US $600.00

PhoCusWright's United Kingdom Online Travel Overview Second Edition

July 2007
US $600 CA $742 £397 €476

The consolidation of tour operators (TUI and First Choice, and MyTravel and Thomas Cook), and, earlier, online travel agencies (U.S.-based conglomerates’ purchases of U.K.-based ebookers and lastminute.com) have been the recent big stories in the U.K. online travel market. However, fueled by demand for experience-based shopping and research, The Long Tail is also manifesting itself in travel niche sites that, taken as a whole, rival or surpass the influence of the traditional giants.

Specialist travel companies and tour operators are offering differentiated travel experiences and pursuing an Internet presence, and, as the U.K. travel shopper evolves, even the mass market travel tour operators are investing in experience-based travel brands. This trend is also behind the emergence of communities (e.g., WAYN, or “Where Are You Now”) and inspiration sites (e.g., InterContinental’s GoDiscover.co.uk, launched in partnership with Lonely Planet). After a decade of leading the migration of the European traveler to online purchase channels, the U.K. traveler is ready to go beyond price and the simple air/car/hotel purchase and enter the realm of shopping for experiences.

The U.K. is the first market in which Expedia has experimented with its recommendations engine, dubbed the Inspirator. Lastminute.com’s strategy from the start has focused on retailing meals, event tickets and other experiential products, with these “lifestyle” sales peaking at close to one-tenth of sales before its purchase by Sabre diluted the mix. But as demand for such products swells with the online travel shopper’s desire to build a trip rather than simply assemble transport and accommodations, many of the smaller travel players are leveraging the online channel to communicate and market their distinctive offerings.

Even airlines have tried to transcend the commoditization of air by focusing on experience. All U.K. airlines have put the Web at the heart of a strategy that allows travelers to manage the pre-, during- and post-trip experience. Now that the LCC model has been firmly established, the market leaders such as easyJet and Ryanair continue to avoid intermediaries and seek to stimulate their ancillary revenue. Ryanair's recent switch to Expedia as its accommodations supplier and easyJet's activation of its deal with hotelopia are examples of this effort.

The U.K. has a robust but mature online travel market, and yet it continues to attract new players. The U.K. remains the first point of entry for any travel player with pan-European designs. The past two years have seen metasearch companies such as Sidestep, Kayak and Skyscanner; community sites such as Trip Advisor and IgoUgo; and portals such as Yahoo! (through its acquisition of Kelkoo) launch travel offerings in the market. The U.K. market has also seen the emergence of home grown intermediaries such as the aggregator Travelsupermarket.com, lodging specialist LateRooms.com, and WAYN, one of the largest community Web sites to emerge from the U.K.

Report Overview Table of Contents Methodology

REPORT OVERVIEW ^top

Providing guidance in the highly fragmented European market.
This report is PhoCusWright’s latest in-depth look at market size, forecasts and analysis for the European market as a whole along with the U.K. travel market and online travel markets for the years 2004-2006 (actual) and 2007-2008 (projected), by segment and channel.Get informed about the local players and their importance in each of the market segments.

Along with channel analysis of European and U.K. online travel agency, tour operator and supplier direct sales, PhoCusWright’s United Kingdom Online Travel Overview Second Edition provides segment analyses (including historical and projected segment gross bookings and growth, both online and offline) for:

Airline
Hotel
Car Rental
Rail
Packaging

TABLE OF CONTENTS ^top

The European Online Travel Marketplace
Introduction
Europe Market Assumptions
Growth Factors
Trends in European Online Corporate Travel
Conclusions

The U.K. Online Travel Marketplace
Overview
E-Commerce and Internet Penetration
Size of the Market
Online Travel Agencies
Suppliers
Conclusion

METHODOLOGY ^top

PhoCusWright's U.K. Online Travel Overview Second Edition presents the findings from PhoCusWright research on the European online travel markets in 2006 and 2007. This effort was undertaken as a multi-part project to assess the European travel market as a whole with in-depth analyses of five individual European markets: France, Germany, the U.K., Italy and Spain. These comprise the third edition of PhoCusWright's European market research, and this report covers overall European market trends.

To evaluate the markets, PhoCusWright interviewed executives from over 100 European-based airlines, hotels, tour operators, rail companies, online travel agencies, traditional travel agencies and travel technology companies. European estimates and projections include the first 15 European Union (EU) countries as well as Norway and Switzerland.

Internet sales are based on gross bookings – that is, the total transaction value of the products sold online – for leisure and unmanaged business travel sites (i.e., consumer-facing Web sites that sell to individuals, including unmanaged business travelers purchasing outside of corporate travel policies). PhoCusWright includes in these figures bookings that are researched online but may have been completed offline as a direct result.

All financial information is based on data obtained from interviews with company executives or publicly available financial reports. Estimates and projections are based on executive interviews, third party information, Web traffic results, economic indicators, market trends and PhoCusWright analysis.

PhoCusWright market size estimates and projections are based on the local market results of pan-European online travel agencies, the results of local online travel agencies, and total gross sales reported by local suppliers. Data is actual for 2004-2006 and projected for 2007-2008.

Non-hospitality suppliers’ online sales are assigned to the market in which the supplier is headquartered. For example, all online business generated by Lufthansa worldwide is associated with Germany, while all Air France online revenue is associated with France. Hospitality suppliers' gross bookings are based on revenues generated by properties in the country source market. Room revenue for hotels and guesthouse/bed and breakfast establishments are included.

All currencies are in European euros (€) converted at the average rate for the period they represent. References to the “travel market” are understood to cover the total travel market, and “traditional travel agency” refers to principally offline travel agencies.