TUI UK “to double online sales” in four years

Increased broadband take-up and other home-based technology developments will trigger a “massive upturn” in online travel sales, Thomson parent TUI UK predicts.

The UK’s largest tour operator estimates that more than half of all holidays will be booked online within the next four years.

Releasing its first online booking report, Thomson claims to have out-performed internet rivals such as Expedia, lastminute.com and Cendant in January and widened its online market share.

Hitwise figures released by TUI UK show it achieving a 16% online market share in the month, a 5% rise year-on-year, against Expedia, static at 11%, lastminute.com, down 1%  to 10%, Cendant, static at 4%, First Choice at 4% and Thomas Cook at 3%.

The German-based TUI group’s pure online turnover last year was worth euros 1.3 billion, with the UK taking a 40% share.

TUI UK head of new media Graham Donoghue disclosed that UK online turnover was up 100% year-on-year with a 48% rise in passengers. 

He forecast that the proportion of TUI UK’s online business will rise from 15.5% last year to 25% this year and 50% by 2009.

In an overall overseas holiday market estimated to grow from 33 million to 49 million by 2010, TUI UK revealed that the most popular online purchases are low cost flights followed by villas and cottages, last minute deals, hotels, charter flights and package holidays. TUI UK’s average online transaction value is £530 against £560 through its travel agency network.

Looking forward at the overall online travel market, the operator sees flight-only business growing from 20% in 2004 to 31% in 2008, with dynamic packaging representing 37% and packages 32%.

Seat-only will grow from 33% of TUI UK’s passenger mix this year to 39% in 2007, with dynamic packaging rising from just 2% to 27% and packages declining from 65% to 34%.

The company believes its annual carryings of around four million, which has remained static the last 10 years, will increase as it expands its low cost flight network and accommodation-only business.

The convergence of home technologies and heightened broadband usage is seen as the driving force behind continuing growth rates, with the PC, internet, radio, DVD players and TV combining to create a single system in “ehomes” of the future.

Meanwhile, traditional travel agencies will have to change to survive, although TUI UK says there will continue to be room for agents who can offer expertise to customers.

The company sees its agents becoming “lifestyle consultants” meeting a range of customer needs beyond travel, including pre-holiday keep-fit deals at local gyms, instant digital photo processing, foreign language packages, house-sitting services and holiday music CDs. 

“You will see big changes in the products we will offer on the high street in the next 12 months,” said TUI UK sales and marketing director Miles Morgan.

While internet travel purchases will become more attractive as consumers migrate from merely buying CDs and DVDs online, travel retail remains the preferred channel now for the majority of customers.

But Mr Morgan warned: “There will not be a place for a complacent travel agent. You need to have a bank of expertise to offer the customer.”

The company is creating a “virtual call centre” where its 7,000 agency staff can support the company’s call centres and its websites. Agency staff will be able to work from home via laptop computers and will be taught new skills through e-learning packages, according to Mr Morgan.

The company’s research shows that Italy is the top destination for DIY holidays mainly booked online with more than 60% of people arranging their own trips, followed by Spain at 56% and Portugal at 48%. But three quarters wanted a full package when travelling to Egypt while the Dominican Republic, Thailand, Tunisia and Morocco are seen as destinations where people are less likely to tailor make their own holiday.

Report by Phil Davies 

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