Report finds agents losing ground to online, mobile bookings

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Online travel retailers, including supplier websites and online travel agencies (OTAs), could take about $73 million worth of U.S. bookings from travel agents and travel management companies (TMCs) by 2016, as younger, e-commerce-acclimated travelers account for a growing percentage of travelers, new research suggests.

Phocuswright predicted in its annual Online Travel Overview that mobile bookings, which accounted for just 2% of U.S. travel transactions two years ago, will surge almost fivefold, to about 8% of domestic bookings, by 2016 as hotel and airline companies catch up with OTAs at designing user-friendly mobile apps and mobile websites.

Source: U.S. Consumer Travel Report Sixth Edition
Source: U.S. Consumer Travel Report Sixth Edition

OTAs and supplier-branded websites will boost their share of U.S. travel bookings to 55% in 2016, from 53% last year, while travel agents’ and TMCs’ share will fall 2 percentage points, to 27%, during the same time period, according to the 86-page report from Phocuswright.

(Phocuswright is owned by Travel Weekly parent Northstar Travel Media.)

Suppliers will continue to account for two-thirds of U.S. online bookings for the foreseeable future, while OTAs such as Expedia, Priceline and Orbitz will make up the other third. The percentage of U.S. travel booked through central reservations and walk-ins will hold steady at 28%, the report predicts.

All distribution channels will be helped by the fact that overall U.S. travel spending will rise 6% each year between 2014 and 2016, when it will reach $367 billion.

“Offline channels are growing behind the overall market, as travelers get more habituated to online,” wrote the report’s authors, Robert Cole, Douglas Quinby, Maggie Rauch and Lorraine Sileo. “TMCs are faring better than agencies, providing important services for corporate travelers and adapting with hybrid offline/online models. Travel agents have been slower to embrace change and are depending more on a niche market of affluent travelers who take more complex trips.”

Meanwhile, as online travel grows in increments, its mobile-travel subset will continue to increase by leaps as travelers get more comfortable both shopping for and booking air, hotel, car rental and cruise reservations on their smartphones, according to Phocuswright.

So far, mobile has made its biggest impact by far on hotel bookings through OTAs. While mobile bookings will account for just 5% of the total travel market this year, they will add up to about 20% of hotel bookings on OTAs.

Regardless, overall, mobile gross bookings will have jumped 53%, to $15.9 billion, after climbing 67% last year. Mobile gross bookings will reach $30.4 billion in 2016, when they will account for almost a fifth of the online travel market.

“OTAs and suppliers in each segment — except for cruise and packages — are preparing for a future where mobile owns most online bookings,” the report asserted. “It remains unclear when mobile might reach that saturation point, but consumer habits are changing quickly.”

As for the OTAs, Expedia, which accounts for about 42% of U.S. online bookings, is benefiting from its agreement to take over much of the operations from smaller competitor Travelocity, while Priceline, the world’s largest OTA by sales, continues to boost its U.S. presence through its expanding marketing effort for its division.

Through the first half of 2014, Expedia boosted its gross U.S. bookings by 35% from a year earlier, to $15.3 billion, while Priceline’s U.S. bookings rose 20%, to $3.49 billion. Orbitz increased its U.S. bookings through June by 6%, to $5.21 billion, according to Phocuswright.

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