HOTELMARKETING.COM

OTAs under pressure as suppliers push to reach travelers directly

November 14, 2012 | Online Travel

According to new PhoCusWright data, online travel growth is expected to slow to 7% for 2013. Even worse for booking sites like Expedia and Priceline, most of that online growth is coming from bookings made through airlines and hotels directly, a segment that is expected to grow 14%, versus 6% growth for OTAs.

In numbers released Monday, PhoCusWright estimated that the U.S. online travel market will grow 11% in 2012, outpacing the 8% growth of the broader travel industry. Over the next two years, however, online-travel growth will is expected to slow to 7% a year, thanks to fiscal and economic uncertainty in the U.S. and slowdowns in Europe and Asia.

Even worse for booking sites like Expedia and Priceline, most of that online growth is coming from online bookings made through airlines and hotels directly, a segment that is expected to grow 14%, versus 6% growth for online travel hubs. That slowdown is likely to hurt some online-travel sites more than others. Analysts are expecting Priceline's revenue to increase by about 20% this year as well as 2013. Expedia's revenue, meanwhile, is expected to increase by 15% a year. Orbitz, by contrast, is forecast to see revenue remain flat this year.

Smaller companies are also likely to see mixed fortunes. Analysts expect Kayak (KYAK) to see revenue growing between 25% and 30% this year and next, faster than the anticipated growth of its new parent, Priceline. TripAdvisor's (TRIP) growth will be closer to 19%. TravelZoo will see about 6% growth, in line with the industry forecast.

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