European Online Travel Overview Eleventh Edition Written and Researched by Charuta Fadnis January 2016
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REPORT European Online Travel Overview Eleventh Edition Written and Researched by Charuta Fadnis January 2016 Europe’s economy continues to recover from the recession. Thanks in part to increased consumer spending, the region’s travel industry reached new heights in 2015, driven by exceptional growth in the online market. Phocuswright's European Online Travel Overview Eleventh Edition provides comprehensive analysis, sizing and forecasts for the Europe's total and online leisure and unmanaged business travel markets. The report examines key segments and channels, and also includes access to dedicated reports focusing on the following six individual European travel markets: France, Germany, Italy, Scandinavia, Spain and the U.K. This content is published by Phocuswright Inc., a wholly owned subsidiary of Northstar Travel Media, LLC.The information herein is derived from a variety of sources. While every effort has been made to verify the information, the publisher assumes neither responsibility for inconsistencies or inaccuracies in the data nor liability for any damages of any type arising from errors or omissions. All Phocuswright publications are protected by copyright. It is illegal under U.S. federal law (17USC101 et seq.) to copy, fax or electronically distribute copyrighted material beyond the parameters of the License or outside of your organization without explicit permission. © 2016 Phocuswright, Inc All Rights Reserved. European Online Travel Overview Eleventh Edition January 2016 About Phocuswright is the travel industry research authority on how travelers, suppliers and intermediaries connect. Independent, rigorous and unbiased, Phocuswright fosters smart strategic planning, tactical decisionmaking and organizational effectiveness. Phocuswright delivers qualitative and quantitative research on the evolving dynamics that influence travel, tourism and hospitality distribution. Our marketplace intelligence is the industry standard for segmentation, sizing, forecasting, trends, analysis and consumer travel planning behavior. Every day around the world, senior executives,marketers, strategists and research professionals from all segments of the industry value chain use Phocuswright research for competitive advantage. To complement its primary research in North and Latin America, Europe and Asia, Phocuswright produces several highprofile conferences in the United States and Europe, and partners with conferences in China and Singapore. Industry leaders and company analysts bring this intelligence to life by debating issues, sharing ideas and defining the everevolving reality of travel commerce. The company is headquartered in the United States with Asia Pacific operations based in India and local analysts on five continents. Phocuswright is a wholly owned subsidiary of Northstar Travel Media, LLC. © 2016 Phocuswright Inc. All Rights Reserved. 2 European Online Travel Overview Eleventh Edition January 2016 Table of Contents Key Findings 5 Overview 6 European Online Travel Market 8 Share and Trends by Country 16 Suppliers 20 Airlines 20 Traditional Airlines 21 LowCost Carriers 22 Hotels 23 Rail 25 Car Rental 26 Tour Operators 26 Online Travel Agencies 27 Mobile 30 Metasearch 32 Methodology 33 Links to CountrySpecific Reports 34 Endnotes 35 © 2016 Phocuswright Inc. All Rights Reserved. 3 European Online Travel Overview Eleventh Edition January 2016 Figures and Charts Fig. 1: European Gross Domestic Product Growth (%), 20092015 7 Fig. 2: European Travel Market Gross Bookings (€B), 20072017 8 Fig. 3: European Total and Online Travel Markets (€B) and Growth Rates (%), 20132017 9 Fig. 4: Online Travel Penetration by Region, 20132017 10 Fig. 5: European Travel Market, Share by Channel, 20132017 11 Fig. 6: European Online Travel Market (€B) and Growth by Channel (%), 20132017 12 Fig. 7: European Online Travel Market, OTA vs.SupplierDirect Share, 2015 & 2017] 13 Fig. 8: European Online Leisure/Unmanaged Business Travel Market, OTA and Online Direct Bookings 14 (€B) by Segment Fig. 9: European Online Direct Travel Market, Share by Segment, 2015 15 Fig. 10: European Travel Gross Bookings by Segment (€B) and Channel Share (%), 2015 16 Fig. 11: European Total and Online Travel Gross Bookings (€B) and Online Penetration (%) by Market, 17 2015 Fig. 12: Unemployment Rates (%), EU 27 Average vs. Key Markets, 20112016 18 Fig. 13: European Online vs. Total Travel Gross Bookings, Share by Market, 2015 19 Fig. 14: European Total and Online Travel Markets, Compound Annual Growth Rates (%) by Market, 20 20152017 Fig. 15: European Airline Gross Bookings (€B) by Channel and Online Penetration (%), 20132017 21 Fig. 16: European Traditional Airline Gross Bookings (€B) by Channel and Online Penetration (%), 22 20132017 Fig. 17: European LowCost Airline Gross Bookings (€B) by Channel and Online Penetration (%), 23 20132017 Fig. 18: European Hotel Gross Bookings (€B) by Channel and Online Penetration (%), 20132017 24 Fig. 19: European Rail Gross Bookings (€B) by Channel and Online Penetration (%), 20132017 25 Fig. 20: European Car Rental Gross Bookings (€B) by Channel and Online Penetration (%), 20132017 26 Fig. 21: European Tour Operator Gross Bookings (€B) by Channel and Online Penetration (%), 2013 27 2017 Fig. 22: European Online Travel Agency Gross Bookings (€B) and Growth (%), 20132017 28 Fig. 23: OTAs in Europe, Gross Bookings (€B) and Share by Region of Operations (%), 20132017 29 Fig. 24: OTAs in Europe, Gross Bookings (€B) and Share by Region of Operations and Growth (%), 30 2014 & 2015 Fig. 25: European Mobile Gross Bookings (€B) and Mobile Share of Online Gross Bookings (%), 2013 31 2017 Fig. 26: European OTA and Supplier Mobile Bookings (€B), 20132017 32 © 2016 Phocuswright Inc. All Rights Reserved. 