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Online Travel Sales to Boom

Jeffrey Grau
Online Travel Sales to Boom Jeffrey Grau
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The online travel market is divided into two segments: leisure/unmanaged business travel and managed business travel (also known as corporate travel). The online booking behavior of unmanaged business travelers is indistinguishable from leisure travelers. Employees of the millions of small- and medium-sized corporations in the U.S. use the same websites as leisure travelers to book their business travel. Thus these two groups of buyers are treated as one customer segment.
 
eMarketer estimates that U.S. online sales of leisure and unmanaged business travel reached a total of $65 billion last year that the total will grow to $122 billion by 2009, a near doubling of the market in just four years. eMarketer's forecast takes into account macroeconomic indicators, historical trends in online travel sales and historical and projected trends in overall retail ecommerce.


 


Estimates of online travel spending in the U.S. are bound to vary from source to source, given the differences in how the market is defined. The estimates from comScore and PhoCusWright are for both leisure and unmanaged business travel sales, the same definition used by eMarketer. The 2005 estimates from these three firms are close, falling within $4.5 billion. Forrester's estimate for 2005 would be higher if it included unmanaged business travel sales. Conversely, Jupiter's estimate, which appears to include managed business travel sales, would obviously be lower if these sales were excluded. Where all the research firms agree is in their estimates that annual sales growth was around 20 percent in 2004 and 2005, and that it will drop off into the teens during 2006 and 2007. 

 


A comparison of online travel sales with total retail ecommerce sales highlights some important trends. In 2005, US online leisure/unmanaged business travel sales were the equivalent of 75 percent of total retail ecommerce sales. In the two years prior to 2005, growth of online travel sales outpaced retail ecommerce sales, but last year was a tipping point. Going forward, eMarketer expects sales growth in online travel to lag behind retail ecommerce. This reversal of fortunes signifies that ecommerce growth markets, such as apparel, health & beauty and home furnishings, are replacing early ecommerce success stories like travel, computer hardware, books and videos as the leading sales drivers.


 


Travel is one of the most mature B2C ecommerce categories, as measured by the percent of total industry sales generated online. By 2010, Forrester predicts that about 46 percent of total travel sales will be booked online, second only to computer hardware/software (55 percent).


 


Breaking out online travel sales by distribution channel also illuminates some of the dynamics shaping the online travel market. Last year, according to PhoCusWright estimates, travel supplier websites (e.g., Continental for airlines and Marriott for hotels) accounted for $35 billion of the $65 billion spent on travel online, amounting to a 54 percent share. Online travel agencies (OTAs) such as Expedia, Travelocity and Orbitz accounted for the remaining $30 billion in sales. By 2007, PhoCusWright forecasts that online travel suppliers will widen the gap by controlling $54 billion of the $94 billion to be spent for online travel, giving them a 57 percent share. The data also show that between 2005 and 2007, online travel supplier sales will grow at a 24.2 percent annual rate compared to online travel agency growth of 15.5 percent.


 


Jeffrey Grau is a senior analyst at eMarketer. This article is drawn from eMarketer's recent report, Online Travel in the US: Pursuing Customer Loyalty. Reach them directly.

It completely blows my mind that people feel they can lie, cheat and steal and still be successful in our industry. After all, we're not in the legal profession. (Sorry lawyers, I couldn't resist!)


The basics of building your industry credibility start with your integrity. First, think about what you're saying before words start flying out of your mouth. If you say that you're going to do something, then do it. As an example, marketers (those of us on the buy side) often compare notes and complain about salespeople that promise the world and don't deliver. While I understand the need to talk a good game, all you'll be doing is filling a hot air balloon if you can't deliver on your word.


The people whom I choose to align myself with -- whether it's a vendor, agency, publisher or strategic partner -- all have earned my trust by consistently delivering on their word. These are the same people that have not only earned my business but have also become trusted partners and friends that I know I can count on to lead my business in the right direction. I often seek these people out as sounding boards whenever I'm starting a new initiative or need help breaking through a plateau. In addition, these are the first people who I recommend to anyone within earshot every chance I get.


Second, admit it when things don't go as planned. Murphy's law dictates that your campaign, business process, communication, technology and anything else that can go wrong will eventually go wrong.


The most common situation for me is that a media campaign performs horribly even though we put our best foot forward and felt confident in its success prior to launch. Not even the rock stars in our business knock it out of the park 100 percent of the time.


In fact, the rock stars probably can write the book on business snafus. The key to coming out ahead even in the biggest FUBAR situation is how you handle it.


Anyone on the other side of the fence from me in these situations knows that if they minimize damage, regroup and analyze the situation quickly, they've just earned their merit badge. My best media reps are the ones that are able to quickly pivot, whether it's to kill a campaign or look for a solution to shift ad dollars to something else. It shows me that they care about our success and are in the business relationship for the long-term, not just for a short-term commission.

