Global Context of Management
Online Travel Agency – UK
Table of Contents
Porters Five Forces6
Appendix 1: PESTEL Analysis7
Political & Legal7
Appendix 2: Tables & Graphs12
This report aims to analyse the online travel agency industry in the United Kingdom (UK). It does so using a variety of techniques: 1.Offering a global view of the industry across four chosen countries – China, India, United States and the UK 2.PESTEL analysis – a summary is included in this executive summary, with the full analysis as an appendix at the back. 3.Porter’s 5 Forces analysis
The online travel industry in the UK has been established for some years now and is reaching maturity. As it reaches maturity, the rapid growth it saw leading up to this point will cease to continue. This will increase competition and make it increasingly difficult to operate an agency.
This economic climate will cause further difficulties for online travel agents as consumers look to find value for their money, and spend time seeking the lowest price.
In saying that there are enormous opportunities on the technological front with m-commerce beginning to come to fruition. In addition, the industry is beginning to see the benefits of marketing through social media and this should play an important role in the future viability of an online travel agent. Global View
The online travel market in Asia is expected to be the most import driver that will affect the overall travel market in Asia in 2012. Estimated to grow 35.2% annually in 2012, the online travel market of China, and its growth over the last few years shows that the online service of booking travel is increasing past conventional means of booking travel.
The growth of this industry can be explained by a multitude of reasons, such as the increase of internet usage in China and the world as a whole, the rise of the middle class in developing countries, the rise of credit card holders, and the change/reduction of visa restriction to Chinese travellers by foreign countries, has led to a boom in this industry.
In India in 2011, online travel sales increased in real terms by 21%. This exceeded the overall travel industry’s increase of 19% (Euromonitor, 2012). Growth was believed to be have been hampered by unreliable payments online. Despite this, India has seen an increase both of traditional travel agencies offering online services and from online travel agencies.
Internet users in India by 2013 are forecast to double to 216 million from 2007 levels (Euromonitor, 2009), and in turn this is expected to eat into the share of the traditional bricks and mortar travel agencies (Euromonitor, 2012).
The trend for online travel retail sales in the UK is upward, but at a slowing rate. In 2010, 35% of total travel retail sales were online, accounting for a total market of £9.2 billion. Year on year, this result is the second lowest ever growth for online travel sales, indicating that the market is reaching maturity. Further growth is still expected as the younger generation, who are more akin to book travel online, make up a greater percentage of holiday makers (Euromonitor, 2011).
Despite the fact that internet sales are expected to increase both in market share and overall sales, it is expected to reach a ceiling in the next few years. Of the online travel retailers in the UK, Expedia leads the pack. Expedia is also the worldwide leader in online travel agencies, and the leader in the US market, the largest online travel retail market in the world.
Global online sales totalled US$207 billion in 2011, an increase of 7% from 2010. North...