Tuesday, November 06, 2007

Forrester says that online travel has reached a peak...

Forrester's online travel head Henry Harteveldt has been trying to steal the pre-conference attention away from PhoCusWright with the publication of a report called "Are Online Travelers Saying "Buh-Bye" to the Web?"

In this he reports that the number of online travellers both researching and buying travel online has fallen from 68% in 2005 to 62% in 2006. In addition that 63% of leisure travellers that looked online booked online in 2005, rising to 67% in 2006 but dropping to 55% in 2007. Meanwhile the online travel industry in the US is set to be US$104 billion this year up from $73.6 billion in 2005.

Harvteveldt says that all this points to a fall off in travellers, a decline in bookers and the "travel industry [being] increasingly reliant on a smaller group of people who are travelling more" (quote and stats in US Travel Weekly article by Dan Luzadder - registration required). eMarketer was full of similar doom and gloom about the US market earlier this year when they claimed that online growth rates in the US were dropping dramatically. My response at that time was "Baloney!" and I tempted to repeat that analytical summary in this instance.

Instead of being a symbol of the resurgence of the offline world or the end of online, the trends highlighted by Harteveldt are merely the signs of a mature market. Online travel in the US is more than 50% of the leisure market. Therefore we should expect now and into the future that market stats and figures will show ups and downs, as you would with any mature market. Rather than be a example of online travel failing it is a natural consequence of the victory of the keyboard over bricks and mortar. I am not saying that there is no place for a travel consultant or that the big three/four online players in the US can laugh all the way to the bank. Similarly I have argued before that consumers are entering a period in online travel where there is "too much information". But no-one in the US online travel industry should see statistical blips in demand or sky is falling talk from analysts as an indication that the industry is in trouble. If you have scale online in the US and continue to focus on good product, customer experience and driving efficiency then there is no need to worry about the strength of the online travel industry.

Thanks to reader Brian Russo of Bank of America who covers Priceline and Expedia for the Bank. He sent through an NY Times article on this subject prompting me to look further.

1 comment:

Anonymous said...

I dont understand how people come up with these assumptions. There is no REAL measureable matirx and no real numbers to measure, on calculations. Is USA running short of cash ? Is european trave lalittle more complex and thus still tour driven ?