Wednesday, March 7, 2001

UK Online Leisure Travel Will Reach £3.7 Billion

The UK online leisure travel market will represent 14% of total leisure travel sales in 2005, according to a new Report by Forrester Research. But only a dozen suppliers and agents will survive the forthcoming dogfight for the 22 million UK online leisure travellers. Players will need to tailor online marketing to focus on one of the three emerging Web consumer profiles -- what Forrester terms Hardshells, Backpacks and Softshells.

"Forrester predicts that the UK market will grow from a paltry £592 million in 2000 to more than £3.7 billion in 2005," said Jaap Favier, senior Forrester analyst. "But as new opportunities arise online for UK travel players, the industry itself faces an overhaul due to the Net. The number of Internet users booking flights online will grow fourfold between 2000 and 2005 from 1.6 million to
5.7 million, and the online flight market in the UK will account for 45% of the total £3.7 billion industry in 2005. To reach and keep the British online travel shopper, Web travel sites will have to understand the specific travel needs of the various online shoppers."

Hardshells are a small group of big spenders that form the top 3% of the online travellers but represent 20% of all vacation spending. For this market, airlines will prevail with exclusive Net offers, and special services like free upgrades and bonus miles to members booking at their Web sites, and sending personal flight information via WAP phones.

Backpacks are a big group that book cheap fares and actively search for the cheapest fares using their PC or phone -- 8% book through the Net. The online ventures that can consistently offer Backpacks the cheapest deal, such as no-frills airlines, will win their business.

Softshells are the majority, representing 56% of the travel market but spending the least on leisure travel. They use offline travel agents to book their leisure trips. High-street tour operators will use their glossy brochures to promote their Web sites, which are designed to fit their brand experience with rich graphics and extensive destination information. Selling marginally cheaper on the Web than in the store, the tour operators will stimulate Net sales and capture Softshells for repeat business.

"With UK iDTV penetration at 25% of households by the end of 2000, many Softshells will use this device to book travel online," added Favier. "Players without a strong brand will have a very hard time convincing the Softshells that it is safe to buy their products. In the highly competitive online leisure market, the pure plays without venture-capitalist backing will have no other option but to outspend established brands with lower fares."

For the Report "The UK Online Travel Dogfight", Forrester spoke with 35 travel companies, including agents and direct sellers, about their online strategies.

Report on Visitors to Banking & Investment Sites
More than four million Britons visited a banking or investment website from home in January, according to Internet monitoring company NetValue. But the UK lags behind its European counterparts, Germany, France and Denmark. Germans are Europe's keenest online bankers, with more than 5.4 million visiting a financial website.

Amongst the countries NetValue currently measures, Korea is the world leader for Internet banking, with half of all home Internet users either visiting a banking or investment website in January. Korea has seen a huge surge in visitors to finance sites, more than doubling from 2,438,000 visitors in October 2000 to 5,200,000 visitors in January 2001.

In terms of time spent on a financial site, French users spend longest, and were online for an average of two hours in the month. German users remained on a finance site for 86 minutes, with users in Hong Kong staying for 72 minutes. The UK comes only ninth in the duration ranking, with users spending just 35 minutes on a financial site. Surprisingly, US users only spent 31.9 minutes. This could indicate that US users are savvier about the data they are looking to get from a Website.

Spain has the highest percentage of men, and also has the highest percentage of 24 and under users visiting finance sites. The male to female ratio is most equal in the US, which also has the largest percentage of over 35 users.

Secure connections are used to ensure the confidentiality of information exchanged, in particular when entering and transmitting credit card information, when accessing online bank accounts and when trading online. Egg.com had 5.7 percent of Internet users making a secure connection, with barclays.co.uk the second most popular website.

In France, the success of banks online contributed to the growth of the financial sector on the Internet. The reach of online banking sector increased by 6% since August, from 26.8% to 32.3%, representing a total of 2.5 million users. Time spent on these websites also increased, with a growth of 7.3 minutes in 6 months.

In Spain, NetValue measured a growth in the usage duration on the financial websites since September 2000, from 15.7 minutes per user to 54.3 minutes in January 2001, representing a growth of 245.85%. This duration is significantly higher than in the UK and the US.

News Tidbits (appears every day on the front page)
- eToys filed for bankruptcy today bringing an end to the toy store's online adventure. Today eToys filed Chapter 11 and plans to close its Website this week.