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Key Trends in Online Travel Market (2021)

Globally, travelers are increasingly becoming online and more mobile savvy than ever before. As a result, online travel intermediaries (OTAs, tour operators and other providers) market value has experienced rapid growth. The global online travel market was valued at $236.7 billion in 2020. The market is projected to grow at a CAGR of more than 15% during 2021-2025. Companies within the travel industry have faced and continue to face unprecedented challenges and uncertainty due to the COVID-19 pandemic.

Going forward, online travel companies must navigate COVID-19 recovery, serve diverse traveler bases across generations and countries, while making strategic investments in technology and encouraging more sustainable travel. The requirements of travelers are constantly evolving, and hence online travel intermediaries will have to change and adapt to meet future traveler demands. Within the online travel industry, there has been an increasing focus on personalization by online market players as loyalty to a particular brand being replaced by travelers’ loyalty to their own preferences.

Overview of the global online travel market

Overview of the global online travel market

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What are the key regions in the global online travel market?

North America was the leading region in the global online travel market followed by Asia-Pacific, Europe, South & Central America, the Middle East & Africa.

In 2019, the APAC region recorded the highest global online travel market. Increasing digitalization, coupled with a relatively young population and rising income levels, presents an exciting growth opportunity for the online travel sector in this region. Nevertheless, GlobalData forecasts predict that online travel market value in North America will surpass that of the APAC region in 2020. Online travel market value in North America is largely driven by the size of the US market, as, as per GlobalData’s Q3 2019 Consumer Survey, only 10% of US respondents typically book holidays in-store which is in stark comparison to the global average of 17%, whilst 33% of US respondents use OTAs.

GlobalData forecasts reveal that by 2025 the five largest online travel markets in terms of market value will be the US, the UK, China, Hong Kong, and Brazil.

Global online travel market share, by region, 2020

Global online travel market share, by region, 2020

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What is the classification of global online travel intermediaries?

Online travel intermediaries are classified into online travel agents (OTAs), direct suppliers, and ancillary suppliers.

Online travel agents (OTAs)

GlobalData’s Q3 2019 Consumer Survey revealed that 44% of global travelers book with an OTA compared to 17% using an in-store travel agent. The number of travelers using an OTA is likely to accelerate further due to COVID-19. COVID-19 saw the global OTA market value fall, however, according to GlobalData forecasts global OTA market value is forecast to grow at a CAGR of more than 10% during the forecast period.

Direct suppliers

Direct suppliers tend to utilize two distribution channels. Travelers can book directly with the supplier or through a travel agent who acts on the supplier’s behalf. GlobalData’s Q3 2019 Consumer Survey reveals that 32% of global respondents typically book directly with an airline and 36% book directly with the lodging provider

Ancillary suppliers

Ancillary services refer to the extras that traveler’s book along with their trips with the fundamental purpose to provide more enjoyment and satisfaction. In the travel arena, travelers are gravitating towards online applications to book all parts of their trips and ancillary suppliers must adapt to accommodate this.

What are the market dynamics in the global online travel market?

Globally, the value of online travel intermediaries (OTAs, tour operators, and other providers) has experienced substantial growth over the recent past which has been facilitated by increased digitization, greater mobile phone usage, and an increase in Internet users worldwide.

COVID-19 presented an unprecedented challenge to the travel industry as countries closed borders and restricted both domestic and international travel. From 2019 to 2020, the global market value of online travel intermediaries declined by more than 50%. However, the impact of COVID-19 is likely to be more beneficial in the long term and even accelerate the uptake of online travel. COVID-19 has highlighted the need to reduce physical contact and consumers are now more likely than before to carry out a transaction online rather than in a physical store.

On a global level, online air sales overtook that of offline in 2019. The growing dominance of air sales through online means has been an ongoing trend in countries like the UK and the US, where online sales exceeded offline as early as 2015. However, in China offline air sales is still dominant, despite having a developed digital landscape and one of the world’s largest OTAs, Trip.com. Furthermore, in-store bookings are likely to continue to decline as online options gain traction and as technology continues to be adopted.

What are the key themes impacting the online travel industry?

Social media & influencers

Social media plays a significant role in travel companies’ customer service. The mutual benefits of easy brand accessibility via Twitter, Facebook, YouTube, and other platforms allow for easy customer contact and engaging social interaction, providing brand building and widescale contact through multiple channels. GlobalData’s Q1 2021 Consumer Survey shows that 25% of global respondents consider the ability to engage directly with a brand as an essential or key driver of purchase.

