With the current economic climate most travel companies are facing declining demand and uncertainty for the future. The latest forecasts in PhoCusWright’s U.S. Online Travel Overview reflect these lower expectations for travel companies’ performance. Travel companies must prepare for a downward trend as fewer people taking trips and companies being more selective towards travel expenses.

PhoCusWright projects the overall U.S. travel market is expected to increase by 4% and 2% in 2008 and 2009, respectively. These are the slowest growth rates since 2003, when the market declined by 8% following the effects of the terrorist attacks in 2001. All segments are expected to be impacted. Also, it is foreseen that in 2010 the market is expected to be recovered again.
The online travel market remains a bright spot in this forecast, the growth however is not as impressive as it used to be. Online travel sales will continue to increase at more than twice the rate of the market as a result of more customers purchasing travel online; comfort level with online purchasing is increasing, perception of online prices as being the lowest, supplier incentives and increased use of mobile devices.

2008 will also be the first year that the U.S. online leisure/unmanaged business travel market will display single digit growth. Gross bookings are expected to increase 9% in 2008 to reach close to 100.00 billion dollar. Hotels will experience the slowest year-over-year online gains (8 percent), while rail will enjoy the highest increase in online sales (28 percent).

The overall travel market encounters flat growth rates, online penetration continues to rise. PhoCusWright estimates that sales from leisure and unmanaged business travel sites will represent 36 percent of the total market in 2008, up from 34 percent in 2007. However, penetration rates are expected to increase by just one percentage point in 2009 to 37 percent.

The full report, rather expensive, is available at the PhoCusWright website. Source of the article is Hospitality Net.

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