growth (82%)

  • Consolidation trends continued for online travel agencies, with five companies now controlling half of the entire U.S. online travel industry




Data and Methodology



PhoCusWright`s Online Travel Overview: Market Size and Forecasts 2004-2006 includes actual data for 2002-2003 and forecasts through 2006 for leisure and unmanaged business travel in the U.S. Now in its fourth year, this annual forecast is based on months of research and data collection, and interviews with more than 80 travel executives regarding their companies`Internet sales, marketing and technology investments, challenges, strategies and expectations.



Detailed analyses of the market are structured into sections covering the market overall, online travel agencies, airlines, hotels, car rental companies, vacation packagers and rail and cruise lines. The strategies and outlooks of each segment and channel and the major players therein are scrutinized and put into the context of the industry at large.



PhoCusWright`s Online Travel Overview: Market Size and Forecasts 2004-2006 is the most comprehensive, yet consolidated, look at the U.S. online travel market, including prospects for growth and peppered with exclusive market research findings from PhoCusWright`s Consumer Travel Trends Survey Sixth Edition.

Co-Founder & Managing Director - Travel Media Applications | Website | + Posts

Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.

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