Making the connection
Online travel industry growth will accelerate in Canada
According to GlobalData, the Canadian government’s plans to connect 98% of Canadians to high-speed internet by 2026 will only accelerate online travel demand.
The global data and analytics company points out that the online travel intermediary market value already easily exceeds that of offline, reaching US$14.1 billion in 2019 compared to US$9.2 billion for in-store in Canada.
GlobalData said that a significant investment of US$1.75 billion to develop universal broadband across Canada will only increase internet penetration and accelerate online travel bookings.
In its third quarter 2019 consumer survey, GlobalData found that Canadian tourists’ booking trends favoured online travel platforms.
Johanna Bonhill-Smith, travel & tourism analyst at GlobalData, said that: “GlobalData forecasts international departures from Canada will decline by a staggering 43.9% over 2020 due to COVID-19 and associated international travel restrictions. Therefore, travel and tourism companies are facing significant difficulties.”
Bonhill-Smith continued: “With digital innovations well under-way across Canada, it is clear that companies that do not hold a viable digital infrastructure or booking platform are likely to face further headwinds in servicing the future Canadian tourist.”
According to GlobalData’s consumer survey, 36% of Canadian tourists book with an online travel agent (OTA) and 32% book directly with either a lodging or airline provider, meaning these online channels were the most popular for Canadian travellers in 2019.
Only 13% stated that they typically use an in-store travel agent, desiring a face-to-face experience. With a total of US$1.75 billion to be invested in universal broadband across Canada aspiring to reach 100% connectivity by 2030, the number of Canadians booking through an in-store travel agency is likely to further drop over the next few years.
As early as 2013, the market value of online travel intermediaries overtook that of in-store in Canada after experiencing year-on-year (YOY) growth of 12% reaching US$14.8 billion.
Since then, it has only accelerated further as major innovation with the online travel space has given travellers the opportunity to book holidays from the comfort of their own home.
COVID-19 sees the market value of both offline and online travel intermediaries naturally declining due to the dramatic slump in travel demand; GlobalData’s forecasts envision outbound travel from Canada to majorly decline over 2020 (-43.9%).
Post-2020, however, as travel demand begins to recover, the growth rate for online travel intermediaries is far higher than that of in-store, forecast to grow at an expansive compound annual growth rate (CAGR) of 8.3% for 2021 to 2024 compared to a compound annual rate of change (CARC) of -1.1% for in-store intermediaries.
Bonhill-Smith notes that: “While there may always be a minority that will opt for a face-to-face conversation, seeking a more personal experience with an in-store travel agent when booking a holiday, it is clear that online travel demand is accelerating at a much faster rate.”
And she concluded: “In order to effectively service future demand, all companies need to be developing conversational platforms, app engagement and general digital infrastructure to ultimately offer that ‘seamless experience’ for the end user and to succeed in the future travel space.”
Go to www.globaldata.com for more.