Offline travel market shrinks but at slower rate

Offline travel market shrinks but at slower rate
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Sales of travel through bricks and mortar agencies will continue to shrink over the coming years but at a slower rate than previously seen, according to research firm PhocusWright.

Its forecasts show Australia and New Zealand's online travel market will grow between 8% and 9% between 2013 and 2015 year on year – compared with 13% reported in 2011. Online penetration is expected to rise from 41% in 2013 to 44% in 2015, meaning 56% of the ANZ travel market will still be offline. 

While the projections mean ANZ will hold onto its position as the market with the highest online penetration in Asia Pacific, they also demonstrate a slowdown. 

“The offline travel market is shrinking but not at particularly fast rate,” research analyst Chetan Kapoor told Travel Today.

“Once any market reaches nearly 40% online penetration, the growth of online begins to slow and it won’t be as fast-paced, so the offline market won’t be losing share that fast.”

The corporate sector plays a large role in slowing the advance of online due to the complexity of its policies which are difficult to transition to an online platform.

“Australia has a very strong corporate travel market and a lot of that continues to be served by travel management companies offline,” Kapoor revealed. “We aren’t seeing any dramatic shifts in that segment to go online and that will be one of the factors why online penetration won’t move as fast as other markets.”

However, some companies such as Egencia are seeing success in shifting corporate travel online. But the predominant players continue to conduct the majority of their business offline.

Meanwhile, Kapoor believes the “jury is still out” on the success of the increasingly popular hybrid model which sees agencies mix a variety of offline and online distribution channels.

“At the end of the day it all boils down to marketing efforts,” he said. “Helloworld is a relatively new brand, even though it is backed by quite a prominent brand in ANZ. So basically it all depends of marketing efforts of that company.”

But he underlined the need for the likes of Wotif, Webjet, Expedia and Booking.com to be “more relevant” than ever in the marketplace as the online threat from former bricks and mortar competitors gathers momentum.

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