Travel Industry Worldwide, October 2003

SUMMARY

There is no question that the global travel industry has experienced dramatic declines over the past two years. And, for both its online andoffline segments, the road immediately ahead looks bumpy—but some opportunities are beginning to open up for fast-moving providers.

Attention: Airlines, Hotels, Car Rental Chains, Travel and Ad Agencies, Marketers, Consultants and Technology Vendors

The TravelIndustry Worldwide report aggregates data from more than 60 research firms and government agencies and explores the trends shaping the future of thetravel industry.

The report is broken into seven main sections that look broadly at travel in key world regions and also provide specific detailsabout the impact the Internet has had on the travel value chain, including the ways in which travel products and services are marketed and sold tocustomers. The topics covered include:

• Trends in business and leisure travel
• Technology applications and initiatives
• Travel advertising and marketing
• On- and offline travel market size and growth
• Air, hotel and car rental segments
• Traveler demographics

The report also provides companies with a sense of how their business and e-business strategies compare with those of their competitors.

Selected Findings from Travel Industry Worldwide:

• Worldwide online travel sales are projected to reach $80 billion in 2003
• 74% of corporate travel managers surveyed cited the need for improvements in the balance sheets of their companies as essential factors in therebound of business travel
• It' s predicted that by 2008, 28% of managed corporate travel bookings will be made on the Internet (up from 12% in 2003)
• During the same period, sales will triple, rising from $8.5 billion in 2003 to $26.4 billion in 2008
• Although the travel industry spends heavily on advertising, travel companies put less than 15% of their advertising budgets online
• Business for low-cost airline carriers (LCCs) is booming, with the top six US LCCs enjoying a 17% increase in passenger traffic in the firsthalf of 2003

Ad Spending to Rise Moderately.

Travel ad spending totaled $3.80 billion in the US last year, representing 3.96% of thetotal $95.93 billion spent by US companies. Print media accounted for 60% of the outlay.

After a minor decline in 2001, US online travel advertising shot up 17.9% in 2002, putting it among the category growth leaders. The LondonBusiness School and Havas put growth in interactive travel marketing spend at 4.4% in the US, France, Germany, the UK and Japan combined, butpredicted a 23.4% rise in 2003.

Read the Road Signs: Get All the Numbers and Analysis—In One Report

Drawing upon aggregated surveys, findings and datafrom research firms and government agencies around the world, including American Customer Satisfaction Index, Interactive Advertising Bureau, NationalBusiness Travel Association, Travel Industry Association of America, and World Tourism Organization, in combination with eMarketer' s in-depthprojections and analysis, the Travel Industry Worldwide report is the first place to turn for up-to-date information on a business full of dangerouscurves.

This wealth of valuable information can be delivered by PDF and on your desktop in minutes. Start making smarter, more-informed businessdecisions today, click the "Add to Cart?Ebutton now.

TABLE OF CONTENTS

Methodology 7

The eMarketer Difference 8

The Benefits of eMarketer' s Aggregation Approach 9

"Benchmarking"  and Projections 9

I Travel Trends 11

Domestic Person-Trips* in the US, 2000-2005 (in millions) 13

Domestic Person-Trips* in the US, by Purpose of Trip, 2000-2002 (as a % of total) 14

Domestic Person-Trips* in the US, by Mode of Transportation, 2000-2002 (as a % of total) 15

A. Business Travel 16

US Corporate Travel Spending Trends, June 2003 (as a % of respondents) 18

Travel Budget Trends among Corporations in North America, 2003 (as a % of respondents) 19

Reasons for Decrease in Travel Budget among Corporations in North America, 2003 (as a % of respondents) 20

Travel Mode Alternatives Used by Corporations in North America, 2003 (as a % of respondents) 21

Reasons for Limiting Air Travel among Corporations in North America, 2003 (as a % of organizations limiting air travel) 22

B. Leisure Travel 23

II Technology Applications and Initiatives 25

A. Travel Distribution 26

Evolution of Travel Distribution, 1920s-Present, 1920s-Present 26

Evolution of Travel Distribution, 1920s-Present, 1920s-Present 27

Breakdown of Travel Supplier Revenues, 2001 & 2006 28

Reasons Why Travel Suppliers Use Global Distribution Systems (GDSs), 2002 (as a % of respondents) 29

