What the future holds: online travel booking in 2019

This article first appeared in the December-January 2018-19 edition of PAX magazine.

While it’s something of a dirty word amongst traditional travel agents, any discussion of travel in 2019 would be incomplete without an examination of online travel booking. It’s a rapidly growing segment of the travel industry and as technology continues to evolve, online booking will only increase.

According to Statista, in Canada, revenue in the online travel booking segment amounted to US$4.9 million in 2018. Of these bookings, the largest segment was hotels with a market volume of US$2.98M in 2018.

But not to worry, dear travel agent – it’s a big market and in many cases, you have the upper hand!

Millennial market

According to PhocusWright, Canadian online travel penetration of the total market will rise from 41 per cent in 2017 to 47 per cent by 2021 – and the majority of that is being driven by younger travellers.

The share of Canadians who only/usually book online rose from 50 per cent in 2014 to 55 per cent in 2017. However, online booking incidence correlates strongly to age: the PhocusWright report found that more than six in 10 Canadian travellers age 18-34 only/usually booked online in the past twelve months, compared to just 44 per cent of travellers 55 and older.

Mobile bookings – smartphones on the rise

In 2017 there were 24.4 million mobile phone internet users in Canada, a figure projected to grow to 29.1 million by the end of 2022. Increasingly, those phones are being used to book travel.

PhocusWright found that worldwide, online travel bookings are increasingly being made by mobile devices, with smartphones outpacing tablets. According to the report, in the fourth quarter of 2017, online travel agencies gained 39 per cent of their bookings on smartphones – a 61 per cent year-over-year increase.

However, booking by phone hasn’t caught on in every market.

While 50 per cent of all Middle East online travel bookings are made by phone, only 22 per cent of such bookings in North America take place by mobile.

The GAFAM

The so-called GAFAM – Google, Amazon, Facebook, Apple and Microsoft – looms larger on the radar of the travel industry, as these brands’ presence in travel grows.

While these five companies are indisputably among the world’s most valuable, they’re in constant flux. This past summer, Apple became the first publicly traded company in the U.S. to hit a stock value of $1 trillion; the milestone was repeated just weeks later when Amazon, however briefly, also crossed the $1 trillion mark.

So where does their presence stand in the travel industry?

For Apple, Microsoft and Facebook, their impact on travel is, at the current moment, peripheral at best: Apple has yet to attempt an entry into travel and Microsoft took a step back following the failure of its Bing Travel search engine in 2011.

Of these three, Facebook has the most direct effect, both as an influencer of travel decisions (a Facebook-commissioned study in 2016 stated that when planning a trip, users spend five times longer on the social network versus travel-related sites and apps) and via its Recommendations tool, an application through which customers can endorse a business and has been touted as a possible channel for direct hotel bookings.

Google & Amazon: trouble looming?

However, Google and Amazon may be a different story.

Since adding Google Flights, Google Hotels and Destinations in recent years, Alphabet (the parent company of the popular search engine), has made the most inroads into travel of the five GAFAM companies. Valued at approximately $739 billion in 2018, the company has the capital, reach and ambition to continue expanding its travel booking tools.

While not currently in the travel business, Amazon has flirted with the market before – and could very well again in the future.

In April 2015, the company launched Amazon Destinations, a tab on its Amazon Local site (which also offered deals on hotel bookings) allowing customers to search for travel deals on products such as weekend getaways available in the Amazon inventory. With few products available, the option was removed from Amazon Local just four months after its launch, when hotel bookings on Amazon Local were also discontinued.

However, given Amazon’s past incursions into the online travel space, there’s speculation that the company will make another run at the market; after all, they certainly have the finances to do just that.

Check in with PAX on Monday (Jan. 14) for part 2.