US Online Travel predicted to decline in 2009

Online travel in the US will decline by 3% for the first time in 2009, according to the revised forecast by PhoCusWright. The online travel market will still outperform the total travel market and return to positive growth much sooner. With the recession in full swing and leisure and corporate travelers alike pulling back, the total U.S. travel market will decline 11% in 2009 to approximately $241 billion.

Summary of key trends:

• It will get worse before it gets better!
• The decrease on the total travel market is driven primarily by an even sharper decline in the corporate travel and groups and meetings markets.
• Consumers are likely to reduce travel expenditure this year
• However, those that spend less than average more likely to increase spend
• Generation Y is the largest increase (25-34), baby boomers more likely to reduce spend (45-64)
• Online Travel Agencies will outperform other channels in year over year bookings because of their consumer base (also massive deals by the likes of Expedia and Orbitz)
• Comparison engines still increasing. Over a quarter (28%) of travelers typically turn to them when shopping for travel.
• Online Travel is mature but not saturated, so there’s still plenty of opportunity to grow online.



According to Hitwise US the different travel verticals market shares compared to all internet usage seem to remain pretty constant, despite the projected decline.



Across the pond they are celebrating US Memorial Day on May 25 and travel is expected to decline about 1%. Fewer plane trips for Memorial Day, the traditional start of the US summer travel season, may result in 7% drop in summer flying as the recession decreases demand and carriers have reduced capacity by more than 10% (source: Air Transport Association).

Fares over Memorial Day are down about 12% and leisure fares for the summer have declined about 17% according to Travelocity.com., attracting a lot of bargain hunters. Travelocity’s bookings are up year over year, though no specific figures have been provided.

It still shows that there is opportunity for growth, by despite the current climate!

Easter Travel Boom

Despite the credit crunch there’s are 2 million Brits heading overseas this Easter. Domestic UK tour operators are reporting an excellent season so far, with some reporting double digit percentage growth on last Easter. Also overseas holidays have also seen a big upsurge in bookings for both Easter and summer holidays. Top spots for Easter are Spain, the Canary Islands, Turkey, Egypt and Tunisia, while Cuba has become popular as holidaymakers become keen in experiencing the island before the US travel ban is lifted. Florida is also this year’s top long haul family destination. The Easter effect will mean that April this year will see passenger numbers increase by 20% compared to April in 2008. However, at the end of February UK bookings for summer 2009 were down 12% on last year, though no official figures are released yet March shows an improvement on previous months (Source: GfK Ascent-MI).

Is this the year for Mobile in Travel?

According to a new study by PhoCusWright, M-commerce is a transformative new platform quickly changing the way consumers interact with travel brands. It’s still hard to imagine travellers booking a two-week holiday from start to finish using their mobile, but travellers have already started to research and buy travel options on the go. Mobile travel applications can serve as a convenience to travellers, but they also represent significant potential for travel companies to promote cost efficiencies and create new revenue streams. The US travel industry bookings will reach US$291 billion in 2010 and online transactions will top $90 billion, whilst mobile bookings will reach $160 million. While the revenue figures remain low, there exists a vast potential for growth for mobile travel applications.

Currently 67% of travellers and 77% of frequent business travellers have used the mobile to find local services and attractions. Top of the list among preferred features is real-time flight information wanted by 53% of leisure travellers. Location-based services are also expanding in use and popularity, travellers would use services such as mapping, navigation services and city guides upon arriving at a destination. Mobile travel is about more than providing a miniature-sized version of a site, it opens up opportunities for a range of context-aware applications that will transform the way travellers and travel companies interact.

Only a few of my clients have developed a mobile site, and I wonder how much Mobile activity has is currently being undertaken by travel companies? The results below are from a recent worldwide survey by Eyefortravel which shows that the usage is limited.



Geographically, the US reports the highest proportion of companies with mobile specific websites (32%). Asia Pacific respondents report the lowest mobile website penetration at 17% and the UK is just above this with around 20%.

