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Riding the waves of change in online travel

NEWS BITES What's Making The News Out There

Riding the waves of change in online travel The online travel landscape came under the microscope at Wired Travel Asia, a travel distribution and marketing conference held in Singapore late October. What's making the news? P@SSPORT shares the highlights. First the good news. Online travel is growing and set to boom further as broadband access spreads throughout Asia and consumers become savvier on the Web. Mr Ram Badrinathan: Trends in India tell the story

According to PhoCus Wright, the Asia Pacific online travel market is projected to more than double after 2007 to US$25.6 billion, a 112% growth from 2004-2007 expectations.

India, one of the fastest-growing online markets, will grow in size from US$295 million in 2004 to US$2.004 billion in 2008, says the leading online travel researcher. Now the bad news. Not everyone's going to be able to benefit from the explosive growth, especially if they do not adapt to the changing dynamics and consumer behaviour and invest in new marketing platforms. Enter the traditional travel agent. The National Association of Travel Agents Singapore (NATAS) Holiday 2006 Travel Fair recorded close to 60,000 visitors and chalked up sales of S$25 million. While this is evidence that bricks-and-mortar agents are still alive and well, there are serious questions about some agents' ability to ride through what is the next crest of the online travel wave. Online bookings clinch corporate travel market in US Corporate travel is being consolidated in the hands of global giants which are channelling their business through travel management companies that have international presence and clout, and offer online booking tools and platforms. Ms Bev Heinritz, Senior Vice President and General Manager of GetThere, a Sabre company focused on corporate online travel, said its online tool is used by more than 3,000 companies globally with over 30 million profiled users. More than US$6.3 billion in corporate travel was booked in 2005 with GetThere. Online travel is now mainstream, she said. Quoting PhoCusWright's Corporate Travel Distribution Report 2006, she said that next year will see more corporate travel booked online than offline for the first time in the US. "We will cross the chasm in 2007," she said.

Ms Bev Heinritz: Corporate travel is shifting from offline to online


P@SSPORT - News Bites

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In 2006, 49% of corporate travel will be booked online while in 2007 the percentage will rise to 55%, tipping the scales for the first time. Virtual giants taking on world travel market Experts also predict the worldwide leisure travel landscape will be transformed with the expansion of online giants beyond their US shores. According to Mr Brett Henry, Vice President, Centres for Excellence of Abacus International, the four global names in online travel - Expedia, Cendant, Sabre and Priceline - are looking outside the US for growth. The US now accounts for only 28% of Sabre's total market share of 51%; 21% of Cendant's 36%, 8% of Priceline's 32% and 15% of Expedia's 22%. All are present in the Asia/Pacific market already. And if you think these giants are big, Mr Henry said watch out for the emergence of the 10,000 pound gorillas in the shape of search engines such as Google, Yahoo and AOL which are beginning to leverage their travel content. Yahoo, valued at US$40 billion, has FareChase and Trip Planner as well as other features such as RSS, map, email and IM integration; AOL (US$60 billion), has Pinpoint Travel, while Google (US$115 billion) has an air search tool, local results for hotel search and a host of features that will serve it well in the travel market. Not just the "old" Internet, but the new: Web 2.0 Then there's Web 2.0, the latest phenomenon on the Internet which is seeing the mushrooming of social networking sites such as Trip Advisor and IgoUgo or Yahoo Answers where you ask a question about travel and others share their recommendations with you. Mr Jim Donnelly, who founded IgoUgo and then sold it to Sabre, said people want to belong to networks and communities - travel networking sites allow them to do so. "Human inspiration is a strong area to own, particularly in the online environment. In true underdog fashion, IgoUgo used "human inspiration" to grow a meaningful online travel brand," said Mr Donnelly who has since left IgoUgo. IgoUgo members share their views and typically take five hours to complete a travel journal, said Mr Donnelly. They receive merit points which can then be redeemed for travel awards. The future of online travel in Asia-Pacific Meanwhile, taking Australia as a forerunner of things to come for markets in Asia - online watchers in the region generally look Down Under for signs of things to come - online intermediaries are making their presence felt in a market estimated at US$4.1 billion in 2006, according to PhoCusWright. Of that, Mr Ram Badrinathan, Analyst for Asia/Pacific of PhoCusWright, said online intermediaries will have a 16% market share in 2006 compared with 7% for traditional travel agents. Airline direct will continue to dominate the channel at 67% while hotel direct will account for 10%. The landscape is already changing in India. Mr Badrinathan said sites like, a leading travel website in India, will take five years to achieve in business what Cox & Kings took more than 200 years to realise. While supplier channels will continue to dominate the travel distribution landscape, Mr Badrinathan said online travel intermediaries in India will achieve traction at the expense of traditional travel agencies.

Mr Ram Badrinathan

Online intermediaries in India are expected to grow their share of the channel from 7% in 2005 to 10% in 2008 while traditional travel agencies will decline in share from 32% to 25%, predicts PhoCusWright.

Speaking up for the traditional travel agents, Mr Robin Yap, Regional Director-Asia, Insight Vacations, said travel agents had to adapt and transform or perish. "Become the purple cow," he said. "Find your niche and adapt." Next month: Special focus on online travel with an interview with Mr Scott Blume, CEO of Zuji.

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Riding the waves of change in online travel  

Online travel proj to more than double