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Travel Booking - US - May 2016

"The US travel market is stable and growing. As spending on leisure travel increases, so too will the market for travel booking. Booking direct with suppliers continues to be the norm, though OTAs (online travel agencies) are aggressively competing for share. As loyalty to travel supplier brands is in question due to devaluing of loyalty programs, OTAs stand to benefit. "
- Fiona O'Donnell, Director – Multicultural, Lifestyles, Leisure and Travel

This report discusses the following key topics:

  • Online booking dominates, suppliers more likely to win the final transaction
  • More important than price, good experiences drive repeat use of travel booking sites
  • Lack of differentiation among leading OTAs

Regardless of travel type, travelers are significantly more likely to choose the online route to travel booking. The ease and convenience of searching multiple sites via traditional computers or via mobile devices has lead travelers to adopt a “do-it-yourself” approach to searching and selecting their travel. Due to the popularity of self-directed travel booking, this has prompted the question of whether travel agents and live reservation agents are relevant in today’s connected world. Despite a proportionally smaller user base, about one in fivetravel bookers feel travel agents plan trips that result in better travel experiences and that they plan a better trip for the money, which indicates room for the travel agent model.

The Report covers the US travel booking industry related to how consumers book travel-related transportation, accommodations, and tours/activities; what drives their choice; and attitudes toward travel booking and innovations. Booking methods covered include:

  • Online – Direct with suppliers and via OTAs
  • Offline – In person, via phone, and travel agents
  • Third-party OTAs
  • Direct with suppliers

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

          • The issues
            • Online booking dominates, suppliers more likely to win the final transaction
              • Figure 1: Typical travel booking methods – Online versus offline and direct versus third party, March 2016
            • More important than price, good experiences drive repeat use of travel booking sites
              • Figure 2: Most recent travel booking considerations – Top three, March 2016
            • Lack of differentiation among leading OTAs
              • Figure 3: Perceptions of select online travel agencies – Scatter plot, indexed to average, March 2016
            • How important is mobile for travel booking?
              • Figure 4: Most recent online travel booking method, March 2016
            • The sharing economy emerging to be a contender
              • Figure 5: Attitudes toward Airbnb, by household income, March 2016
            • The opportunities
              • Room for innovation in travel booking online and on via mobile devices
                • Figure 6: Select attitudes toward travel mobile apps, March 2016
              • Don’t discount the value of travel agents
                • Figure 7: Attitudes toward travel agents, by generation, March 2016
              • Email subject lines, frequency needs to be individually tailored
                • Figure 8: Attitudes toward email marketing, March 2016
              • What it means
              • The Market – What You Need to Know

                • Travel booking is a fragmented market across method and platform
                  • Travel booking growth expected to continue
                    • Macroeconomic indicators support growing travel market
                      • Millennials are key consumers of the travel booking market
                        • Seasonality and mobile booking will be key drivers
                        • Market Breakdown

                          • Travel bookers have a variety of options
                            • Figure 9: Typical travel booking methods – Online versus in person nets, March 2016
                          • Booking online direct is dominant, OTAs compete to increase share
                            • Figure 10: Typical online travel booking methods – Direct versus OTA, March 2016
                          • OTAs a dynamic market – Expedia dominates in the US
                            • Figure 11: US online travel agency market share, 2013 and 2016 (est)
                        • Market Perspective

                          • Vacation and tourism growth to continue at 3-4% per year
                            • Figure 12: Best- and worst-case forecast value sales of vacations and tourism, at current prices, 2010-20
                          • Millennial travelers propel growth in travel booking
                            • Seasonality is a key driver of travel booking
                              • Domestic business travel has slowed
                              • Market Factors

                                • Despite some reservations travel spending will continue to grow
                                  • Figure 13: Consumer Sentiment Index, January 2007-March 2016
                                • Mobile phone apps expected to drive travel booking sales
                                • Key Players – What You Need to Know

                                  • Accommodations, tours, and activities are important aspects of OTA portfolio
                                    • A mixed portfolio for OTAs
                                      • ePerformance analysis sheds light on OTAs’ email marketing strategies
                                        • Mobile for travel booking and travel apps yet to make their mark
                                          • Personalization and advertising on visual social media platforms has potential to drive travel booking
                                          • Online Travel Agency Spotlight