Travel Supplier Concerns about Reservations Distribution, 2002 (as a % of respondents) 30

Travel Supplier Attitudes toward Global Distribution Systems (GDSs), 2002 (as a % of respondents) 31

Reasons Why Hotels Find Global Distribution Systems (GDSs) Inadequate for Their Business Needs, 2002 (as a % of respondents) 32

Reasons Why Airlines Find Global Distribution Systems (GDSs) Inadequate for Their Business Needs, 2002 (as a % of respondents) 32

Cost to Consumers of Barriers in Airline Ticket Sales in the US, 2001-2006 (in millions) 34

B. Self-Service Kiosks 35

US Airlines Offering Electronic Check-In Process, 2003 35

C. In-Flight E-Mail Update 36

III Travel Advertising and Marketing 37

A. Offline 38

Total Advertising Spending in the US, by Category, 2002 (in millions and as a % change vs. 2001) 39

Travel Advertising Spending in the US, by Medium, 2002 (in millions) 40

B. Online 41

US Online Advertising Spending Growth, by Industry, 2001 & 2002 (as a % increase/decrease vs. prior year) 41

Interactive Marketing Spending in Select Countries*, by Industry Sectors, 2002 & 2003 (as a % increase/decrease vs. prior year) 42

US Online Advertising Spending, by Industry, 2000-2002 (in billions) 43

US Online Advertising Spending, by Industry, 2000-2002 (as a % of total spending) 44

Top Advertisers in Europe, by Industry Sector, 2002 (as a % of total advertisers) 45

Online Advertising Impressions in the US, by Industry,Week of 16 June 2003 45

Top Advertisers in Europe, by Industry Sector, 2002 (as a % of total advertisers) 46

Top 10 Travel Advertisers among US At-Home and At-Work Internet Users,Week Ending 7 September 2003 (in thousands of impressions) 47

Number of US Advertisers Comprising Half of Industry Impressions, by Industry, Q4 2002 48

Top 10 Travel Advertisers among At-Home and At-Work Internet Users in the US, Week Ending 20 July 2003 (in thousands of impressions) 48

Pop-Up Ads* as a Percent of Total Ads in the US, by Web Site Genre, Q4 2002 49

US Click-Through Rates for Free Search vs. Sponsored Search, by Industry, April- May 2003 50

Media that Influenced US Consumers Looking to Learn More about a Product, by Product Type, December 2002 (as a % of respondents) 50

Incremental per-Click Charges for Various Positions of Select Keywords, 2002 51

E-Mail Marketing Click-Through Rates, by Industry, Q2 2002-Q1 2003 52

IV Total Travel Market: Size and Growth 53

A. Leading Tourism Markets ? Arrivals 54

International Tourist Arrivals, by Region, 2001 & 2002 (in millions,% growth and market share) 54

World' s Top Five Destinations for International Tourist Arrivals and Tourism Receipts, 2001 & 2002 (in millions,% growth and % marketshare) 55

B. Leading Tourism Markets ? Spending 56

International Tourism Receipts, by Region, 2000 & 2001 (in billions,% growth rate and as a % of market share) 56

World' s Top 15 Countries in Tourism Spending, 2000 & 2001 (in billions,% change and as a % of market share) 57

World' s Top 15 Countries in Tourism Receipts, 2000 & 2001 (in billions,% change and as a % of market share) 57

US 58

Breakdown of the Total Travel Market in the US, by Channel, 2000-2002 58

US Travel Spending, 2000-2005 (in billions) 58

V Online Travel Market 61

Worldwide Online Travel Bookings, 2002 & 2005 (as a % of all travel booked

worldwide) 62

A. North America 63

US 63

Internet Users in the US, 2000-2005 (in millions) 63

Online Consumer Accounts in the US, by Account Type, 2002-2006 (in millions) 63

US Online Leisure Travel Revenues, 2000-2005 (as a % of total US online retail revenues) 64

US Online Leisure Travel Revenues, 2000-2005 (in billions) 64

Online Travel Bookings in the US, 2000-2005 (as a % of all travel bookings) 65

Growth of Online Travel Bookings in the US, by Category, 2002-2005 (in % increase vs. prior year) 65

Online Travel Bookings in the US, by Category, 2002-2005 (in millions) 65

Online Lodging Revenues in the US, 2000-2006 (in billions) 66

Online Travel Revenues in the US, 2000-2006 (in billions) 66

Comparative Estimates: US Online Leisure Travel Revenues, 2002-2005 (in millions) 67

