Report: Online Travel Set To Soar to $64B

In spite of a post-September 11th drop in online travelbookings, Jupiter MediaMetrix (Nasdaq: JMXI) expects online air, car,hotel and cruise sales will reach US$64 billion by 2007,up from $24 billion in 2001.

In fact, the lagging economy is driving travel buyersto the Web in ever-increasing numbers. “A tighteconomy for the past year, coupled with the aftermathof September 11th, is pushing consumers to the Web fortravel deals in penny-pinching times,” Jupiteranalyst Jared Blank told the E-Commerce Times.

In a Wednesday teleconference, Jupiter analyst FionaSwerdlow said that by 2007, 39 million people will purchasetravel online, up from 19 million in 2001. In fiveyears, she added, 22 percent of all travel bookings will be madeon the Web, up from 11 percent last year.

About the only figure that is not expected to increaseis the percentage of online shoppers who buy travel — about 28 percent. “That penetration level within the online population as a whole will remain fairly constant,” Swerdlow noted.

Air Rules

Airline tickets will continue to dominate online travelsales in 2007, according to the Jupiter report,reaching $40 billion in sales or 28 percent of totalonline travel bookings, up from $16 billion and 15percent in 2001.

Online car rental bookings will grow from $2 billionin 2001 to $7 billion in 2007 and will account for 24percent of all car rental bookings, up from 13 percentin 2001. Internet shoppers will spend $15 billion onhotel bookings in 2007, up from $5 billion in 2001.

The cruise and tour sector, which was the last tooffer online booking and remains one of the mostdifficult to translate into a simple onlinetransaction, will grow more slowly, reaching just $1.8billion in sales by 2007.

According to Swerdlow, cruise and tour products aremore complex and generally cost more than air, car andhotel bookings. “It’s just something that consumers are notquite comfortable enough to complete online, thoughthey do lots of research,” Swerdlow said.

Business Travel Boom

Much of the growth of online travel over the next fiveyears will be driven by increased use of corporatetravel booking systems. “We’re looking at a situationwhere the managed travel sector is poised to reallytake off,” Swerdlow said.

Jupiter predicted that managed travel will grow from $5billion in 2001 to $27 billion in 2007. Just 7 percentof corporate travel was booked online in 2001, butthe research firm expects that figure will rise to 26 percent by 2007.

Corporations can save a considerable amount onbusiness travel by using an internal bookingsystem and a set of guidelines. So far, the trick has been toget employees to both use the system and abide by thecompany’s booking rules.

“Enforcing compliance has really been sort of abugaboo,” Swerdlow said. “It’s one thing to install asystem on someone’s laptop, but changing the habits ofthat employee is quite a bit more difficult.”

Investment Rebound?

Swerdlow noted that some companies have tried internalmarketing, while others, such as Honeywell, have toldemployees they might not be reimbursed for travel notbooked through the system.

Similar measures will continue to drive growth in thesector, along with a renewal of investment in corporatebooking systems.

“Companies may have held back oncorporate travel booking systems, but we are expectingthat those investments will start to happen again,”Swerdlow added.

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