                                            • Overview
                                              • Priceline Group
                                                • Expedia, Inc.
                                                  • TripAdvisor, Inc.
                                                    • Email strategies of top OTAs
                                                      • Email distribution centers around the middle of the week
                                                        • Figure 14: Distribution of top OTA email volume, by day of week, January-March 2016
                                                      • Distinct strategies revealed based on day of week analysis of email volume
                                                          • Figure 15: Brands’ top mailing days, day of the week, January-March 2016
                                                        • Unique brand strategies also reflected in proportion of daily email volume, by brand
                                                          • Figure 16: Proportion of daily email volume, by brand, January-March 2016
                                                        • ePerformance overlap and read rate analysis
                                                          • Priceline.com has tight competition from Expedia and Travelocity
                                                            • Figure 17: Priceline.com ePerformance – Overlap analysis and competitor read rates, January-March 2016
                                                          • Expedia dominates Orbitz subscribers’ inboxes; Travelocity emails also popular
                                                            • Figure 18: Orbitz ePerformance – Overlap analysis and competitor read rates, January-March 2016
                                                          • Booking.com and TripAdvisor emails reach one quarter of Expedia’s subscriber inboxes; Travelocity reigning champion of read rates
                                                            • Figure 19: Expedia ePerformance – Overlap analysis and competitor read rates, January-March 2016
                                                          • Travelocity is highly competitive to TripAdvisor
                                                            • Figure 20: TripAdvisor ePerformance – Overlap analysis and competitor read rates, January-March 2016
                                                          • Travelocity and KAYAK appear to have successful email marketing strategies
                                                            • Figure 21: Travelocity Mobile ads, March 2016
                                                        • What’s Working?

                                                          • Travel research and booking via the same platform
                                                            • Visual platforms are a powerful influencer for travel booking
                                                              • Foreign acquisitions are now norm
                                                              • What’s Struggling?

                                                                • Areas of improvement and ancillary revenue generation
                                                                  • Challenges remain with mobile booking
                                                                    • Fast and furious – Travel bookers want instant results
                                                                      • Need for one powerful travel app
                                                                        • Brand loyalty up for grabs? Loyalty programs become stricter
                                                                        • What’s Next?

                                                                          • Tour and activities are important components of the travel experience
                                                                            • Sharing economy is emerging as a force in its own right
                                                                              • Smarter travel booking sites
                                                                                • Personalized offers
                                                                                  • The dust will take some time to settle down before winners emerge
                                                                                    • End-to-end innovation, agile business strategies top priority for OTAs
                                                                                      • Need for creativity in travel booking
                                                                                        • One wallet to bring them together, one wallet to rule them all
                                                                                          • Competition between OTAs and direct travel providers heats up
                                                                                            • Artificial intelligence and travel agents re-invented
                                                                                              • Mobile messaging as a commerce platform for OTAs
                                                                                                • Is Google a threat to the OTAs?
                                                                                                • The Consumer – What You Need to Know

                                                                                                  • Online booking most common, direct with supplier remains popular
                                                                                                    • May the best price win? Or is experience all?
                                                                                                      • Desktop/laptops booking is most popular, mobile appeal is niche
                                                                                                        • Sharing economy gaining importance
                                                                                                          • Travel bookers tend to think OTAs are all pretty much the same
                                                                                                            • Judicious email marketing can drive sales
                                                                                                            • Typical Travel Booking Methods

                                                                                                                • Transportation, accommodations essential to TB, tours/activities part of the booking mix
                                                                                                                  • Transportation
                                                                                                                    • Accommodations
                                                                                                                      • Tours/activities
                                                                                                                        • Cruises
                                                                                                                          • Figure 22: Typical travel types booked, March 2016
                                                                                                                        • Relatively stable weekly and monthly use of travel provider sites
                                                                                                                          • Figure 23: Frequency of visiting airline/car/hotel info or reservations websites, January 2006-December 2015
                                                                                                                        • Online travel booking is most common
                                                                                                                          • Figure 24: Typical travel booking methods – Nets, March 2016
                                                                                                                        • Millennials most likely to book online
                                                                                                                          • Figure 25: Online booking for airline tickets, hotels/motels, and rental cars, by generation, March 2016
                                                                                                                          • Figure 26: Have not booked any airline tickets, hotels/motels, and rental cars, by generation, March 2016
                                                                                                                        • Males and high-income groups book online
                                                                                                                          • Figure 27: Online booking for airline tickets, hotels/motels, and rental cars, by gender and household income, March 2016
                                                                                                                          • Figure 28: Have not booked any airline tickets, hotels/motels, and rental cars, by gender, March 2016
                                                                                                                        • Travelers may be interested in booking package deals
                                                                                                                          • Figure 29: Typical travel booking method – Details – Airlines, hotels/motels, rental cars, March 2016
                                                                                                                        • Is this the beginning of the travel agent comeback?
                                                                                                                          • Figure 30: In person or phone booking with a travel agent for airline tickets, hotels/motels, and rental cars, by generation, March 2016
                                                                                                                        • Travel providers effectively competing with OTAs
                                                                                                                          • Online vacation rentals popular among Millennials
                                                                                                                            • Figure 31: Travel booking method – Nets for home rentals (eg Airbnb, HomeAway), by generation, march 2016
                                                                                                                          • Hispanics book tours and activities online
                                                                                                                            • Figure 32: Online booking for activities, by Hispanic origin, March 2016
                                                                                                                        • Most Recent Travel Booking Considerations and Method