US B2C E-Commerce, by Category, 2002 (in billions and % growth vs. prior year) 68

Online Consumer Sales at US Sites, Period Ending 24 August 2003 (in millions and % change) 69

Online Sales in the US, by Category, 2000-2002 (as a % of total retail sales) 69

Breakdown of the Online Travel Market in the US, by Category, 2000-2002 70

Effect of the War in Iraq on Online Travel Spending in the US, January-May 2003 (in millions) 70

Channel Breakdown of the Online Travel Market in the US, 2000-2002 71

Online Travel Market in the US, by Mode of Travel, 2000-2002 71

Channel Breakdown of the Online Travel Market in the US, by Category, 2002 72

Canada 73

Online Travel Spending in Canada, 2001 & 2006 (in billions of CAD) 73

Comparative Estimates: At-Home and At-Work Internet Users in Canada, 2000-2006 (in millions) 73

B. Europe 74

Revenues 74

Online Travel Revenues in Western Europe, 1998-2006 (in billions of ., as a % of total travel revenues and % increase vs. prior year) 74

Total Travel and Online Travel Sales in Europe, 1998-2006 (in millions of .) 75

Comparative Estimates: Online Travel Revenues in Europe, 2002-2005 (in billions of .) 76

Online Travel Bookings in Europe, 2002 & 2005 (in billions of .) 76

Category, Channel and Country Breakdown 77

Breakdown of the Online Travel Market in Western Europe, by Category, 2002 & 2003 77

Channel Breakdown of the Online Travel Market in Western Europe, by Market Share,1998-2003 78

Online Travel Market in Germany, 1998-2002 (as a % of online travel sales in Western Europe) 79

Online Travel Market in the UK, 1998-2002 (as a % of online travel sales in Western Europe) 79

Breakdown of Online Travel Sales in Western Europe, by Country, 2002 79

Spain' s Share of the Online Travel Market in Europe, 2003 & 2005 80

C. Asia-Pacific 81

Comparative Estimates: At-Home and At-Work Internet Users in the Asia-Pacific Region, 2000-2006 (in millions) 81

Online Travel Revenues in the Asia-Pacific Region, 2002-2004 (in billions) 82

Leading Online Purchases by Internet Users in Select Countries in the Asia-Pacific Region, 2002 (as a % of Internet users who have shoppedonline) 83

D. Travel Service Vendors 84

North America: US and Canada 84

Leading Online Travel Companies in the US, 2002 (as a % market share) 84

Leading Online Travel Companies in the US, 2002 (as a % market share) 85

Breakdown of the Online Travel Market in the US, 2000-2002 86

US Customer Satisfaction with Leading Online Travel Services, Q4 2002 (based on a 100-point scale) 87

Top 10 Travel Web Sites among At-Home Internet Users in the US,Week Ending 6

July 2003 (unique audience in thousands and % active reach) 88

Top 10 US Travel Firms, Ranked by Online Customer Service, 2003 (based on an index scale of 0-10) 88

Top 10 Travel Sites among US Internet Users, June 2003 (in thousands of unique visitors) 89

Top Travel Web Sites Visited by Home,Work and University Internet Users in the US, April 2003 (in thousands of unique visitors) 90

Top 10 Travel Sites among Hispanic Internet Users in the US, June 2003 vs. May 2003 (in thousands of unique visitors and % change) 91

Favorite Web Sites for Travel Information among Canadians, June 2003 (as a % of respondents) 92

Europe 93

Favorite Web Sites for Travel Information among Canadians, June 2003 (as a % of respondents) 93

Top 10 Web Sites Visited by Women in the UK, May 2003 (in thousands of unique audience and as a % of total audience) 93

Traditional Agencies & Consolidation 94

Travel Agents in the US, by Office Type, 2001-2003 94

Airline and Travel Firms Responding to Consumer Inquiries Submitted via Company Web Sites, 2003 (as a % of companies surveyed) 95

Top 10 Travel Web Sites among At-Home Internet Users in the US, 2 February 2003 & 23 February 2003 (ranked by % growth, unique audience inthousands) 96

