Online Travel: The Internet is the key sales channel for tour operators

ITB Berlin 2009 Special Press Release: Online Travel
























ITB Berlin

Special Press Release

08 / 2009



ITB Berlin 2009
March 11 to 15


Online Travel: The Internet is the
key sales channel for tour operators







Author: Isabel Bommer






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ITB Berlin 2009 Special Press Release: Online Travel






Market and technology trends in digital travel sales

Social networking, semantic searches, crowd sourcing, microblogging, and video
content: the Internet is developing at lightning pace. Current trends, which
today employ online pioneers and e-business developers, are also directly
relevant for the tourist sector. In particular, in the main travel markets, the
Internet is a targeted way of becoming the most important channel for holiday
sales, information and recommendations. The current uncertain economic
climate will not stop this trend, although it is likely to require strategic
concentration on profitable e-travel applications. The ITB Berlin 2009 highlights
the latest challenges and opportunities in online travel sales – with the ITB
Future Day, over 130 Travel Technology exhibitors and PhoCusWright@ITB
Berlin, the industry’s leading international Travel Technology Congress.

In 2008, Europe’s travel sector posted sales of almost 246 billion euros – the largest
travel market in the world. In 2007, the sector grew twice as fast as the remainder of
Europe’s economy. Almost one third of capacity was ultimately due to Internet sales. The
unique feature was that online travel business showed double-digit growth rates (2008:
19 %) and was considerably faster than offline business and the European travel market
as a whole (2008: 3 %) (Source: PhoCusWright’s European Online Travel Overview
Fourth Edition 2008). Nowadays, two out of five reservations are completed online and
more than half of all European travellers (55 %) uses the Internet for information about
their travel destination, travel providers and special offers (Source: IPK International's
European Travel Monitor).

Experts predict that especially in today’s difficult climate, the concentration on online
business will further grow, because customers react even more sensitively to prices and
travel companies are more sensitive to costs: „Customers search on the Internet for the
best offer for their money and travel companies want to minimize their sales costs”,
comments Carroll Rheem, Director of Research PhoCusWright. „Even if the demand for
travel offers is generally under pressure, as a result in 2009 more business will transfer to
the Internet.”


Market development in Europe

At a closer look, however, the markets and market segments will profit with differing
results:


 Great Britain, Scandinavia: established markets take the lead




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ITB Berlin 2009 Special Press Release: Online Travel





The most established online travel countries – Great Britain and Scandinavia – already
complete 44 and 40 per cent respectively of all holiday bookings online, and this quota
will substantially increase. PhoCusWright expects that by 2010 in these countries half of


all holidays will be booked with virtual transactions. For the medium-sized markets of
Germany and France, despite a high level of Internet business, in the short term it will be
more difficult to boost Internet travel sales. Online travel growth rates are in decline,
although in Germany they are still higher than in France (2008: 27 % or 16 %; 2009: 19
% or 12 %). In 2010, in Germany 33 % and in France 30 % of holidays will be sold
online. The less developed markets in Spain and Italy have specific challenges to
confront: here, the popularity of online business is still comparatively low (2008: 19 %
or 14 %). In Spain, online travel agencies and airlines dominate the scene. Growth is
primarily expected from the Spanish railway that heavily invested in its web presence.
Additionally, direct sales in hotels have also shown movement. In Italy, where only one
third of the population surfs regularly today, the main source of business will remain
classic travel agencies. PhoCusWright anticipates that online coverage over the next two
years will remain below 20 per cent.

 Travel providers win with multichannel and direct sales

Scheduled flight operators are especially driving growth. They are in the process of
making up ground against the low cost carriers (who are reaching the saturation limits
of online business) and achieving new Internet sales records.

The hotel segment is also in an optimal situation. Accommodation providers are today in
a position of organizing their offers so that they can be sold both directly as well as via
online travel agencies, tour operators and packaging systems of upselling partners. Their
online bookings rose in 2007 by 30 per cent.

European railways have also significantly strengthened their online channels and were
able to consolidate their online sales volume in 2008 to 1.2 billion euros.


Tour operators especially focus in the more established European markets on
strengthening and widening coverage for their brands – and the success is tangible: their
online direct business grew in 2007 by 12.4 per cent.

Technology trends:

In 2009, the expectation is that last minute bookings will be strong, because holiday-
makers tend to shy away from early decisions due to uncertainty over the economy.
Anyone who aims for success in online travel must be more than ever in the position of
reacting flexibly to short-term changes in demand. The fundamental success factors are


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ITB Berlin 2009 Special Press Release: Online Travel





high performance applications for dynamic price reduction and packaging and classic
search engine optimization.


