Growth for the online leisure / unmanaged business travel market will continue to dip, to 26% compared to 29% in 2004 and nearly 40% in 2003.

The market remains healthy, however, fueled by suppliers' success at moving offline direct sales to their Web sites. Online bookings are projected to surpass US$65.4 billion in 2005, representing nearly 30% of the entire U.S. travel market, according to the recently released PhoCusWright's Online Travel Overview Fifth Edition.

By 2007, the online leisure/unmanaged business travel market is expected to represent nearly 40% of the total travel market, surpassing $93.6 billion. Indeed, well over half of all travel (leisure, unmanaged business and managed business) will be booked online by 2007 (see table below).

Eventually, online and offline travel growth rates will converge, but through 2007, online travel bookings will increase at nearly four times the rate of the total travel market.

Online growth, which since 1998 had relied mainly on the shift of business from offline channels (mainly traditional travel agencies), will continue to decline, reaching 19% by 2007 as offline sales shrink. Share shift will not entirely disappear as a driver of online gains, however. This is evidenced by the fact that overall travel bookings will continue to increase at a fraction of the rate of online bookings growth.

Car rental firms, hotels and especially airlines are reporting success in driving call center bookings to their Web sites. At the same time, record demand and firmer pricing helped the overall travel market to reach pre-Sept. 11, 2001 levels in 2004. Online players are fueling an extension of that expansion by facilitating access to products and destinations previously unknown to, or out of the reach of, a growing pool of travel consumers.

PhoCusWright's Online Travel Overview Fifth Edition details these trends and other factors and forces shaping the U.S. online travel market, including:

• Segment analyses for airline, hotel & lodging, car rental, packaging, rail and cruise markets;
• Channel analyses with a focus on online travel agency and supplier distribution strategies;
• Data and discussion on major players in the travel arena; and
• The impact of marketing and technology investments.

PhoCusWright's Online Travel Overview Fifth Edition includes actual data for 2003-2004 and forecasts through 2007. It is the most comprehensive, consolidated look at the U.S. online travel market, and is supplemented with exclusive consumer research findings from PhoCusWright's Consumer Travel Trends Survey Seventh Edition.

www.phocuswright.com