Surge Seen for European Net Travel Market

The European online travel market will soar from the US$2.9 billion racked up in sales last year to $10.9 billion in 2002 -- a nearly 300 percent spike -- according to a study released Monday by Internet travel measurement firm PhoCusWright.

The report found that a number of factors will help drive this growth, including increased Web and wireless device usage rates; beefed up online bill payment, security and privacy measures; wider adoption of flat-rate Net access payment plans; and the rapid development of online travel services.

"Several online players have begun to build significant market share, raising public awareness of travel e-commerce in the process," said PhoCusWright director of information services Kate Rice. "The greatest potential of the Internet is in its global capabilities and nowhere is that more true than in online travel."

To compile data for its assessment of "The European Online Travel Marketplace: 2000 - 2002," PhoCusWright surveyed e-commerce executives at nearly 50 travel-related firms based in Europe.

Airlines on Top

Supplier Web sites have cornered the Net travel niche in Europe, said PhoCusWright. Seventy-four percent of the entire online market share was captured by airlines, tour operators, hotels, railways and car rental companies in 2000. By comparison, independent online travel agencies claimed a 26 percent share of the e-travel pie.

The report also said that airline Web sites accounted for $810 million in sales during 2000, while online travel agencies sold $382 million in airline tickets. The two carriers with the greatest number of Net-based bookings in Europe are easyJet and Ryanair, neither of which allows independent online agencies to sell tickets on their airlines.

Independents Up in U.S.

The European breakdown stands in marked contrast to the U.S. Net travel sector. A study released in the fall from International Data Corp. (IDC) found that the majority of online travel sales will be generated from independent travel agencies and not from sites directly connected with the major airlines in the coming years.

Moreover, IDC said that although Web sites run by airlines accounted for more than half of all online ticket sales in 2000, their share will fall below 50 percent this year and will continue to drop through at least 2004.

Analysts at IDC attributed the forecasted boom for independent travel agencies to their ability to tailor services for travel consumers.

Last Minute Leader

Despite the current supply-side dominance of the sector, European online travel agencies have taken steps to increase their market share.

In August, travel agency Lastminute.com acquired France's largest e-travel group Degriftour in a deal valued at $89 million. The takeover made Lastminute.com the second largest online travel agency in Europe, with estimated combined gross bookings of $116 million.

According to PhoCusWright, Ebookers.com is the top European travel services firm with $150 million in projected gross bookings, while Expedia.co.uk ranks third.