In future, there will be more demand for:

 Travel 2.0 – the long tail of travel sales is alive

The interactive Internet has already long since offered the travelling public the option
to be actively involved in tourist information and web content in various different
formats (travel communities, blogs, wikis etc.). Travel communities are booming:
these network holidaymakers in all countries and their travel experiences.
Globosapiens, Virtualtourist, TripsbyTips, Wikitravel: today, a Google search for the
term „travel blog” gives more than 400,000 pages alone. Most of the blogs have no
user and content statistics, as shown today by YouTube, Facebook, Qype or Flickr.
However, in general, communicative travellers post in millions of new comments,
images or videos in no time at all. Nowadays, almost every destination, hotel or
restaurant has an industrious critic in this long tail of user-generated content – and
there is no delay to post praise or criticisms. Currently, uploaded video content only
represents challenges for the companies.

What is clearer than ever: Web 2.0 and Travel 2.0 have long since arrived in the here
and now. The latest phenomena include short reports (microblogs) and short films
(microvlogs) that use limited numbers of characters (140) or film lengths (<
1 minute) and take on the quality of real-time messaging. The community is directly
involved in the experience: here and now, virtual friends can read or see where I am,
what is happening here and how I am enjoying things. It is still a topic for debate as
to what meaning the short formats have for online travel, and how they can be
integrated in a value-oriented way into the interaction with travellers.

• Finding content – the central challenge

The challenge today is less about making guests write or put something online
themselves. The more urgent issue is how to effectively organize the vast amount of
content on the interactive web and to make available the relevant information to
those undertaking searches in a fast and targeted way.

• Social Search – search like your friends, purchase like your friends

Social search approaches are gaining importance. They use, for example, meta data
generated by users as indicators for the relevance of content for specific surfers and
searches. This includes folksonomies, for which web entries were not only used as
key words by a single author according to a fixed scheme (taxonomy), but were
evaluated and tagged by many users. A community key word system is created,
which facilitates greater flexibility for a more precise search with more exact results,

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ITB Berlin 2009 Special Press Release: Online Travel





yet can also lead to fragmenting of categories and (due to absent standards), which
can cause a lack of precision in indexing. Other social search approaches use virtual
relations between people (social graphs) to suggest potentially interesting content
and products on the basis of similarities among users (user behaviour, last pages



visited, social bookmarks etc.). These approaches clearly go beyond classic key word
searches.

• Semantic search – the other way of being found

Just when you think you have mastered the web, the next generation emerges. The
semantic web – also known as Web 3.0 – offers options for adding extra information
(so-called meta data) to available content, to enable search engines to recognize
meaningful links. For instance, an American restaurant web page offers initial
attempts by searching user-generated text contributions according to fixed key
words (good, excellent, poor etc.), awarding points and identifying an evaluation.
EbSemantics (enabling semantic web based e-commerce), a project of the Austrian
Federal Economic Chamber and the affiliated advertising platform, AUSTRIAPRO, as
well as Smart Information Systems aims to make access to e-commerce in the
semantic web easier for small and medium-sized companies – in the early summer of
2008, a working group focused on the development of semantic categories
(ontologies) for tourism. Trustyou and Circos, for instance, search the web for hotel
evaluations in order to recommend venues to guests not only based on price and
availability but also in terms of quality and other criteria. Semantic searching – and
coding content with semantic meta data – will make new demands of providers and
search engine optimizers.


• Omnipresence – boost for mobile applications

Finally, customers have increasing expectations of services and applications that
integrate different sales channels: the mobile Internet is widespread today. The
convergence of Internet, telephony and mobile phone technology is advanced.
Additionally, networking of navigation and other wireless technologies (Navigation,
RFID, 2D and electronic barcodes), social networking and e-commerce is possible any
time and anywhere. The linking of tourist services with mobile applications (mobile
ticketing or payment on trains, in the ski lift or hotel bar etc.) is increasingly common
and offers opportunities for process optimization (e.g. more self services) and
additional sales. The decisive point is to communicate an integrated experience to
the client no matter which channel is selected. However, genuine multichannel
solutions, which seamlessly combine all offers and interaction channels, are still rare.
At the same time, key value-added potential exists precisely in this area also of tourist
e-business: studies showed that customers who interact with the travel company via

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ITB Berlin 2009 Special Press Release: Online Travel





more than one sales channel are „more valuable” than single channel customers.
They exhibit higher purchase frequency and their annual expenditure is about 32 per
cent higher (Source: Shop.org, „Multichannel Report” 2008). Travel companies could
also profit from this with the corresponding concepts.


