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China’s online travel bookings to double by 2015

Hand-Holding-SmartphoneWeb sales currently account for only 15 percent of overall travel sales in China, but that number is rapidly growing. A new study by travel industry market research firm PhoCusWright says China’s online air travel bookings grew 50 percent in 2012, and hotel bookings grew 37 percent.

Online travel agencies, led by homegrown players Ctrip and eLong, will continue to post substantial gains, even as they lose online share to hotel and airline websites.

The firm predicts that by 2015, mobile bookings will grow from just a fraction of a percent to one-fifth of all travel bookings. That means a more than 560 percent increase in 2013 alone. One such site, Qunar, already sees 20 percent of bookings coming via its smartphone apps.

Have online travel agencies reached their peak?

Qunar and other metasearch engines are inserting themselves into the booking process, while shopping mall sites like Taobao and Jingdong are increasing their profiles with consumers and suppliers.

These new intermediaries threaten the dominant stance of online travel agencies (OTAs) like Ctrip (NASDAQ:CTRP) and eLong (NASDAQ:LONG). Right now, metasearch is used to find leads that help the big OTAs, but they are starting to look more like competitors. Meanwhile, even Chinese airlines are setting up their own shops on Tmall.

No signs of stopping

According to the report, China’s upcoming National Day in early October is the biggest occasion of the year for Chinese travelers to go on leisure trips. As web and mobile adoption continue to explode in China, so does people’s desire to travel. Many more people now have the income to fulfill those desires, so it makes sense for PhoCusWright to make such eye-popping predictions. Just last year, China surpassed Japan to become Asia’s largest travel market. The report says, “travel growth will keep up double digit percentages for the next three years.” Revenue from gross flight and hotel bookings between 2012 and 2015 will exceed $30 billion.

Still, offline travel bookings will still dwarf online bookings in China for some time to come. In the graph below, you can see the comparison between the most current data and PhoCusWright’s prediction for 2015 in both the online and overall markets.

phocuswright graph

(Editing by Steven Millward and Willis Wee)



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