Despite 2009 Decline, U.S. Online Travel Market to Outperform Other Distribution Channels

The U.S. online leisure/unmanaged business travel market is significantly outperforming every other distribution channel in 2009, according to travel industry research authority, PhoCusWright Inc., in its soon-to-be-released report, "PhoCusWright's U.S. Online Travel Overview Ninth Edition." Amid a severe economic downturn, U.S. online leisure/unmanaged business bookings will decline 7 percent while the total U.S. travel market will post a 16 percent drop.

"For the first time since PhoCusWright began tracking the remarkable trajectory of the Internet in travel distribution, online travel will decline in 2009," said Douglas Quinby, senior director, research at PhoCusWright. "But the 7 percent drop in online travel versus far steeper double-digit declines for the total travel market and offline channels indicates that travelers are increasingly turning to the Web to shop and purchase travel amid the recession."

The sharp fall-off in traveler demand and spend this year will reduce the size of the overall market to pre-2005 levels. However, the pullback has not been as severe for Internet distribution channels, which have outshined other sectors in 2009. As a result, online travel's share of the total travel market will surge from 35 percent in 2008 to 39 percent in 2009, with online travel agencies (OTAs) proving far more recession-resistant than supplier websites.

"By honing in squarely on consumer concerns in 2009, heavily promoting deals and last-minute special offers and eliminating many booking and customer service fees, online travel agencies have deftly outflanked recessionary pressures and are outperforming every other distribution channel," Quinby said. "OTAs are taking back some share from travel supplier websites this year."

With 2009 coming to a close, all eyes are focused on the turnaround and outlook for 2010 and 2011. PhoCusWright projects very modest growth for the travel industry in 2010, but the outlook varies for travel segments and distribution channels.