Trend discussion with travel technology experts – at PhoCusWright@ITB Berlin

PhoCusWhright@ITB Berlin – the leading international travel technology congress –
discusses the opportunities and challenges of the current technology trends for tourism
with industry leaders from around the world. On 11 and 12 March 2009, the debate
entitled „Expanding E-Travel Across Europe” will focus on social networking, the
semantic web and innovative mobile applications in tourism.











ITB Berlin Convention 2009 takes place from March 11 to 14, 2009 in halls 7.3, 7.1 a
and 7.1 b. The PhoCusWright@ITB conference on March 11 and 12 is the leading
international Travel Technology conference-in-conference. This years conference theme is
“Expanding E-Travel Across Europe”. A separate registration is required.


March 11
10.30 – 17.15: PhoCusWright@ITB Bloggers Summit

10.30 – 12.00: Welcome Meeting

12.00 – 13.00: Lunch

13.00 – 14.00: Briefing
Meet with „Five Minutes of Fame“ and PhoCusWright@ITB
speakers

14.30 – 15.30 Uhr: Workshop: The Top Social Media Trends for Travel & Tourism
Moderated by: Stephen Joyce, Publisher, Tips From The T-List, CEO, Sentias
Software Corporation
Panel guests: Darren Cronian, Editor, Travel Rants
Klaus Hildebrandt, Editor-in-chief, FVW International
Kevin May, Editor, Travolution
Mag. Martin Schobert, Head of Research & Development (CIO),
Austrian National Tourist Office


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ITB Berlin 2009 Special Press Release: Online Travel



15.45 – 16.45: Workshop: From Theory to Reality, Putting the Trends to Work for
Your Organization
Moderated by: Stephen Joyce
Panel guests: Darren Cronian
Klaus Hildebrandt
Kevin May
Mag. Martin Schobert
Vasco Sommer-Nunes, Founder and Managing Partner,
mokono GmbH


March 12
10.15 – 19.35: PhoCusWright@ITB: Expanding E-Travel Across Europe
The PhoCusWright@ITB Hospitality Lounge Opens

10.15 – 10.20: Welcome
Speaker: Philip C. Wolf, President & CEO, PhoCusWright Inc.

10.20 – 10.50: Street Talk. VC Talk. Walk The Talk
Moderated by: Gene Quinn, Chairman, PhoCusWright Inc.
Speakers: Marc Duijndam, Partner, Greenhouse Innovation
Jason Katz, Founding Partner, KP Capital LLP
Daniel Smith, Partner, ISIS Equity Partners

10.50 – 11.20: Executive Roundtable: The Perfect Social Travel Guide
Executive
Roundtable: Sebastian Heinzel, CEO, tripwolf GmbH
Jan Kooman, CEO, HotelVideoReviews.com
Diarmuid Russell, Acting Global Online Director, Lonely Planet
Publications
Jerome Touze, C o-Founder & Director und Co-CEO,
WAYN – Where Are You Now? Ltd.
Moderated by: Kevin May, Editor, Travolution

11.20 – 11.50: Executive Roundtable: The Semantic Web Meets Travel

Executive
Roundtable: Jakob Riegger, Co-Founder & CEO, TRUSTYOU
Morris Sim, Co-Founder & CEO, Circos.com Inc.
Moderated by: Tom P. Botts, Partner, Hudson Crossing LLC

11.50 – 12.30: Keynote: Technical Innovation Re-Invents Travel Distribution
Keynote Speaker: Eberhard Kurz, CIO, Passenger Transport Division,
DB Mobility Logistics AG
Talkback
Roundtable: Bret Gordon, President & CEO, Wandrian Inc.
Anton Hell, Managing Director, hit-CONSULT GmbH

12.30 – 12.35: Five Minutes of Fame: Previewing Travel Industry Start-ups (1 von 4)
Speaker: Jean-Marc Godart, Managing Director, deciZium SA

12.35 – 12.55: Break

12.55 – 13.00: Five Minutes of Fame: Previewing Travel Industry Start-ups (2 von 4)
Speaker: Ronald Lenz, Co-Founder & Creative Director, 7scenes



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ITB Berlin 2009 Special Press Release: Online Travel



13.00 – 13.30: Executive Roundtable: From Thought to Finish: Implementation
Realities in a Digital World
Executive
Roundtable: Justin Cooke, Managing Director, Fortune Cookie (UK) Ltd.
Kais Makhlouf, Vice President, Strategic Partnerships and
Emerging Platforms, Nurun Inc.
Diego Ricchiuti, Managing Director, Agency.com
Marco Tosi, Managing Director, LBi IconMedialab
Isabell Wagner, Managing Director, Germany, bigmouthmedia GmbH
Moderated by: Daniel Krisch, Director, Client Services, h2c consulting GmbH,
Market Analyst, Europe, PhoCusWright Inc.

