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The Tipping Point: Online Travel Growth Slows At 35 PercentMay 19, 2011 By: George Dooley
When considering online travel penetration, bigger isn't always better, says PhoCusWright research, urging travel companies seeking the highest growth opportunities to look to travel markets with online penetration below 35 percent. According to PhoCusWright's Global Online Travel Overview, 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 percent 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, PhoCusWright says.
In Scandinavia, which broke the 40 percent 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 percent, PhoCusWright says.
With growth rates likely to slow as more countries surpass the 35 percent 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 says.
PhoCusWright notes that despite cultural and technological challenges, more and more consumers prefer to book online and seek the opportunity to do so.