Friday, February 22, 2008

In a southerly direction

Denmark’s Centre For Regional & Tourism Research has revealed its eighth annual look at the European online travel sector, and while the top-line finding is good news – online is taking a bigger share of a growing market - the surprising thing is that there are few surprises.

[See Travolution news story]

The most notable change when you drill down into the stats is the increasing proportion of business coming out of southern Europe – Italy, Spain, Portugal and Greece. These four territories accounted for 14% of the €49.4bn worth of online sales in Europe 2007 – the region had 12% of the total in 2006 and 10% in 2005.

While the UK and Germany continue to grow, there is evidence that they are maturing – meaning that OTAs and supplier-direct are competing for the business of an established online community, rather than target fresh blood.

Reference CRT’s research with Internet World Stats. The UK and Germany, at the end of 2007, had 66.4% and 64.6% of their population online respectively. If you ignore Portugal which has a surprising 73.1% online, there are new subscribers waiting to get connected – Spain has 56.5% online, Italy 57% and Greece 35%.

[Note, these stats do not differentiate between dial-up and broadband]

While the volumes in UK and Germany will always trounce southern Europe, it will be interesting to see how the global dotcoms approach these increasingly important secondary markets. A lot of the US-owned dotcoms have rethought their approach to Europe since entering the market in the early noughties, realising that what works in one territory can easily bomb in another. Hence the move towards localised marketing.

Similarly, the product range for the OTAs needs to become localised to capture local business. Spaniards tend to holiday in Spain, self-drive is a factor, as is the use of rail over flights. Throw in regulations, credit card use and broadband penetration and you start to build a picture of how complex the European online travel landscape is.

But it’s still growing, and will continue to grow. CRT reckons that in 2009 online travel in Europe will be worth €67bn.

Enough to go around? We’ll see.

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