The UK on-line leisure travel market will represent 14% of total
leisure travel sales in 2005, according to a new report by
Forrester Research. But it also predicts that only a dozen
suppliers and agents will survive the forthcoming fight for its
estimated 22 million UK on-line leisure travellers.
"Forrester predicts that the UK market will grow from £592
million in 2000 to more than £3.7 billion in 2005," said Jaap
Favier, senior Forrester analyst. "But as new opportunities arise
on-line for UK travel players, the industry itself faces an
overhaul due to the Net. The number of internet users booking
flights online will grow fourfold between 2000 and 2005 from 1.6
million to 5.7 million, and the online flight market in the UK will
account for 45% of the total £3.7 billion industry in 2005. To
reach and keep the British online travel shopper, web travel sites
will have to understand the specific travel needs of the various
online shoppers."
The company says sellers will need to tailor on-line marketing
to focus on one of three emerging internet consumer profiles - what
Forrester terms Hardshells, Backpacks and Softshells.
Hardshells are defined as a small group of big spenders that
form the top 3% of the on-line travellers but represent 20% of all
vacation spending. For this market, airlines will prevail with
exclusive internet offers, and special services like free upgrades
and bonus miles to members booking at their web sites, and sending
personal flight information via WAP phones.
Backpacks are a big group that book cheap fares and actively
search for the cheapest fares using their PC or phone - 8% book
through the internet. The on-line ventures that can consistently
offer Backpacks the cheapest deal, such as no-frills airlines, will
win their business.
Softshells are the majority, representing 56% of the travel
market but spending the least on leisure travel. They use off-line
travel agents to book their leisure trips. High-street tour
operators will use their brochures to promote their web sites,
which are designed to fit their brand experience with rich graphics
and extensive destination information. Selling marginally cheaper
on the web than in the store, the tour operators will stimulate
on-line sales and capture Softshells for repeat business.
"With UK iDTV penetration at 25% of
households by the end of 2000, many Softshells will use this device
to book travel online," added Favier. "Players without a strong
brand will have a very hard time convincing the Softshells that it
is safe to buy their products. In the highly competitive online
leisure market, the pure-plays without venture-capitalist backing
will have no other option but to outspend established brands with
lower fares."
For the Report "The UK Online Travel Dogfight", Forrester spoke
with 35 travel companies, including agents and direct sellers,
about their on-line strategies.