VI Travel Segments 97

A. Air Travel Market 98

Competitive Environment: FSCs vs. LCCs 98

Net Debt of US Airlines, 2000-2003 (in billions) 98

Cost Advantage of Typical European Low-Cost Carrier (LCC) in Relation to Full-Service Carrier (FSC), 2002 100

Cost Advantage of Typical European Low-Cost Carrier (LCC) in Relation to Full-Service Carrier (FSC), 2002 101

Unmanaged Business Travelers in Select Countries in Europe Who Flew Low-Cost Carriers (LCCs) in Past 12 Months, September 2002 (as a % ofrespondents) 101

Year-over-Year Change in Revenue Passenger Miles (RPMs) among Full-Service and Low-Cost US Carriers, May 2002 103

Worldwide Airline Traffic & Leading Airports 104

Worldwide Airport Traffic, by Region, September 2002 (in millions of passengers and as a % change vs. September 2001) 104

World' s Leading 30 Airports, 2002 (in millions of passengers and as a % change vs. 2001) 105

Leading Airlines 106

World' s Leading 20 Airlines, by Revenue Passenger Kilometers (RPKs), January-July 2003 (in billions ) 107

World' s Leading 20 Airlines, by Revenue Passenger Kilometers (RPKs), January-July 2003 (in billions ) 108

World' s Leading 25 Airlines, by Revenue Passenger Kilometers (RPKs), 2002 (in billions) 109

World' s Leading 25 Airlines, by Operating Revenue, Operating Profit and Net Profit, 2002 (in thousands) 110

World' s Leading 25 Airlines, by Number of Passengers, 2002 (in thousands) 111

B. Hotel/Hospitality Market 112

Hotel Performance Benchmarks 113

Worldwide Lodging Industry Performance, by Region, 2001 & 2002 113

Hotel Industry Statistics for Select Cities in the Asia-Pacific Region, Europe, Latin America and the Middle East, May 2003 114

US and International Lodging Industry Performance, Q1 & Q2 2003 115

Traveler Preferences 116

US Business Traveler Satisfaction with Hotel Chains in the US, by Hotel Category,2002 116

US Leisure Traveler Satisfaction with Hotel Chains in the US, by Hotel Category, 2002 117

US Traveler Satisfaction with Upscale Hotels in the US, 2003 (index rating) 118

US Traveler Satisfaction with Luxury Hotels in the US, 2003 (index rating) 118

US Traveler Satisfaction with Mid-Price Full-Service Hotels in the US, 2003 (index rating) 119

US Traveler Satisfaction with Economy/Budget Hotels in the US, 2003 (index rating) 120

US Traveler Satisfaction with Mid-Price Limited Service Hotels in the US, 2003 (index rating) 120

Emerging Technologies: Broadband Hotels 121

US Traveler Satisfaction with Extended Stay Hotels in the US, 2003 (index rating) 121

High-Speed Internet Usage in Hotels in North America, April 2001 & April 2002 (as a % of respondents) 122

High-Speed Internet Usage in Hotels in North America, by Hotel Price Category, February-April 2002 (as a % of respondents) 122

WLAN Deployments in Hotels Worldwide, 2001 & 2006 123

C. Car Rental Market 125

Revenues and Fleet Size 125

US Car Rental Fleet, 1998-2002 (in thousands) 125

US Car Rental Revenues, 1998-2002 (in billions) 125

Leading Companies and Markets 126

Top US Car Rental Car Companies, by Revenues, 2000 & 2001 126

Top US Car Rental Car Companies, by Revenues, 2000 & 2001 127

Top 10 Airport Car Rental Markets in the US, 1997-2002 128

Breakdown of Top 50 Airport Car Rental Markets in the US, 2002 128

Traveler Preferences 129

Top Car Rental Web Sites among US At-Home and At-Work Internet Users, July 2002 & July 2003 (unique audience in thousands and % change) 129

Favorite Car Rental Companies among US Business and Leisure Travelers, 2002 130

Travel-Related Purchases Made by US At-Home and At-Work Internet Users in the Past Three Months, 2003 (unique visitors in thousands and % ofInternet audience) 130

VII Traveler Demographics & Preferences 131

A. Business Travelers 132

US 132

US Firms that Use Travel Management Companies, 2003 (as a % of respondents) 132

Types of Business Travelers, 2003 132

Travel Booking Policies at US Companies, 2002 (as a % of respondents) 133

Breakdown of Travel Booking Practices at US Companies,August 2002 (as a % of respondents) 134