If you came out of the womb as a brilliant interactive marketing guru, I'd love to shake your hand. For the rest us who weren't born with such talent, we have to learn our craft. Just like the formal apprentice relationships in many industries, your best bet is to seek out those who are at the top of their game and learn from them.


Start with the general movers and shakers in our industry and learn from them. Read all of the articles that they write, and spend time with them at conferences when possible. Although these individuals are incredibly busy (I think they have figured out how to thrive on two hours of sleep per day), reach out to them and request to interview them for 15 minutes on something you want to learn about. Even though they are busy, most of them are genuine, thoughtful and helpful people with a willingness to impart their wisdom.


The great thing about the interactive space is that in addition to the general movers and shakers, there are so many talented people in a variety of niches. If you're thinking about running a certain type of campaign, it's likely that someone else has done it really well.


For example, when I was new to interactive marketing, I needed to start up an affiliate program for the purpose of lead generation. I had no clue where to start, so I researched who was leading the field. At the time, Declan Dunn was an author, speaker and very successful affiliate marketer. I found a conference where he was speaking one week later and booked a flight and a conference pass to see him.


During one of the networking sessions, I introduced myself to him and requested 30 minutes of his time. He was generous enough to give me a brain dump that lasted nearly two hours! That learning session resulted in the successful launch of the affiliate program three weeks later, and it raked in millions of dollars in business for my company in a short period of time. In addition, Dunn's passion for the interactive space was contagious and sparked my passion for the industry.


Once you've become an expert and have had some degree of success in a given area, pass it on. Fill someone else's bucket with the knowledge that you've gained and it will help you too at some point in your career.

In addition to seeking out mentors, take advantage of the fact that anything you want to learn is right at your fingertips. I've always believed strongly that learning is a lifelong process that kicks into higher gear once you're done with formal schooling. What's ironic is that so few people in our industry take advantage of the tools that are part of our industry.


One of the biggest accelerators of my industry knowledge over the past few years has been the proliferation of blogs. Not only have I found an unbelievable source of great information on a daily basis, but RSS feeds have completely replaced the email newsletters I used to receive. At the same time, this more efficient delivery method has allowed me to consume more information in less time.


Do you have a commute longer than 10 minutes? If so, turn your walk, car or train ride into a learning annex. If you look on my iPod right now, it's filled with business and marketing audio books and podcasts. I have a 45-minute commute each way to the office, and I love it! I'm able to listen to everything from iMedia Summit sessions and interviews with top interactive industry moguls to audio books by great authors like Seth Godin, Malcolm Gladwell, Jack Welch, and more.


Do yourself a favor and get an Audible.com membership, as well as subscribe to all of the podcasts (they are free) relevant to your business that you can get your hands on. Listen during your commute, airplane trips and when exercising. My wife made fun of me a couple of years ago because when we ran our last marathon together, I was listening to Joseph Jaffe's podcasts and panels from iMedia Summits and ad:tech while she was listening to music. My feeling was that if I had to run for five hours, I might as well capitalize on captivated learning time as well as take my mind off the pain.

One of the keys to building your name credibility and exposure in the industry is to get out there and talk to people. No matter how much knowledge and talent you have, nobody will know who you are if you lock yourself up in your office like a hermit. Allocate a certain percentage of your time toward going to conferences and trade shows to not only learn from the content, but also to meet people who you can share ideas with.


The payoff from networking is two-fold. First, our industry is full of fun, interesting people that are great to hang out with. Second, you'll start to build your knowledge base circle of go-to people. As an example, when we were recently looking at email solution providers to bring on board, I was able to pick up the phone and call a dozen marketers and agency executives whom I consider experts on the subject.


Just like I seek out a trusted circle of people who have expertise in certain areas, others in turn call on me for the same sort of advice on a regular basis, and I'm happy to share. This sort of balanced give and take is a key element to making the most of your networking. It helps establish and build life-long business relationships that will pay off throughout your entire career.

Do you ever feel that common sense needs to be the first class that is taught in college?


It usually goes without saying, but common sense tells you that the Golden Rule applies to building your industry credibility. It's surprising to me how many people forget this simple tenet for business and life. Unfortunately, I've seen extremely talented people in our industry flame out because they forgot how to treat the people they do business with.


As you soak up your industry knowledge and flex your newfound muscles, be careful not to leave debris of bugs splattered on your career windshield. As you become more seasoned, focus on giving back to the industry and helping to contribute to the talent pool. Whether it's as a thought leader or simply giving guidance to newbies in the industry, you'll get back much more than you put in.


We are in a highly connected and highly social industry where opinions about individuals are shared freely. Follow the simple motto coined by the movie "Bill and Ted's Excellent Adventure": "Be excellent to each other." It will attract others to you and raise your stature in the interactive community faster than you can imagine.


Sean Cheyney is the VP of marketing and business development for AccuQuote.

Comments

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Commenter: Katie White

2010, March 02

I agree, this is one of the best online travel sites around and should be much higher in the online travel rankings in www.Dozentravel.com. There are many online travel sites out there, but this is one of the tops.