Surging growth in international travel is driving revenue increases at the foreign units of U.S. online travel agencies and has spurred heated competition for a bigger slice of the lucrative and expanding market.
Companies like Orbitz Worldwide Inc and Priceline.com Inc have ramped up efforts to attract customers to their sites overseas, and at least one U.S. travel site, Vayama, has devoted itself entirely to international bookings for travel to and from the United States.
Growth in bookings made outside the United States far outpaces the growth in U.S. domestic bookings. That is partly because more people are traveling and partly because travelers are increasingly comfortable trusting their reservations to Web sites, said Orbitz Chief Executive Steve Barnhart.
It's a competitive market place in the United States, and it's going to be a very competitive marketplace globally, Barnhart said in an interview on Monday.
Earlier this week Orbitz said it has relaunched ebookers, its online travel company in Europe, with more inventory and user reviews with the goal of attracting more European bookings.
Bookings on European online travel agencies or the European divisions of U.S. agencies are projected to total $62.9 billion in 2007, up from $24.5 billion in 2004, according to travel research company PhoCusWright.
American online travel companies are the largest players in Europe.
Priceline's second-quarter international bookings soared 93 percent year-over-year. Orbitz said its international bookings jumped 24 percent in the quarter, while Expedia Inc said European bookings increased 38 percent.
Meanwhile, passenger traffic leaving and returning to the United States on U.S. carriers is on the rise. The number of international passengers on U.S. airlines rose 3.8 percent in the first five months of 2007 from the comparable period a year earlier.
Vayama, which has carved out a niche in that business, hopes to cut into international bookings of U.S. travel sites like Expedia and Orbitz.
Vayama CEO Andre Hesselink said the privately held company sees enough potential in the international air travel market to concentrate on those bookings as well as hotels and car rentals. He said Vayama's strategy centers on providing more inventory and access to low-cost providers than its competitors.
I don't think the customer is that loyal, Hesselink said. They go for the best price.
Michael Cannizzaro at PhoCusWright said the proliferation of low-cost airlines in Europe has spurred travel to locations that previously were not major destinations.
Every time you see a low-cost carrier route open up, you're going to see an increase of hotel demand in that area, Cannizzaro said.
Travel industry experts agree that while growth in European bookings is faster than in the United States, U.S. markets are far from saturated. Only about one-half of all bookings are made on Web sites in the United States, compared with about 25 percent in Europe.
Internet penetration and credit card use in Europe lags that of the United States by about five years. So eventually the market for Web-based travel bookings in Europe could rival the United States.
(Reporting by Kyle Peterson, editing by Jeffrey Benkoe)