23 Musings

Denmark's Center for Regional and Tourism Research has released it's latest figures on European online travel trends this week.

The report shows a 24% increase in sales of travel products online in 2007 (compared to 2006) and shows they now contribute 19.4% of the market as a whole. They're expecting a further 18% growth in 2008 and up to 15% in 2009.

The UK still contributes the biggest share at 30% of online travel sales.

Packages accounted for 14.6% of sales, looking like there wasn't much change from last year. God knows where dynamic packages fit in the report though, there's no explanation. In fact it must be really hard to classify travel these days with so many sites selling components as a package (of course, as I've said before consumers really don't know what's a traditional package and what's dynamic...).

Here's the breakdown by type of product, full details can be found here.

For the firs time ever more travel in the U.S. was booked online than was booked offline in the last year. This is according to the PhocusWright Consumer Travel Trends Survey.

The study said that 51% of US travel was booked online in 2007, and it projected that percentage to increase to 56% in 2008 and 60% in 2009.

The survey also said that travel products with multiple components, such as packages, are being purchased less frequently online, while simple components - plane tickets, for example - are being purchased more frequently.

That last point is really interesting! I've always assumed that as online booking systems get more sophisticated users would become more comfortable with booking packages online. It would seem not! Something to be said for keeping it simple perhaps, maybe all the new technologies and booking processes being thrown at users are actually overkill and making it more confusing than it used to be? Or perhaps dynamic packaging is not proving the hit with consumers that it is with suppliers? An interesting point, and one I'll be keeping an eye on as I'm predominantly in the package industry.

There's a really interesting story on Travel Mole today. It's a guest comment from Euromonitor taking a look at the potential impact of the current global credit crunch on sales in the travel industry.

I've been wondering how this is going to affect us in our January peak month. Will we see the growth predicted, or will we see little to no growth year on year as consumers tighten their belts after an expensive Christmas and with the thought of credit problems to come.

Euromonitor warn that any recession in 2008 could be a real wake up call to an industry who have seen significant growth over the last few years. They're right, a real recession would cut household spending significantly and obviously expensive purchases such as holidays are the first to be cut from the budget. Of course this could be further off than January, a recession takes time to bite and, if indeed we are heading for one, it would be middle of next year before it would really show it's teeth (I believe).

Euromonitor see a recession as unlikely and rather predict a drop in consumer expenditure growth. However they still expect to see consumer expenditure grow by 2.25% in 2008, compared to 2.5% in 2007. That sounds like too small a drop in expected growth to me. Having worked in financial services I have many friends in senior positions in financial institutions, all of whom agree with me and think there will be significantly less growth than that next year. Time will tell...

One thing in our favour though says Euromonitor is that if we do see a drop in the desire to spend then the travel industry areas that will still succeed are low cost carriers and internet operators. This makes perfect sense as the hunt for cheap deals happens online these days and therefore travel companies offering online discounts and incentives to book will do better. Price comparison websites would be my other tip for a year of lower consumer spending, they'll get more traffic (on a percentage of traffic available basis) as more users want to compare deals. Dynamic Packaging providers will also do alright as long as they have access to low cost carrier fares.

Anyway, the point of this post (I'll get there eventually) was to post a graph showing growth of online travel by year. It's using figures from Euromonitor taken from the article linked above and shows growth of online travel sales by industry segment.


So, the graph above shows that traditional package holidays are growing the quickest of any online industry segment! Great news for tour operators everywhere, I've always said there is still huge potential for packages if the user experience is right. At the end of the day, customers don't know the difference between a dynamic package, a traditional package and even component packaging. All industry jargon, ignore it and focus on delivering the best booking experience you can!

Also interesting is the jump in Dynamic Packaging as it took off, and then the massive slowdown in growth the following year. Looks like everyone jumped on the bandwagon in one year, or more likely the ability to distinguish between the two became blurred for Euromonitor as it has for consumers.

The upshot of this post is that we may not see the massive growth we have all been expecting in January if this credit crunch gets any worse. So in that case I hope you have all got your developments in place before the Christmas lock down so you can get as much value out of the visitors who have money to spend as you can!

Travelocity have a new tool in their beta area, the Travelocity ExperienceFinder.

This new way to find a holiday is basically quite similar to the Expedia Inspirator and Inspiriscope tools I took a look at earlier. It allows you to choose a destination and theme and then presents you with ideas that suit your holiday. It's a Flash based app, and looks great. You can add items to your wish list which builds up like a nice shopping basket, only of course it's not a shopping basket...

This is where this type of functionality becomes useless to me. Yes I can make informed decisions on what products to add to my wish list, yes they will help me by segmenting the product by theme and yes it looks pretty funky. But (and it's a big but) what about booking? I can only book each item on it's own, I can't bundle the wish list up and book the lot which is really annoying!

I guess Travelocity don't have true dynamic packaging technology (which amazes me given the Lastminute.com pedigree) otherwise they would allow this bundling. So this still leaves me waiting for my perfect travel inspirer...