NB: This is a viewpoint by Lorraine Sileo, senior vice president of research for Phocuswright.
Despite recent troubles, the European travel market continues to reach new highs with projected revenue of €264 billion in 2015, shattering the previous year’s record of €251 billion.
This upward trajectory for travel is expected to continue as Europeans continue embracing digital channels, and especially mobile, for booking their trips. As growth continues, online travel agencies (OTAs) and suppliers will continue their battle for market share dominance.
In 2015, the European travel market grew an estimated 5% over the previous year to €264 billion (see Figure 1). Over the next two years, growth will slow slightly to an annual 3% rate, until it reaches the €282 billion mark in 2017.
Growth in online travel continues to outpace the overall market. After a whopping 13% spurt in 2015, the online travel market will grow at a healthy 8% per year through 2017.
Online travel market
European travelers continue to embrace digital channels for travel booking. For the first time, Europe will surpass the US and claim the top spot globally for online adoption.
In 2015, 47% of travel revenue in Europe will be booked online, compared to 45% in the US, 31% in Asia Pacific and 23% in Latin America (see Figure 2). The gap between Europe and the rest of the world will continue to widen. In 2016, Europe is expected to reach a milestone, with half of all gross bookings made via online channels.
In 2015, 47% of travel revenue in Europe will be booked online, compared to 45% in the US, 31% in Asia Pacific and 23% in Latin America (see Figure 2). The gap between Europe and the rest of the world will continue to widen. In 2016, Europe is expected to reach a milestone, with half of all gross bookings made via online channels.
Germany, Italy and Spain will lead the sustained increase in online adoption, as consumers in those countries avail of improved website and mobile experiences from suppliers and OTAs.
The rapid erosion in offline channel share will benefit both OTAs and suppliers. With their faster rate of growth, OTAs will comprise almost a quarter of the total travel market in 2017, a slight increase from 2015. Supplier direct bookings will grow from two percentage points in the same period.
The OTA/supplier battle for share
Increasingly mindful of the threat from OTAs and acknowledging technology’s power to influence consumer behavior, suppliers have been investing heavily in functionality and user experience.
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