Usage of Online Corporate Travel Booking Tools at US Companies, by Frequency, 2002 (as a % of respondents) 135

Penetration of Online Travel Booking Instruments at US Companies, 2002 (as a % of respondents) 135

Average Corporate Managed Travel Fare vs.Average Internet Fare, January-June 2003 136

Europe 138

Person Responsible for Business Travel Bookings at Companies in Europe, September 2002 (as a % of respondents) 138

Breakdown of Business Travelers in Select Countries in Europe, by Business Size, September 2002 (as a % of respondents) 138

Tools Used by Companies in Europe to Book Hotel for a Business Trip, by Country, September 2002 (as a % of respondents) 139

Tools Used by Companies in Europe to Book Flight for a Business Trip, by Country, September 2002 (as a % of respondents) 139

B. Leisure Travelers 140

North America: US 140

Demographic Profile of Travelocity Customers in the US, 2003 (as a % of active Travelocity members and as a % of US population) 140

Profile of Leisure Travelers* in the US, 2000 & 2002 141

US At-Home Users of of Travel Sites, by Age,Week Ending 28 July 2002 142

US At-Home Users of of Travel Sites, by Gender,Week Ending 28 July 2002 142

Types of Products Purchased Online by US Consumers, by Experience Online, 2002 (as a % of respondents) 143

Online Travel Buyers in the US, by Experience Online, 2002 (as a % of respondents) 143

Popular Online Activities among Internet Users in the US, 2002 (as a % of respondents) 144

Popular Online Activities among Internet Users in the US, 2002 (as a % of respondents) 145

Use of the Web as a Travel Resource among Internet Users in the US, by Frequency of Travel in Past Year, September 2002 (as a % of respondents)146

Purchases for which US Internet Users Used the Internet As Their Primary Research Source, 2002 (as a % of respondents) 147

Use of the Internet to Plan Some Aspect of Travel among Business and Leisure Travelers in the US, 2002 & 2003 (as a % of respondents) 148

Sources Used When Planning a Trip by Leisure Travelers in the US, 2003 148

Purchases for which US Internet Users Used the Internet As Their Primary Research Source, 2002 (as a % of respondents) 148

Extremely/Very Important Travel Web Site Features for Travelers in the US, 2002 & 2003 (as a % of respondents) 149

Web Site Features that Are Important to Frequent* Leisure Travelers in the US, 2003 (as a % of respondents) 150

Consumer Travel Booking Preferences, by Sales Channel, 2002 (as a % of respondents) 151

US Leisure Travelers'  Opinions Regarding Where They Get the Best Prices for Travel Services, 2002 & 2003 (as a % of respondents) 152

Most Common Complaints of US Internet Users about Hotel and Travel Web Sites, June 2003 (as a % of respondents) 152

Satisfaction Index for Domestic Destinations among US Travelers, 2000-2002 153

Satisfaction Index for International Destinations among US Travelers, 2000-2002 154

North America: Canada 155

Web Sites Accessed by Canadian Adults While Searching or Visiting Sites of Interest, by Category, Spring 2003 155

Primary Source of Information Used by Canadians for Planning Upcoming Travel, June 2003 (as a % of respondents) 156

Canadians Who Have Gone Online to Research a Trip Prior to Taking It, June 2003 (as a % of respondents) 156

Number of Times Canadians Have Used the Internet in the Past Year to Purchase Online Travel, June 2003 (as a % of respondents) 157

Online Travel Purchases Made by Canadians, June 2003 (as a % of respondents) 157

Likelihood of Canadians to Use the Internet to Purchase Their Next Trip, June 2003 (as a % of respondents) 158

Likelihood of Canadians to Use the Internet to Research Their Next Trip, June 2003 (as a % of respondents) 158

Europe 159

Western European Visitors to European Travel Web Sites, by Age, April 2002 (as a % of online visitors) 159

Online Activities of Internet Users in Europe, 2001 & 2002 (as a % of respondents) 160

Online Activities of Internet Users in the EU, November 2002 (as a % of Internet users) 161

Internet Users in France, Germany and the UK Who Book Travel Reservations or Tickets Online, 2001 & 2002 (as a % of respondents) 162

Travel Web Site Usage among At-Home Users Worldwide, by Country, November & December 2002 163

Index of Charts 165