Online Travel Market - Industry Growth & Trend Analysis (2024-2032)

Online Travel Market Synopsis:

Online Travel Market Size Was Valued at USD 900 Million in 2023, and is Projected to Reach USD 1970 Million by 2032, Growing at a CAGR of 9.1% From 2024-2032.

Online travel market can be defined as the utilisation of the internet and/or other technology driven tools by consumers to execute various travel related activities such as transport, accommodation, activities and experiences. This market group is a wide one and it encompasses services and products sold on or through internet channels such as OTAs, travel apps & sites, direct bookings from airline, hotel websites or car rental service and Service providers with connection with specific travel destinations. The expansion of internet connection, development in mobile technology and constantly rising consumer trends towards easy and happy digital experiences are key driving forces helping strengthen the online travel market. Also, the advance in technology make it easier to compare the prices, read the reviews and even access current information has changed how people travel. Involves all classes of consumers, right from those in search of holiday destinations to those that require transport and accommodation for business purposes. This sector is very saturated with different companies constantly struggling to capture the attention of the consumers and make people loyal to their brand, offering new products and services and focusing on the application of artificial intelligence and machine learning technologies to predict consumer’s behaviour and improve the user experience.

The market of online travel is rapidly evolving in last few years due to technological improvement, changing consumers’ behaviour and internet facilities. Today, as travellers have shifted to more online means for their travelling, people are now seeking online travel solutions majorly through online travel agents or portal which acts as an umbrella marketplace where consumers can meet airline providers for their flight, accommodation providers for the hotels and where to go providers for the activities. Furthermore, more and more people own mobile devices which have contributed to increased use of mobile based travel services, where the application enables people to book and manage their travels through the mobile application. This factor, alongside with such benefit as the opportunity to get access to a variety of travel services is the reason for growing popularity of the online travel booking among the young people and the active users of the internet devices, so-called millennials. Therefore, it has expanded at a constant rate and with increased consumer demand, OTAs and airline or hotel direct suppliers have turned their attention to the Web to respond to the demands of users.

But this market also poses some risks to the involved players such as OTAs, airlines, hotels, and other travel services players. Client consciousness in relation to costs, along with the increasing availability of services through the internet that eliminates the need of using third party service providers, have forced the OTAs to supply other services and appropriate costs. Furthermore, the market is highly dependent on the overall travelling industry and any world economic crisis, such as floods, war or other distractions, which can affect people’s willingness and ability to travelling. However, it is worth emphasizing that, due to the overall growth in travel activity around the world, the availability of new ‘no frills’ airlines, and the ongoing trend towards ‘online’ distribution of travel services, the overall market in online travel remains buoyant. They have in place strategies that key on customer experience, individual traveller planning, and big data processing for market evaluation and decision making, and these are the things that are fuelling fresh growth and development on the market.

Online Travel Market Trend Analysis:

Personalization and AI in Travel Booking

• One of the emerging tendencies, which are law across online travel market, is the use of artificial intelligence and machine learning to provide the consumers with more relevant travel products and services. Customers today demand suggestions for flights, accommodations, attractions, and events and that too, personalized depending on their choices, past travel records, and in some cases the geographical location of the customers at that particular point of time. It is now allowing travel companies to deliver the right offer at the right time and to the right customer so they can deliver bespoke travel options.
• Further, we find that AI chatbots and virtual assistants are being implemented as customer help in handling real-time questions, booking support, and customer relations. All of these technologies are not only useful in improving the ‘outside’ customer experience but also can improve the ‘inside’ functioning of travel agencies, as well as their online platforms. AI-operated technologies are helping organizations gain better foresight of future customer demand or execute promotions well-suited for specific markets or even alter product prices to match current consumption trends. As the application of AI and data analysis technology advances in the future, the on-line travel market will apply even more elaborate personalized strategies in order to enhance user satisfaction and achieve increased customer loyalty.

Growth in Emerging Markets

• One of the big opportunities in this line of business for the online travel market is the growth of services in new markets. The economies in Asia Pacific, Latin America and parts of Africa are growing; internet connectively is on the rise; middle class consumers with higher disposable income are fast emerging. These are areas that are largely unexplored hence act as vast market destinations for the travel providers who aim at achieving new customer markets. The increased attention to traveling experience shown by people, especially millennials who are more inclined to use the internet for their travel needs, is fuelling a vast demand for online travel platforms across these geographies.
• Moreover, the governments of many emerging markets countries are going hard on strengthening the already existing e-infrastructure and focusing in tourism sector which is also enhancing the growth of the online travel market. With the onset of broadband connections being widely available and mobile devices being used even in less developed markets, the consumer in these regions will gravitate more towards the use of web interfaces for their travel bookings. The experiences that individuals may find within these markets make clear to them certain preferences, and where regional or cultural tendencies exist, companies can often expand their services and quicken their growth in regard to corresponding markets.