4 European Online Travel Overview Eleventh Edition January 2016 Key Findings ■ The European travel market is projected to reach €264 billion in 2015, a 5% increase over 2014. Economic growth will be slow but steady over the next two years. Aided by low inflation, falling unemployment and rising consumer confidence, travel revenue will continue to increase, reaching €282 billion by 2017. ■ More than half of all travel revenue in 2015 is generated from offline channels. As online penetration grows, offline share of revenue will drop to 48% by 2017. European travelers are embracing digital booking channels faster than any other region globally. Online revenue is projected to reach €125 billion in 2015 and will grow at a healthy 8% pace annually through 2017 to surpass €146 billion. ■ The U.K. is now Europe's largest travel market with €59 billion in gross bookings in 2015, of which €33 billion was booked online. Its high online adoption rate of nearly 57% is second only to Scandinavia's 63%. As these two markets reach saturation, Germany, Italy and Spain will become the new growth leaders in online adoption. ■ In 2015, 57% of online gross bookings are derived from supplierdirect channels; this will drop only marginally to 56% by 2017. ■ With the exception of LCCs (88% online), all other segments are highly dependent on offline or other channels, with at least 60% of their sales coming from these avenues. ■ Total airline revenue will reach nearly €113 billion in 2015 and grow to €121 billion by 2017. Online penetration is at just below 50%. In 2015, airlines' online direct revenue is expected to be €40 billion, 59% of which is generated by traditional airlines. ■ Traditional airlines continue to strengthen their online offerings and are being rewarded with a slow but steady share shift from OTAs to direct online channels. By 2017, online direct share of total traditional airline revenue will increase to 28%, and corresponding OTA share will decline to 12%. ■ Travelers booked €20 billion in LCC revenue in 2015. Growing at 8% annually, LCC revenue is forecast to reach €23 billion by 2017. EasyJet comprises a third of the market, and together with the secondlargest LCC, Ryanair, controls 52% of the market. Both of these LCCs are making calculated moves to attract business travelers by distributing inventory through the global distribution systems (GDS) and offering fare bundles that might appeal to corporates. ■ Hotel gross bookings will increase approximately 3% annually and are expected to reach €95.2 billion in 2017. Because hotels are a highly fragmented marketplace offline channels dominate distribution and generate more than 65% of revenue. Online adoption is expected to grow to 38% in the next two years and supplierdirect channels will benefit more than OTAs from this shift. ■ Hoteliers aspiring to reduce their dependency on OTAs are looking at alternatives like Instant Booking by TripAdvisor but the partnership with Booking.com could dilute its value proposition. Other alternatives include Google's Hotel Ads commission program, Trivago © 2016 Phocuswright Inc. All Rights Reserved. 5 European Online Travel Overview Eleventh Edition January 2016 Direct Connect (currently being piloted) and Accor's new distribution platform. ■ Rail remains an important part of the travel ecosystem in Europe, and is projected to rise 5% in revenue to €33 billion by end of 2015. Steady growth is expected in 2016 and 2017, with gross bookings projected to rise by more than one billion euros annually. ■ With some travelers shying away from car ownership in favor of sharing/hailing a car for short trips and renting for longer trips, the car rental industry is in for moderate growth. The market is projected to exceed €11 billion in 2015 and gain a further 23% each year before hitting €12 billion in 2017. ■ Tour operators are experiencing a small renaissance as travelers return to package holidays after a few years of shunning them. The overall tour operator market will grow to €55 billion in 2015 and €59 billion by 2017. Despite heavy investment in digital channels by large tour operators such as Thomas Cook, the sector remains stubbornly offline, and online share is fairly stagnant at a quarter of total revenue. ■ OTA gross bookings increased by 16% in 2015 to €54 billion. Revenue will continue to increase 910% annually over the next two years, reaching €64 billion in 2017.