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European Online Travel Bookings Jump 19 Percent in 2008

December 1, 2008 By: George Dooley


As the European travel industry faces global economic pressure, online booking channels continue to increase market share, reports PhoCusWright's European Online Travel Overview. The research firm sees online penetration reaching nearly 30 percent in 2008 amid declining market conditions.

PhoCusWright says online sales growth for leisure/unmanaged business travel for 2008, projected at 19 percent, is significantly greater than the 3 percent rate expected for the European travel industry as a whole. Internet bookings of leisure/unmanaged business travel will represent 29 percent of the nearly $316 billion European travel industry at the close of 2008, according to the overview.

"Global economic challenges have exerted downward pressure on the European travel industry as a whole in 2008," said Carroll Rheem, director, research for PhoCusWright. "Consumers are looking online to find the best value for their money and operators are looking to cut distribution costs as much as possible. Although overall travel demand will suffer, these trends will drive more business online in 2009."

PhoCusWright' says its research also proves that while Europe is playing catch-up to the U.S. in online market penetration, some regions are more mature than others. "The United Kingdom and Scandinavia are well ahead of the curve," added Ralph Merten, PhoCusWright market analyst for Europe. "Scandinavia represents only 5.5 percent of the total European travel industry; however, it accounts for a full 8 percent of European online bookings. In 2008, Scandinavians will have booked over 40 percent of their travel online." PhoCusWright forecasts that half of travel in the UK and Scandinavia will be booked on leisure/unmanaged business travel sites by 2010.

European analysts have identified several key market trends in 2009 and beyond, including:  traditional air carriers gaining ground as low-cost carriers reach online saturation; European traditional carriers setting all-time Internet sales records in 2007; the hotel segment holding great potential for both supplier websites and online travel agencies (OTAs); online bookings growing 30 percent in 2007; the European rail segment experiencing solid gains and  rail website bookings increasing by an expected $1.5 billion in 2008; tour operators building their online brands successfully in certain mature European markets; and gross bookings of tour operator websites growing by 12.4 percent in 2007.

"The current economic environment will shake up the traditional layout of the travel industry," Rheem cautioned. "As we have seen in the past, new challenges can be a catalyst for shifts in market share. Fragmentation, tour operator distribution networks and fundamental cultural preferences will exert powerful influence over how individual countries will adapt. Our research and projections are beginning to pinpoint what Europe and its largest individual markets will look like in 2010."

Visit www.PhoCusWright.com.


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