Online travel has grown up. It’s now a mainstream market, with UK consumers alone making 3.2 million searches for travel in May 2013.
NB: This is an analysis from Peter Panteli, commercial director of Truly Travel.
According to IMRG the sector continues to show signs of strong growth and estimates for 2013 summer travel hit an all time global high of $54 billion.
Even more importantly, with a global travel industry worth over $600 billion, there’s a lot of room for market growth and a growing number of players.
There are challenges that come with that mainstream appeal however. One of the great joys of the internet, since the early days of its development as a business opportunity, has been the ability to source a URL, throw some software together and launch a business.
While there have been successes for offline businesses going online, today’s internet giants, from Facebook to Twitter or Google, came from nowhere.
With the growing maturity of business and investor expectations however, the world of online has got more complicated.
It’s no longer sufficient to launch a brand and build it up. Well, it may be if you have access to a multi-million dollar advertising and marketing fund.
Market reality
If you want to move a business online today however, you need more than simply making a quick advertising splash in an already overcrowded market.
These days, it appears to be more cost effective to buy an established online brand rather than to try to build one yourself. Research suggests that today it is likely to prove cheaper, and more effective, to buy an existing business and then improve on it.
This has certainly been a growing model in the travel industry. Google itself highlighted the approach when it bought ITA Software in 2011.
While the company said it was never going to sell direct to consumers, it bought the company in order to create a new approach to searching for flight information, an easier way to find better flight information online, which should encourage more users to make their flight purchases online.
While the company has not made a massive impact on the online travel sector, it is targeting one of the online travel market’s most competitive sectors.
Metasearch, or price comparison, is definitely where it’s at today, with Kayak, Skyscanner, Trivago, and TripAdvisor all staking their ground this year, with mergers, funding and product launches driving the market.
While much of the online travel market appears to be dominated by US giants, the model of buying to gain access to market share is a smart one, and UK players are following suit.
We, a call-generation based travel agency, for example, bought online travel brand and website, BeatTheBrochure, in order to accelerate our growth in online markets.
Why it works
What makes a difference here (and elsewhere, hopefully) is the synergy between the online and the offline business. While the online brand already exists, has a profile, customers and a track record, the offline business can often bring stability, long term contracts with hoteliers and travel groups, as well as a reliable history with airlines and destinations.
Combining an already established online travel agency (OTA) with a more traditional travel agency can trigger a strong boost.
Instead of working from scratch to establish customer awareness online it can gave the company the necessary head-start needed to build a successful online business and grab market share quickly.
Obviously problems can arise in integrating two different cultures, especially between online and bricks and mortar companies. It’s also important to ensure that existing customers, both off and online, don’t feel alienated or forgotten.
But given that offline and online audiences tend to be different it’s a huge opportunity to build the business. While it matters which established supplier relationships to continue, by combining two businesses you get to select the best, and provide double the support and energy to your customers.
Buying an existing brand to build market share can accelerate business growth - and in the online travel market, you’ve got to be in it to win it.
NB: This is an analysis from Peter Panteli, commercial director of Truly Travel.
NB2: Offline online image via Shutterstock.