PhocusWright releases thirteenth ddition of European Online Travel Overview
Buoyed by positive economic indicators and generally strong consumer confidence, the European travel market is projected to climb to an alltime high in 2017. Online bookings, anchored by travel suppliers’ own websites and apps, lead the way. Conversely, offline bookings continue to decline, though traditional travel agencies and other offline channels remain vital in some markets. In spite of the continued growth, the industry faces some challenges. Brexit and the threat of terrorism, along with political and economic uncertainty in some markets, are key challenges that could impact individual travel markets or the overall region in the coming years.
KEY TRENDS AND DEVELOPMENTS
On the heels of a 1% decline in gross bookings in 2016, the European travel market was projected to grow 3% in 2017 to €273 billion, with most segments showing modest gains. Total gross bookings are expected to increase 3% annually through 2021.
Online bookings continue to outpace the broader market, although now that the online channel has reached maturity, online growth rates have begun to more closely resemble the total industry. In 2017, online bookings were projected to total €138 billion, representing 51% of the total market. Mobile channels supplier and online travel agency (OTA) apps and mobile websites are driving most of the growth. Mobile travel bookings are projected to climb 21%, and will represent nearly one fourth of all online bookings in 2017.
In the battle for online bookings, travel suppliers continue to have a clear edge. Online supplierdirect channels will capture two thirds of online bookings in 2017, compared to just one third for the supplierOTA channel.
Suppliers in all segments are stepping up their efforts to promote their own websites and mobile apps by leveraging strong branding, loyalty programs and special perks for direct bookers. These initiatives will pay off, and supplierdirect bookings will represent 70% of the online market by 2021.
While the number of terrorist attacks in the region declined in 2017, the threat of terrorism continues to impact multiple European markets. The tour operator segment has suffered the most, as travellers weigh the safety of long popular “sunandsand” destinations. Hotel bookings in some European capitals and other large cities have been impacted as well.
Political turmoil is creating some uncertainty in the European travel market. The UK’s planned exit from the European Union could have significant consequences, and its effects are already evident in the weakened British pound. Inconclusive elections in Germany and a fierce separatist movement in Spain’s Catalonia region could also have implications for those markets.
Traditional airlines in Europe are under increasing pressure from nimble LCCs such as Ryanair and easyJet, as well as from full service Middle Eastern carriers including Emirates, Etihad and Qatar Airways. Meanwhile, the bankruptcies and financial insolvency of Air Berlin, Alitalia and others are consolidating the market and creating some new opportunities.
The hotel category is the only segment where OTAs have a strong lead over suppliers in attracting online bookings. But large chains are expected to reduce their dependency on the two dominant OTAs Booking. com and Expedia as they focus on promoting their own online booking channels. Recent legal rulings that ban hotel rateparity clauses also favour online direct hotel bookings.