13.30 – 14.05: Executive Roundtable: The Power of Local
Executive
Roundtable: France: Pierre Alzon, Deputy CEO, Voyages-SNCF.com
The Netherlands: Wim Butte, Founder & CEO, Airtrade Holding BV,
Founder & Co-CEO, Vayama.com
UK: Simon Cooper, CEO, On The Beach Ltd.
Spain: Javier Pérez-Tenessa, Founder & CEO, eDreams Inc.
Germany: Hans Simon, General Manager, Onlineweg.de
Touristik GmbH
Moderated by: Michaela Papenhoff, CEO, h2c consulting GmbH, Senior Market
Analyst, PhoCusWright Inc.

14.05 – 14.55: Late Lunch

14.50 – 14.55: Five Minutes of Fame: Previewing Travel Industry Start-ups (3 von 4)
Speaker: Manfred Osthues, Managing Director, protel hotelsoftware GmbH

14.55 – 15.25: Executive Roundtable: Next Generation Excellence in Tourism
Marketing
Executive
Roundtable: Ryan Bifulco, Founder & President, Travel Spike LLC
Roger Carter, Managing Director, TEAM Tourism Consulting
Konrad Plankensteiner, CEO, Tiscover AG
Olaf Schlieper, Managing Director Media Management,
German National Tourist Board
Mag. Martin Schobert, Head of Research & Development (CIO),
Austrian National Tourist Office
Moderated by: Cees T. Bosselaar, Director, Business Development, PhoCusWright Inc.

15.25 – 16.05: Keynote: You Can be Better in Travel
Keynote Speaker: Dale Moss, Managing Director, OpenSkies (a British Airways company)
Talkback
Roundtable: Andrew Owen-Jones, Managing Director, TravelTainment Ltd.
Anne Rösener, Vice President, Central and Eastern Europe,
Sabre Travel network

16.05 – 16.35: Executive Roundtable: Economics of PPC and PPA
Executive
Roundtable: Faisal Galaria, Managing Director, Europe and Asia, Kayak.com
Javier González-Soria, Managing Director, Google Travel Spain
Thilo Hertwig, Executive E-Commerce Manager,
Steigenberger Hotels AG
Ray Witter, Managing Director Europe, Travel AD Network
Moderated by: Carroll Rheem, Director, Research, PhoCusWright Inc.


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ITB Berlin 2009 Special Press Release: Online Travel



16.35 – 17.15: Keynote: Luxury and Romance Meet Technology
Keynote Speaker: Tamara Heber-Percy, Co-Founder, Mr & Mrs Smith Hotel
Collections
James Lohan, Managing Director, Mr & Mrs Smith Hotel Collections
Talkback
Roundtable: Martin F. Jørgensen, CEO, Net Trans Services AS
Richard V. Leutwyler, President, Utell Hotels & Resorts

17.15 – 17.55: Executive Roundtable: Best Practices in Mobile Applications for
Travel
Executive
Roundtable: Pablo Alvarez, Group Innovation Manager, lastminute.com
Stefano Galastri, President & CEO, SIA Internet
Marina Hegemann, Managing Director, TouristMobile GmbH
Michael Lacy, CEO, Handy Group (UK) Ltd.
Gerry Samuels, Founder & Executive Director, Mobile Travel
Technologies Ltd.
Moderated by: Norman L. Rose, Senior Corporate and Technology Analyst,
Travel Tech Consulting Inc.

17.55 – 18.25: Executive Interview
Interviewer: Philip C. Wolf
Interview guest: Marc Charron, Managing Director, Europa, TripAdvisor

18.25 – 18.30: Five Minutes of Fame: Previewing Travel Industry Start-ups (4 von 4)

18.30 – 18.35: Epilogue
Speaker: Philip C. Wolf

18.35 – 19.35: Cocktail Reception


For further information please visit: www.itb-convention.com

You may find further special press releases under www.itb-berlin.com/Media_Centre/Publications



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