Online Travel Market Segment Analysis:

Online Travel Market is Segmented on the basis of Service Type, Platform Type and Application, and Region.

By Service Type, Online Travel Agencies (OTAs) segment is expected to dominate the market during the forecast period

• Among the two segments for online travel, the OTAs is predicted to hold the largest share of the online travelling market for the duration of forecast due to friendlier services, ease of accessibility and cost-effective charges. OTAs are parties that directly/indirectly connect travellers to suppliers of travel services such as airlines, hotels, car rentals, and activities. OTAs are ideal as they offer self-service interfaces through which the customer can make comparisons, explore offers, and organize the entire trip at once – perfect for the modern, time-starved consumer. Furthermore, OTAs allow for decisions at the last minute, managing of special offers, and packages, which are a considerable value for target consumers who look for everything in one place and try to minimize the total cost as much as possible. So, today’s leading players like Booking.com, Expedia, and Trip.com have also proceeded their supply expansion attempts to strengthen their market position as leaders in the industry.

By Platform Type, Web-Based segment expected to held the largest share

• The web-based platform segment is likely to dominate the online travel market because of this growing dependency on net-based services for booking travel services. Customer still largely prefer to access travel services such as flights, hotel and accommodation through desktop computers and Laptops rather than mobile applications since the former provide easier browsing and online booking options. Furthermore, with the help of web-based platforms, users are offered not only the limited readymade testimonials and recommendations but also in-depth descriptions of services, travel accounts, and a wide range of opportunities for selecting. These features build up a greater level of trust and satisfaction which in turn compel a consumer to go through with the travel bookings exercise.

Online Travel Market Regional Insights:

North America is Expected to Dominate the Market Over the Forecast period

• We anticipate that by 2023 North America will become one of the most significant markets for selling travel services online, because it will have developed and widely used the most advanced technology, high rates of Internet connection, and many consumers interested in online booking services. First, many of the markets within the region boast healthy economic growth and developed travel industries consistently reinforcing e-commerce leadership in online travel. The current information indicates that North America alone commands about 35-40 % of the total market and dominates by turning out to be the most lucrative zone. The growth area arises attributed to the major OTAs including Expedia, Booking Holdings, TripAdvisor among others, enhanced culture of online presence among the American and Canadian travellers. Also, USA ranking highest in North America’s affluent middle class, North America’s high disposable /per capita income and high demand for travel services are expected to continue to drive the high demand of online travel services hence maintaining North America as the largest market for online travel services.

Active Key Players in the Online Travel Market:

• Airbnb (United States)
• Booking Holdings (United States)
• Ctrip (China)
• Expedia Group (United States)
• GetYourGuide (Germany)
• Hopper (United States)
• Kayak (United States)
• Makemytrip (India)
• OYO Rooms (India)
• Priceline (United States)
• Rakuten Travel (Japan)
• Thomas Cook (United Kingdom)
• Trip.com (China)
• TripAdvisor (United States)
• Trivago (Germany), and Other Active Players

Key Industry Development in the Online Travel Market:

• In May 2024, the travel group booking startup Joyned introduced an AI-powered planner that allows users to exchange data while giving vendors a better understanding of consumer preferences.
• In May 2024, the Singapore Tourism Board rolled out a new marketing campaign to promote online travel services and digital tourism content, aiming to attract tourists from nearby countries. The initiative resulted in a 20% increase in tourist arrivals and a boost in local bookings on travel websites.
• In April 2024, Make My Trip, a leading online travel company, announced a new private charter service between Mumbai and Bhutan. This charter, included in its holiday packages, will operate weekly, catering to the growing demand from Indian travelers visiting Bhutan.
• In February 2024, Cleartrip, the online travel aggregator and subsidiary of Flipkart, launched a new corporate travel booking tool called "Out of Office" (OOO). Designed for businesses of all sizes, this platform has attracted around 300 SMEs and 10 large corporations. The tool is projected to manage a business turnover of about twenty crore rupees per month.