                                                                                                                            • Usual suspects top reasons for travel booking, loyalty program benefits hard to redeem
                                                                                                                              • Figure 33: Most recent travel booking considerations, March 2016
                                                                                                                            • Males, Millennials, high-income groups seek travel customization and recommendations
                                                                                                                                • Figure 34: Most recent travel booking considerations – Customization and reviews, by gender, generation, household income, March 2016
                                                                                                                              • Employment is a key factor to seek travel customization, reviews/recommendations
                                                                                                                                • Figure 35: Most recent travel booking considerations, by employment, March 2016
                                                                                                                              • Each generation has a unique approach to saving while booking travel
                                                                                                                                • Figure 36: Most recent travel booking considerations – Cost, by generation, March 2016
                                                                                                                              • Devices with the largest screen size obvious choice for travel booking
                                                                                                                                • Figure 37: Most recent travel booking method, March 2016
                                                                                                                              • Males, Millennials, high-income groups are key for mobile travel booking
                                                                                                                                • Figure 38: Most recent travel booking method – Smartphone, by gender, generation, household income,
                                                                                                                            • Attitudes toward the Sharing Economy

                                                                                                                                • Growing interest in the sharing economy
                                                                                                                                    • Figure 39: Attitudes toward the sharing economy, March 2016
                                                                                                                                  • Millennials are most interested in sharing economy services
                                                                                                                                    • Figure 40: Attitudes toward Airbnb (or similar), by generation, March 2016
                                                                                                                                  • Parents more interested in sharing economy services
                                                                                                                                    • Figure 41: Attitudes toward Airbnb (or similar), by gender and parent status, March 2016
                                                                                                                                  • Interest in sharing economy increases with affluence
                                                                                                                                    • Figure 42: Attitudes toward Airbnb, by household income, March 2016
                                                                                                                                • Attitudes toward Travel Agents

                                                                                                                                  • Travel agents have an audience among those seeking better travel experiences
                                                                                                                                    • Figure 43: Attitudes toward travel agents, March 2016
                                                                                                                                  • Mixed feelings among travel agents by generation
                                                                                                                                    • Figure 44: Attitudes toward travel agents, by generation, March 2016
                                                                                                                                  • Parents of children, dads more likely to book through travel agents
                                                                                                                                    • Figure 45: Attitudes toward travel agents, by gender and parent status, March 2016
                                                                                                                                • Perceptions and Use of Online Travel Agencies

                                                                                                                                    • Most consumers familiar with top online travel booking sites surveyed
                                                                                                                                      • Figure 46: Has any opinion about top online travel agencies, March 2016
                                                                                                                                    • Expedia viewed most positively; TripAdvisor trusted, gaining on use
                                                                                                                                        • Figure 47: Perceptions of select online travel agencies – Scatter plot, indexed to average, March 2016
                                                                                                                                        • Figure 48: Perceptions of select online travel agencies – Table, indexed to average, March 2016
                                                                                                                                      • Room for improvement in website user experience
                                                                                                                                        • Figure 49: Perceptions of select online travel agencies – Overwhelming, indexed to average, March 2016
                                                                                                                                      • Innovation – An important agenda for OTAs
                                                                                                                                        • Figure 50: Perceptions of select online travel agencies – Innovative, indexed to average, March 2016
                                                                                                                                      • Expedia.com attracts more eyeballs, TripAdvisor follows
                                                                                                                                          • Figure 51: Travel booking/review sites visited in the last 30 days, October 2011-December 2015
                                                                                                                                      • Attitudes toward Mobile Apps and Innovation

                                                                                                                                          • Room for improvements in mobile/smartphones for travel booking
                                                                                                                                              • Figure 52: Attitudes toward travel mobile apps, March 2016
                                                                                                                                            • Broad interest in receiving mobile personalized travel offers
                                                                                                                                              • Figure 53: Open to personalized offers via mobile device/smartphones, by generation, March 2016
                                                                                                                                            • Mobiles/smartphones may increase impulse travel booking
                                                                                                                                              • Figure 54: Use of mobile apps for booking/interest in voice assisted technology, by generation, March 2016
                                                                                                                                          • Attitudes toward Email Marketing

                                                                                                                                            • Relevant headers and optimized frequency for the win
                                                                                                                                              • Figure 55: Attitudes toward email marketing, March 2016
                                                                                                                                            • Email marketing relevancy and frequency important factors for all
                                                                                                                                              • Figure 56: Reactions to email subject headers and frequency, by gender, generation, household income, March 2016
                                                                                                                                          • Appendix – Data Sources and Abbreviations

                                                                                                                                            • Data sources
                                                                                                                                              • Consumer survey data
                                                                                                                                                • Direct marketing creative
                                                                                                                                                  • Abbreviations and terms

                                                                                                                                                  Companies Covered

                                                                                                                                                  To learn more about the companies covered in this report please contact us.

                                                                                                                                                  Travel Booking - US - May 2016

                                                                                                                                                  £3,277.28 (Excl.Tax)