Online Travel’s Growth — and Future — Is Not Only in Emerging Markets

By Douglas Quinby

The refrain of online travel over the past half-decade is often repeated: as developed markets in North America and Europe mature and slow, travel companies must look abroad to emerging markets for the next big wave of growth. There is no question that online travel markets in developed economies have matured, and the heady double-digit growth rates of the markets’ early years are a thing of the past. A cursory glance at Figure 1 tells a very clear story.

Figure 1

Indeed, whether looking at the total travel market (that is, all gross bookings, purchased both online or offline) or specifically at online channels, emerging markets are growing much faster. Between 2011 and 2015, travel in the developed markets of North America, Western Europe and Australia, New Zealand and Japan in Asia Pacific is growing at a combined compound annual rate (CAGR) of 2.5% vs. 7.4% for all emerging markets. For online travel, the difference is even starker: 7% in developed markets vs. 22% elsewhere (see Figure 2).

Figure 2

However, the significant difference in the rates of online travel growth across emerging and developed markets does not tell the whole story. The global online travel market will grow 47% between 2011 and 2015, adding $156 billion in new gross bookings. Most of that — 55% — is coming not from emerging markets, but developed ones (see Figure 3). In other words, online travel in Asia, Latin America, Eastern Europe and the Middle East may indeed be growing at a substantially faster rate, but the developed markets of North America, Western Europe, Japan and Australia/New Zealand are still adding far more in total new online gross bookings.

Now, this will not last forever. Online travel companies that have invested early in developing their presence in emerging markets must continue to play the long game. But nor should they dismiss the substantial growth opportunities in their own backyard. There is still a lot of travel being booked offline today that will be booked online tomorrow.

The Phocuswright Yearbook 2014: The Year Ahead in Digital Travel is a compendium of the critical trends transforming the global digital travel marketplace. Designed in an easy-to-read presentation format, the Phocuswright Yearbook 2014 provides a comprehensive, data-led overview of the state of digital in travel, featuring global online and mobile travel market sizing and forecasts, regional segmentation with a focus on emerging vs. developed markets, key trends in changing consumer behavior, highlights from landmark research on the U.S. travel advertising market, the rise of sharing and private accommodation, the ascent of the Chinese traveler, and what the future holds for OTAs, airlines, hotels and more. Click here for more information about the Phocuswright Yearbook 2014.

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