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© 2009 PhoCusWright Inc. All Rights Reserved. 1 Myths, Trends & Opportunities PhoCusWright’s Key Directions in Travel Distribution October 7, 2009 Douglas.

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Presentation on theme: "© 2009 PhoCusWright Inc. All Rights Reserved. 1 Myths, Trends & Opportunities PhoCusWright’s Key Directions in Travel Distribution October 7, 2009 Douglas."— Presentation transcript:

1 © 2009 PhoCusWright Inc. All Rights Reserved. 1 Myths, Trends & Opportunities PhoCusWright’s Key Directions in Travel Distribution October 7, 2009 Douglas Quinby Senior Director, Research

2 © 2009 PhoCusWright Inc. All Rights Reserved. 2 PhoCusWright is the travel industry research authority on how travelers, suppliers and intermediaries connect. Methodology: Quantitative / Qualitative  Consumer Behavior  Industry Interviews  Data Analysis

3 © 2009 PhoCusWright Inc. All Rights Reserved. 3 Key Directions in Travel Distribution 1.Where Are We? (And How Did We Get Here?) Impact on consumersImpact on consumers Impact on revenueImpact on revenue 2.Channel Impact: Online vs. Offline 3.The Role for Destination Marketers 4.Vacation Rentals 5.Q&A

4 © 2009 PhoCusWright Inc. All Rights Reserved. 4 How do you think the second half of 2009 will compare to the first half for your organization? 1.A lot worse 2.A little worse 3.About the same 4.A little better 5.A lot better Poll Question #1: 2H 2009 Outlook

5 © 2009 PhoCusWright Inc. All Rights Reserved. 5 Airlines’ Slow, Steady Decline, Punctuated by Calamity! Comparative YoY Change of ARC* Transactions & Sales, Jan 08 – Aug 09 * ARC is the central settlement agency for travel agencies and airlines in the U.S. Data is representative of travel agencies (leisure and corporate, and online travel agencies). Sources: Airlines Reporting Corporation and PhoCusWright Inc. Lehman Brothers files for bankruptcy OTAs remove booking fees

6 © 2009 PhoCusWright Inc. All Rights Reserved. 6 Travel Industry Backdrop: Hotel Trends Change in Domestic Room Demand & ADR Sources: Smith Travel Research and PhoCusWright Inc.

7 © 2009 PhoCusWright Inc. All Rights Reserved. 7 Older, More Frequent Travelers Staying Home in 2009 Note: Totals may not add to 100% due to rounding Source: PhoCusWright’s Consumer Travel Report Part One: Behavioral Trends 2009 Travel Frequency Intentions by Number of Trips Take in 2008 and Age

8 © 2009 PhoCusWright Inc. All Rights Reserved. 8 So Who Did We Lose?

9 © 2009 PhoCusWright Inc. All Rights Reserved. 9 But It Won’t Be Like Last Time: Now a Mature Market, Online Slips in the Downturn -8% 36% Comparative Declines: U.S. Total and Online Leisure/ Unmanaged Business Travel Markets, 2002 vs (US$B) Source: PhoCusWright’s Online Travel Overview Eighth Edition: Update Double-digit decline (%) Single-digit decline (%) Low, single- digit growth (%)

10 © 2009 PhoCusWright Inc. All Rights Reserved. 10 Key Directions in Travel Distribution 1.Where Are We? (And How Did We Get Here?) Impact on consumers Impact on revenue 2.Channel Impact: Online vs. Offline 3.The Role for Destination Marketers 4.Vacation Rentals 5.Q&A

11 © 2009 PhoCusWright Inc. All Rights Reserved. 11 Online Travel Is Falling Out of Favor, Right? At least, according to the media…

12 © 2009 PhoCusWright Inc. All Rights Reserved. 12 For Destination Marketers and Travel Suppliers: What percentage of your leisure marketing expenditure is for online marketing? o Less than 25% o 25-50% o 51-75% o More than 75% Poll Question #2: Online vs. Offline Expenditure

13 © 2009 PhoCusWright Inc. All Rights Reserved. 13 Online Travel Is as Strong as Ever (Stronger, Actually) Unique Visitor Traffic Growth by Online Travel Category, 2Q 2009 vs. 2Q 2007 Sources: PhoCusWright’s Online Traffic and Conversion Report, September 2009, and Compete Inc. Represents transactional and non- transactional sites “Non-transactional travel sites show significant growth

14 © 2009 PhoCusWright Inc. All Rights Reserved. 14 Performance Diverges by Sector and Channel 2Q 2009 Sales Performance by Industry Source: PhoCusWright’s Travel & Finance Outlook ( Air only)

15 © 2009 PhoCusWright Inc. All Rights Reserved. 15 Online Leisure/Unmanaged Business Travel Will Decline Less and Recover Sooner Comparative Growth Rates of the Total, Online Leisure and Offline Travel Markets, (2009/10 preliminary)* * Percentages are preliminary; PhoCusWright will release full year projections in November 2009 Source: PhoCusWright’s Online Travel Overview Eighth Edition: Update Offline (and corporate) takes the biggest hit in 2009, and will be the slowest to return

16 © 2009 PhoCusWright Inc. All Rights Reserved. 16 Source: PhoCusWright’s U.S. Online Travel Overview Eighth Edition and PhoCusWight’s Corporate Travel Distribution Fourth Edition But Don’t Discount Offline Channels Altogether: Travel Agents Own High-Touch: Corporate, Complex Leisure Agency Share of Tour Operator, Cruise and Corporate Travel Sales, 2008 (US$B) $12.5B $14B $101B 70% 74% 77% Agents’ reliance on higher-end segments leave them vulnerable in a downturn