Influencers are a growing trend within the travel industry, especially as many travelers trust the content posted by influencers rather than online advertisements or brands themselves. Travel influencers are holding greater power over their followers and could be a key tool to increasing awareness of a travel company or destination.

Personalization

One of the biggest trends in the travel and tourism industry that has emerged from the digital revolution is that of personalization. Loyalty to a particular brand is increasingly being replaced by travelers’ loyalty to their own preferences. As per GlobalData’s Q1 2021 Consumer Survey 53% of global respondents were ‘always’ and ‘often’ influenced by how well a product/service is tailored to their needs and personality.

ESG – environmental, social, and governance

The importance of sustainability is increasing both globally and within travel and tourism, which raises both challenges and opportunities for online travel companies. Within travel and tourism, several consumer-driven trends have emerged to incorporate more sustainable travel. These demonstrate travelers’ increasing interest to embrace sustainable practices such as preferences for more environmentally friendly transport choices, eco lodging, slow travel, and consideration of businesses’ sustainability credentials. In response, online travel brands should offer information and booking options for environmentally friendly and sustainable travel choices.

Big data

The travel and tourism industry has collected a huge amount of customer personal data over the past few years and if this can be utilized effectively, it can assist businesses in creating a more captivating, personalized online experience. Collecting and harnessing data has been at the core of OTAs in order to differentiate themselves, first from offline travel companies and then from digital competitors by improving the quality of their offering and satisfaction with a tailor-made trip.

Travel apps

Comfortable with technology, digitally savvy Gen Z and Millennials’ purchasing habits are especially driven by advanced digital features. Players will need to adapt and invest in the latest technologies to attract this demographic segment. However, travel businesses embracing online travel platforms must not alienate those less comfortable with technology. Technology advancements have empowered the development of travel apps. As such, travel apps have become commonplace within the industry and on traveler smartphones.

Mergers and acquisitions

The rationale for M&A within online travel companies varies as some large corporate entities sell large assets to pay off debts or increase liquidity as the industry tackles post-pandemic recovery. Other online travel businesses have seen it as an opportunity to develop products and technology, creating a more diverse service portfolio and user experience.

Who are the key players in the global online travel market?

In 2020, by revenue, Booking Holdings (OTA) was the leading market player followed by Expedia Group (OTA), easyJet (airline), Airbnb (lodging provider), British Airways (airline) and Trip.com (OTA).

Global online travel market, by key players

Global online travel market, by key players

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Market report scope

Market size (Year – 2020) $236.70 billion
Growth Rate CAGR of >15% from 2021 to 2025
Base year for estimation 2020
Segmentation by Regions North America, Europe, Asia-Pacific, South & Central America, Middle East & Africa
Forecast period 2021-2025
Key players Booking Holdings – OTA, Expedia Group – OTA, easyJet – Airline, Airbnb – Lodging Provider, British Airways – Airline andTrip.com – OTA

Scope

GlobalData’s Tourism Insights Report “Key Trends in Online Travel” looks at the key trends & issues within the online travel space, as well as the opportunities and threats. It also offers an insight into key destinations, traveler groups, and the strategies of leading companies, as well as disruptors.

Reasons to Buy

  • Gain an insight into the online travel industry’s leading players.
  • Understand the key traveler types of online travel companies can look to attract
  • Look at the impact of the COVID-19 pandemic on this industry
  • Gain a detailed understanding of the key trends, issues, and challenges facing online travel operators

Companies Mentioned

Airbnb

Booking Holdings

Expedia

Trip.com

Bidroom

TripActions

TripAdvisor

Table of Contents

Table of Contents

Snapshot

Key Market Trends Influenced by COVID-19

Key Market Trends

Company Case Studies

Disruptors

M&A

Challenges and Opportunities

Appendix

Frequently Asked Questions

The global online travel market was valued at $236.7 billion in 2020.

The global online travel market is projected to grow at a CAGR of more than 15% during the period 2021-2025.

Key regions of the global online travel market are North America, Asia-Pacific, Europe, South & Central America, the Middle East & Africa.

Key players in the global online travel market include Booking Holdings (OTA) was the leading market player followed by Expedia Group (OTA), easyJet (airline), Airbnb (lodging provider), British Airways (airline) and Trip.com (OTA).

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