Looking at the travel sectors individually, it appears that the proportion of suppliers and online intermediaries who have developed a mobile specific website have reached the same levels – around 65% have not developed a mobile website and around 28% have. Within the supplier category, it is revealed that the Airline sector leads against Hotels with 38% with mobile websites and 22% of Hotels.

Tour operators are the weakest of the sectors under review in the mobile web space and a significant 89% do not currently have mobile websites developed.

It is evident that there is a lot of room for growth in this area and it will be very interesting to see how the market develops in the next one to two years. It will also be very interesting to assess the ROI of mobile specific websites as the market develops, and finally see mobile marketing take off properly.

Last minute Bookings Expected to Surge

Consumers are holding off booking their summer holidays due to economic uncertainty. One in five Brits are planning on getting a last-minute bargain in summer 2009. At the same time that tour operators have cut capacity to deal with the downturn, expect there to be a massive surge in last minute bookings this year, though there may be less late deals around. This could potentially provide a great opportunity for savvy travel companies, so make sure you have got those last minute keywords optimised ahead of the summers search spike!

Domestic Travel Trend – Retro Travel!

Visit Britain is predicting at least 5 million who went abroad last year will stay here this summer. It’s back to the 70s as families tighten belts with campaign holidays and seaside breaks. Bookings have shot up almost a third from 2008, with a "dramatic" rise in interest over recent weeks leading up to Easter according to the Camping and Caravanning Club (CCC). Traditional British holiday camps or Hi-de-Hi holidays are also set for a comeback this summer. A combination of nostalgia, tight budgets and more attractive accommodation and entertainment at the camps means one in ten people are more likely to visit a holiday park this year.

The search query volume for the good old holiday camps have shot through the roof and haven holidays queries is up 104% and Pontin’s 48% according to Google Insight!

According to Hitwise top attractions keywords in April to the accommodation sector are: thorpe park, alton towers, haven, butlins, hoseasons, centre parcs, haven holidays, center parcs.

Worst hit by recession - Overseas activity holidays

As the current recession continues, it is likely that some travellers will economise by taking holiday trips at home in the UK rather than abroad. This effect will be more marked in the activity holiday sector, where there is a greater price differential between the overseas and domestic products than in some other sectors of the overall holiday market. This said, once the economy recovers, the domestic sector is expected to continue to decline in relation to the overseas sector.

Overall, the appeal of overseas activity holidays is being broadened with respect to a number of demographic characteristics, including age, social grade and region of residence. In terms of type of holiday activity, walking (including trekking) emerged as the most popular activity. In the short term, the impact of the recession will be more severe on the overseas sector, but this situation will probably be reversed as the economy resumes it growth pattern. (Source: NEMS Market Research)

Search Trend
Google insight is also showing that search queries for ‘activity holidays’ is down almost 60% and decreasing compared to the travel average.

Barack Obama factor set to boom tourism

The positive attitude towards Barack Obama is predicted to persuade holidaymakers to visit the US. The pound is down to 1.37 against the dollar but the decreased spending power is offset by the excitement following the inauguration of the 44th President of the United States.

British visitor numbers to the US has not recovered following September 11. The security checks at customs allegedly put people off visiting the US, some were worried they could be detained if they made a mistake at a US airport. Also Bush’s foreign policy did not help tourism. But now that’s all changed, and Visit USA expects British visitors in 2009 to overtake 2000, when a record 4.7 million people visited the US.

In a recent report by ABTA, 13% of Brits are more likely to visit the States now Barack Obama has been elected. This figure is rising to 21% in the 18-34 age group.

The Obama factor could also increase tourism to Hawaii, where Obama neighborhood excursions have already started where people can go and see the apartment where Barack lived with his late grandmother, the Punahou School which he attended up until high school and even the Baskin-Robbins ice cream parlor where he worked. You can read all about Barack Obama’s Hawaii on Hawaii’s Official Tourism Site. Kogelo the village where Obama’s father was born in Kenya is also expecting to see a boost in tourism.