17 © 2009 PhoCusWright Inc. All Rights Reserved. 17 Key Directions in Travel Distribution 1.Where Are We? (And How Did We Get Here?) Impact on consumers Impact on revenue 2.Channel Impact: Online vs. Offline 3.The Role for Destination Marketers When and why do travelers visit destination Web sites?When and why do travelers visit destination Web sites? 4.Vacation Rentals 5.Q&A

18 © 2009 PhoCusWright Inc. All Rights Reserved. 18 Activities, Accommodations and Destination Selection Top the List Travel decisions influenced by a destination Web site Base: DMO users Source: PhoCusWright’s Destination Marketing: Understanding the Role and Impact of Destination Marketers

19 © 2009 PhoCusWright Inc. All Rights Reserved. 19 Destination Sites Must Cater to the Entire Travel Planning Process Percentage of travelers who visit destination Web sites before and after booking travel Key Findings Travelers are equally likely to visit destination Web sites before and after completing a booking Destination marketers must cater to shoppers in the research phase as well as those in the post-purchase phase Source: PhoCusWright’s Destination Marketing: Understanding the Role and Impact of Destination Marketers

20 © 2009 PhoCusWright Inc. All Rights Reserved. 20 Incidence of Internet Usage in Travel Process and Annual Household Travel Spend Base: U.S. travelers(n=1990) Source: PhoCusWright’s Consumer Travel Report Part One: Behavioral Trends Select destination online Shop/purchase online Average annual spend Yes $4,066 NoYes$2,568 No $1,603 It Pays to Play Across the Entire Travel Planning Process

21 © 2009 PhoCusWright Inc. All Rights Reserved. 21 Key Directions in Travel Distribution 1.Where Are We? (And How Did We Get Here?) Impact on consumers Impact on revenue 2.Channel Impact: Online vs. Offline 3.The Role for Destination Marketers 4.Vacation Rentals 5.Q&A

22 © 2009 PhoCusWright Inc. All Rights Reserved. 22 Why Vacation Rentals? 1.It’s a very big market, especially in the South with very unique product: “specialty lodging” 2.More than $500M in venture capital has flowed into the category since 2005 AirBnB, Endless Vacation Rentals by Wyndham, Escapia, FlipKey, FurnishedHomes, HomeAway, LeisureLink, PickPackGo, SecondPorch, TripHomes, VacationRoost, Zonder… 3.The space is changing, moving toward conventional travel distribution

23 © 2009 PhoCusWright Inc. All Rights Reserved % 8% The Size of the Vacation Rental Market Vacation rentals equal 23% of hotel revenue and 8% of the total U.S. travel market Sources: PhoCusWright’s U.S. Online Travel Overview Eighth Edition: Update PhoCusWright’s Vacation Rental Marketplace: Poised for Change

24 © 2009 PhoCusWright Inc. All Rights Reserved. 24 The South Is Home to Major Vacation Rental Markets Source: PhoCusWright’s Vacation Rental Marketplace: Poised for Change Vacation rental market share by state by share of trips Florida is the largest market (by a large margin)

25 © 2009 PhoCusWright Inc. All Rights Reserved. 25 SNAD: Significantly Not as Described Who says we should be wary of vacation rentals?

26 © 2009 PhoCusWright Inc. All Rights Reserved. 26 Source: PhoCusWright’s Vacation Rental Marketplace: Poised for Change VRGs love their vacation rentals. They’re satisfied… Highly satisfied Highly dissatisfied loyal to the category, keen to recommend, and review.

27 © 2009 PhoCusWright Inc. All Rights Reserved. 27 Old School New School Check-in, maid service, etc. Traveler reviews and ratings Flexible length of stay Online rates, availability, payment BYOB&B The key is under the door mat Required one-week length of stay Can’t find it online Change is Afoot: This Ain’t Your Grandma’s Rental Home Legacy practices, presumptions giving way to a new vacation rental paradigm

28 © 2009 PhoCusWright Inc. All Rights Reserved. 28 Let’s wrap it up! To summarize: 1.The worst may be over, but we have a ways to go Expect moderate return to growth as older/frequent travelers return (slowly) 2.Online travel is as strong as ever Online leisure/unmanaged business is declining less and will rebound faster But don’t ignore all other channels – understand the role each channel plays in travel distribution 3.Travelers expect a lot from destination Web sites Address the entire leisure travel planning process, and a range of travel products and services 4.Southern destination marketers: if you are not engaging vacation rental suppliers in your market, you should be! VR is an increasingly professional category your visitors can count on

29 © 2009 PhoCusWright Inc. All Rights Reserved. 29 Thank you! Q&A Select List of Reports Cited PhoCusWright’s U.S. Online Travel Overview Ninth Edition (forthcoming) PhoCusWright’s Online Traffic and Conversion Report (September 2009) PhoCusWright’s Travel & Finance Outlook (August 2009) PhoCusWright Destination Marketing: Understanding the Role and Impact of Destination Marketers (June 2009) PhoCusWright’s Consumer Travel Report (April 2009) PhoCusWright’s Vacation Rental Marketplace: Poised for Change (February 2009) Douglas Quinby Twitter: Douglas_Quinby


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