Travel predictions for 2008

February 5, 2008

PhocusWright has released it’s 2008 Travel Trends report which looks at some of the developments in the marketplace that it expects to dominate the year. There’s a brief overview here.

In short they expect:

  • Mobile to grow (no massive surprise there, it’s been coming for years but travel has been very slow on the uptake)
  • Consolidation in the industry to continue (again a safe bet, I don’t think we’ve seen the last of the mergers, however this year I expect to see online only concerns looking at mergers to stimulate growth and increase market share)
  • Social and e-commerce approaches to converge (strange one this, I know there’s a lot of social experiments that are totally unconnected to a companies e-commerce facility but this will continue as players find their feet in the social waters. Any decent foray into social should always have an e-commerce edge anyway, even the most brand focused campaign should be aiming to drive bookers at the end of the day)
  • Metasearch to come of age (this could be the biggy! I’m waiting for Kayak or someone like that to launch fully dynamic packaging through metasearch, that could be a clincher that sees off the competition. I also expect tour operators to move towards a more metasearch model online by supplementing their product through GDS’)
  • Media-based pricing (interesting move from Expedia earlier this year that has triggered this one, will certainly be interesting to see if others move this way, especially those with their own stock as price flexing to match their media spend will be more difficult)

I think they’ve missed one big thing that we will begin to see on travel websites and that’s intelligent or guided search. My number one complaint is the lack of relevance in cross/upsell offerings that are pushed at you during an e-commerce process. The rise of tagging and meta data on products will help push this forwards (as well as the rise in technologies that provide this kind of functionality). Another interesting area to watch will be semantic web, expect to see a travel site of some sort try to get this right this year. Interesting year ahead!

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ComScore have released figures for the biggest U.S. web properties for December. MarketingCharts have the detail here. Obviously, retail is the big show, and as usual Yahoo just pip Google, even though they have many more pages. Google should overtake them soon.

Travel shows with Expedia in 41st place. January should be a very different story as travel sites shoot up the rankings.

Full list of the top 50 below:

IMRG the online retail analyst is to release a report stating that it is critical that retailers invest in online as more of the UK population shift to making their purchases through the web. They say that retailers who refuse to move online risk losing half their business over the next ten years as they estimate that 50% of all retail will be online by 2018.

Growth of the online retail channel outstripped all other channels in the run up to Christmas and the volume of shopping online in 2007 was up over 50% on the previous year. This kind of growth is expected to continue (although slowing gradually).

I believe this will apply to travel even more quickly than retail. The shift to online is happening much more quickly and it’s possible that half of all travel bookings could be online within the next two years in the UK. The U.S. is already there according to the report here. Investing now will put you in a good position to capitalise on that growth. It’s especially important for any travel companies who don’t have a web presence yet (there really are some who don’t still) as they really need to get their brand known online and get their online marketing processes in place asap.

The power of Google

January 14, 2008

Google’s power and influence in the online world has been demonstrated again today with the news that IncrediMail has had it’s Adsense deal with Google stopped abruptly.

IncrediMail received a large amount of its revenue from displaying Adsense adverts to its users. Now this has suddenly stopped and IncrediMail is feeling the ramifications reflected in its share price which dropped 40%.

No real news as to why the deal has ended but the Adsense account that was used has been suspended so it’s looking like it could be less than amicable.

This really shows the power Google holds over many websites that are considered to have good revenue streams. Switch off the major source of that revenue and what is left for them to survive on. Perhaps some of these websites find they are making so much off Adsense that they neglect other revenue sources and leave their eggs in the one basket.

Hitwise have released some new figures (found via Marketing Charts) which show that Google managed to account for 66% of all U.S. searches during the four weeks up to the 29th December.

It seems we’re set for another year of Google domination in the search engine market. I can’t see anyone making a dent in their market share for quite a while (although the Microsoft/FAST deal may make things interesting eventually).

Another interesting stat from the report is that the travel sector has received 22% more traffic from Google from December ’06 to December ’07 and a 12% increase in traffic from search engines in general.

This shows that for those of us in online travel the search engine is still going to be the major source of qualified traffic. Time to shift that banner spend into something more lucrative like paid search!

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.

ComScore has released it’s final postmortem on the volumes of online retail sales in the run up to Christmas.

Monday December 10th was the biggest day for U.S. online shopping with a total of $881m spent. The fastest growing product category was video games, consoles and accessories which posted an amazing 129% growth year on year.

The week ending December 16th was the biggest weekly spend at somewhere around $4.7 billion in online sales. The year on year growth looks to have been great too looking at the graph below. Let’s hope travel proves as good in the busy months we are now in!