Europeans love online travel agencies, up 10% this year

by Tom Johansmeyer on

It looks like the internet is no longer a fad … at least not in Europe. Forecasts from travel market research firm PhoCusWright put 2010 growth in the European online travel industry at 10 percent, a smile-inducing turn from the 1 percent gain posted last year, not to mention 11 percent decline in 2009 for the entire European travel market (which is up only 2 percent this year, it appears).

This makes sense, given the data recently released by the U.S. Department of Commerce, which shows a hefty increase in travel to the United States from foreign markets.

“For travelers who may have been hesitant to book online, the recession provided the extra push they needed,” says Carroll Rheem, director, research at PhoCusWright. “Deal seekers turned to the Internet, and online travel agencies in particular, to find affordable options.”

The strength of the online travel agency sector was noted as a reason for last year’s resilience, according to a statement from PhoCusWright, “The buoyancy of the online market is due largely to the strength of the online travel agency channel, which grew in 2009, while supplier websites slipped.”

Rheem adds, “Hotel bookings are fueling online travel agency growth in Europe, with brands like Priceline‘s Booking.com maintaining extraordinarily high growth rates.” Further, it looks like online travel agency action is “on track for strong double-digit growth in 2010.”

[photo by Trodel via Flickr]

Business travelers want mobile, Expedia picks up Mobiata

by Tom Johansmeyer on

I guess Expedia is watching the market. The online travel agency just snapped up mobile travel application developer Mobiata. Mobiata’s claim to fame is FlightTrack, and the other apps in its portfolio include TripDeck, HotelPal, FlightBoard and FareCompare. For Expedia, it was a no-brainer, as 4 percent of its traffic is coming from devices, a number the company would like to kick a bit higher, according to TechCrunch.

Beyond the fact that it gets more reach and better footing in the mobile space, Expedia’s Mobiata acquisition is interesting in light of a recent Deloitte survey. Business travelers are increasingly turning to their smartphones to research and book travel. The global professional services firm reported that 63 percent of business travelers earning more than $150,000 a year have web-enabled smartphones. Twenty-six percent of survey respondents, Deloitte said, have even downloaded hotel apps to these devices.

Given this trend in business travel, an important market for the travel industry, Expedia’s pickup makes good sense. The big question: who’s next?

[photo by Ed Yourdon via Flickr]

Four signs that people are traveling again, starting with the road warriors

by Tom Johansmeyer on

Business travelers are voicing their demands, and why should the airlines and hotels care? Well, this group of travelers is going back on the road, buoyed by all that corporate cash. According to travel industry research firm PhoCusWright, the U.S. travel agency/travel management company sector is set to surge 15 percent by the end of the year, compared to only 8 percent growth for the leisure/unmanaged business travel market. The business traveler is largely responsible for this rate of growth.

While the U.S. travel market as a whole is recovering, it’s the corporate travel folks who are leading the charge. “Corporate travel’s wild ride over the past two years has caused an unusual shift in trend, with online channels growing more slowly than the total U.S. travel market for the first time,” says Douglas Quinby, PhoCusWright senior director, research. The phenomenon reflects the peculiar dynamics of this recession, but the reversal will be short lived. “In 2011, the long-term arc of continued shift from offline to online channels will resume,” Quinby adds.

So, what can the travel business expect in 2011 and beyond? Take a look below to see four signs that the travel market is on the mend.
1. A big swing: in 2009, the U.S. travel market fell 15 percent, due largely to the effects of the financial crisis in 2008 and subsequent global recession. No business wants to spend money in those conditions. The economy may still be unpleasant, but companies are starting to put their capital to work again, and that includes investing in business travel to generate some revenue.

2. Half of the loss regained: the projected 2010 business travel market recovery means that half the spending lost from 2008 to 2009 is coming back. PhoCusWright forecasts a total U.S. travel market size of above $255 billion.

3. Growth trajectory: this year’s 10 percent overall growth rate isn’t going to get us back to 2006 levels this year, but the next two years will be positive. PhoCusWright says to look for record levels in 2012.

4. Online future: that sounds a bit obvious, right? Well, the numbers tell the whole story. Online travel agencies will beat the record levels they hit in 2008. The online leisure and unmanaged business travel sector fell only 5 percent last year, thanks to bargain-hunting. This year, the sector will remain stagnant, according to PhoCusWright, at 38 percent of the total U.S. travel market – I suspect this is because the small decline in 2009 sets a higher bar for recovery in 2010.

[photo by laverrue via Flickr]

American Airlines and Orbitz tangle over fees and booking process

by Tom Johansmeyer on

Do you use Orbitz to book flights on American Airlines? Well, your online travel buying habits may have to change. American is getting tough with Orbitz – and other online travel agencies – about how they do business together. For now, you can keep buying tickets on American via Orbitz, but a change could come as early as December 1, 2010.

The rhetoric is already high, as you can see in a recent Bloomberg report. Barney Hartford, the CEO of Orbits, said, “This is a broad attack by American on the travel distribution landscape.” The airline wants the likes of Orbitz to pull flight and fare info directly, rather than through a global distribution system.

So, is this all saber-rattling, or are American’s threats to pull out of Orbitz real. Bloomberg reports:

American can’t afford to pull its content off all the global distribution systems, and its conflict with Orbitz is a “private negotiation that suddenly became public,” said Jay Sorensen, president of aviation consultant Ideaworks and a former marketing director at Midwest Airlines.

Sorensen said he doesn’t “see an agenda here for American to remake the travel industry.” He indicated that this is part of a prudent negotiating strategy but noted that Orbitz may call the carrier’s bluff.

There’s a lot at stake – hundreds of millions of dollars, in fact. American has paid nine-figure sums to companies like Sabre and Galileo to gain access to online travel agencies and wouldn’t mind bypassing them and saving a few bucks, it seems.

So, will negotiations turn into a game of “chicken” as the end of the month approaches? Let’s wait and see how this develops.

[Via USA Today, photo by Deanster1983 via Flickr]

Taxes could make discounted hotels more expensive

by Tom Johansmeyer on

If your next hotel stay is more expensive than you expected, blame the government. State and local governments, still reeling from the recession, are looking for any source of revenue they can grab. And, they’re next target seems to be online travel agencies.

Online booking sites, such as Expedia and Orbitz, negotiate a rate with hotels for available inventory, market it up a bit and pass it along to the travel-buying public. The business model is pretty straightforward. The problem comes down to which room rate should be used to calculate state and local occupancy taxes. At least 40 lawsuits have been filed over the issue, as local governments have rewritten ordinances to try to add a bit more to the coffers.

There’s a lot at stake, according to a USA Today report. Approximately $1 billion a year is perceived to be lost by state and local governments.

Yet, is it really lost? The online travel agencies are paying the hotels, and according to Andrew Weinstein, spokesman for the Interactive Travel Services Association:

“Occupancy taxes are based on the rate the hotel sets and receives,” he says, “not the profits, fees or commissions of its partners. … The facilitation fees are no more part of the hotel rate than the taxi that takes the guest from the airport or the tip they give the bellhop.”

How do you feel about this issue? Leave a comment to let us know if it’s what the hotel gets or what the occupant pays that should matter for tax purposes.

[photo by Howdy, I’m H. Michael Karshis via Flickr]