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Supplier Websites Lose Market Share

December 3, 2010 By: Staff

Who is winning the battle for online business? Research firm PhoCusWright gives one clue, reporting that online travel agencies (OTAs), found a silver lining during the recession. Despite taking a hit in 2009, OTAs outperformed supplier websites throughout the recession to emerge with a larger chunk of the online leisure and unmanaged business travel market.

Expedia, Priceline, Orbitz and Travelocity attracted bargain seekers with last-minute deals and fee cuts, yielding strong countercyclical performance for the OTA category in 2009 and 2010, PhoCusWright research reported. OTA sales fell just one percent in 2009 while the total online leisure/unmanaged business travel market dropped five percent. OTAs should grow at twice the rate of supplier websites to post double-digit gains in 2010.

OTAs and supplier websites react separately to economic forces and attract different types of customers. OTAs draw budget-conscious consumers while supplier websites lure more frequent, higher-spending travelers. The latter group pulled back its spending the most in 2008 and 2009, limiting supplier website gains, PhoCusWright said.

Despite growing at a slower rate than OTAs, supplier websites continue to dominate online leisure/unmanaged business travel sales. Supplier websites' combined share reached a high of 62 percent in 2008, falling to 59 percent in 2010 amidst OTA success. With the rebound continuing, supplier websites will likely regain momentum as the OTAs fight to hold on to their share gains, according to the research firm.

PhoCusWright projects a restrained recovery through 2011, varying by travel segment and distribution channel.

Details of the online market can be found in PhoCusWright's U.S. Online Travel Overview Tenth Edition. The new report provides market sizing and forecasting through 2012 for all major travel segments (airlines, hotels, car rental, vacation packaging, cruise and rail) and key online and offline distribution channels such as online travel agencies, supplier websites, and traditional travel agencies/offline supplier direct.

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