Growth slowing in online travel market?

March 30, 2007

New figures from eMarketer suggest that the huge growth experienced by the online travel market in the last few years may be slowing. Between 2002 and 2006 the U.S. online travel market experienced annual growth rates of 28%, the forecast for the next year is a much lower 17%. PhoCusWright, Forrester Research and comScore all agree with this projection of slower growth ahead.

Now, 17% may seem like huge growth anyway, but in the heady world of online travel this may signal a turning or saturation point for the online players. It’s not just a factor of the big online agents having reached a limit in market penetration though. The ease of entry to the market nowadays has made it much simpler for new entrants to get into the market and gain market share quickly. New Web 2.0 features are also giving consumers a better experience on some of these new market entrants. Also, consumers are turning to more complex trips which is pushing some back to the traditional purchase routes of travel agents and phone calls.

Online travel agencies market share is slipping as consumers move to book components for the trip direct from suppliers websites. More and more suppliers are taking control of their inventory and selling it themselves as well. All of this adds up to tougher times for the established online players, and much tougher times for the traditional tour operators who are still trying to gain ground on their more agile competitors.

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