SOURCE: eMarketer

April 04, 2007 09:00 ET

US Online Travel Sales to Reach $146 Billion

But Year-to-Year Growth Rates Cool, Heating Up Competition

NEW YORK, NY -- (MARKET WIRE) -- April 4, 2007 -- Spurred by the Internet, the travel industry is undergoing a revolution that is redefining the rules of engagement between travel firms and consumers. New travel sites and social networks are proliferating, allowing users to share photos, itineraries and information. Many of these new sites chip away at the expertise that drive people to online travel agencies, which already feel pressure from travel supplier sites like those run by airlines and hotels.

Current industry players must stay alert, otherwise they risk being blindsided by new competitors that fall under their radar, according to eMarketer's report US Online Travel: The Threat of Commoditization (http://www.emarketer.com/Reports/All/Emarketer_2000387.aspx).

For the first time, online travel bookings in the US will surpass offline bookings in volume this year, according to PhoCusWright. In 2007, eMarketer estimates that 41.3 million US households will book travel online, representing 52.5% of all US online households.

This year, US online consumer travel sales (consisting of airline, hotel, rental car, cruise and vacation package reservations) will reach $94 billion, up 19% over 2006, according to eMarketer estimates. Sales will remain strong out to 2010, although growth rates will steadily decline.

A tighter market will exacerbate the fierce competition between online travel agencies and travel suppliers. "To succeed in the brave new world of online travel," says Jeffrey Grau, senior analyst and author of the report. "Industry players must be willing to reinvent themselves to keep up with consumer, technology and competitive forces."

Young people coming of age during the dawn of the Internet have different expectations of the businesses that serve them. They like businesses to come to them, with the right product, at the right time, in the right way. "This will challenge travel providers to transition from a service model based on mass consumption to one centered on creating customized packages for groups of travelers with unique interests and needs," says Mr. Grau.

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