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U.S. Online Travel Market to Soar

  |  November 10, 2004   |  Comments

Overall growth predicted to rise 70 percent, while online managed business travel expected to almost triple in the next five years.

U.S. online travel sales are projected to reach a year-end total of $54 billion in 2004, comprising just under a quarter (23 percent) of all domestic travel sales, according to the latest market forecast by JupiterResearch. That figure marks a 20 percent year-over-year increase above the 2003 total.

Research from comScore and PhoCusWright corroborate that rosy outlook.

According to Jupiter's report, which tracks sales by major direct distributors and third parties, robust growth is predicted to continue through 2009, reaching a total of $91 billion, or 33 percent of all travel purchased.

Total Online Booking Revenue and
Channel Share, 2003 to 2009
Year U.S. Online
Travel Booking
Percentage of
Total U.S.
Travel Revenue
2003 $46 billion 20%
2004 $54 billion 23%
2005 $62 billion 26%
2006 $70 billion 28%
2007 $77 billion 30%
2008 $84 billion 31%
2009 $91 billion 33%
Source: JupiterResearch Internet Travel Model, 2004

A key driver of projected growth is the surge in online managed business sales, expected to nearly triple from a 2004 total of $12 billion to $32 billion in 2009.

"We're expecting to see significant growth in online managed business travel, driven by a shift from previously unmanaged small- and medium-sized businesses into online managed business travel environments," said Diane Clarkson, the lead analyst of the report.

Online Channel Share of U.S.
Managed Business Travel
Revenue, 2003 to 2009
Year U.S. Online
Managed Business
Travel Revenue
Percentage of
Total Managed
Business Travel
2003 $9 billion 13%
2004 $12 billion 16%
2005 $15 billion 19%
2006 $19 billion 23%
2007 $23 billion 27%
2008 $27 billion 31%
2009 $32 billion 35%
Source: JupiterResearch Internet Travel Model, 2004

The $54 billion figure is markedly higher than Jupiter's estimate of $43 billion estimate a year ago. The rise is attributed to a stronger-than-expected recovery in the overall travel market, Clarkson said. Total travel sales increased only 3 percent from 2002 to 2003.

Other research groups detail similar growth figures in online travel. According to comScore, U.S. online travel sales totaled $38.6 billion through the end of the third quarter of this year, and are projected to top $50 billion by the end of the year. That third quarter figure is 26 percent over $30.7 billion in sales over the same period in 2003.

Meanwhile, PhoCusWright's Online Travel Overview, released in June, projects the online travel market to grow at an even a faster clip over the next two years. "In the U.S.," the report states, "this $190 billion industry will see more than half of its total business booked online by 2006."

"What's driving the growth?" asked comScore SVP Dan Hess. "First of all, there's more people visiting these sites than ever before. Secondly, there's an increased tug-of-war between the direct suppliers and the third parties, which increasingly favors the consumer."

According to comScore data, 62 million unique visitors clicked on travel sites in October 2004, or roughly 40 percent of the U.S. online population of 150 million users. An increasingly evident pattern in that traffic is the growing popularity of travel-specific search engines such as www.sidestep.com, www.kayak.com, and www.mobissimo.com, Hess noted.

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