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Study: European online travel agencies need to diversify

Published :2010-08-31 17:47

Posted by Dennis Schaal

European online travel agencies need to wean themselves away from the air business.

That’s one of the conclusions of an Amadeus-commissioned study conducted by Hermes Management Consulting.

The study, Understanding Online Travel Agencies’ Cost Drivers and Ways to Optimise Business in Europe, examined five mid-size OTAs from Scandinavia, France, Germany and the Netherlands and found that nonair products account for only 14% of their gross bookings on average.

Hence, European OTAs are grappling with a problem that leisure travel agencies, wracked by airline commissions cuts, understood years ago — there’s little money in the flight business.

Or, put another way, the margins are much larger in hotels, dynamic packages and advertising.

The study cites PhoCusWright research showing that nonair inventory — i.e. hotels, vacations and cruises, for instance — represent about 76% of traditional agents’ business and nearly 50% of U.S. OTAs’ revenue.

Regarding U.S.-based online travel companies, in the second quarter of 2010, Expedia Inc.’s hotel business accounted for 63% of its revenue, advertising and media represented 13%, air 12% and everything else 12%.

And, in Q2 2010,  Orbitz Worldwide took in 36.6% of its revenue from air, 26.9% from hotels, 16.1% from vacation packages, 6.4% from advertising and media, and 13.9% from “other” categories.



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