Busted! The Myth That Australia Has Low Online Travel Rates

Please allow me to bust the biggest myth in Australian online travel – that we have absurdly low online travel sales penetration rates.

This week at a very pleasant lunch an international travel executive became the latest to propagate the legend by trotting out the old line that there are major opportunities in the Australian travel market because local online travel sales rates are “20% to 25%” – way below US online rates of “50% to 60%”.

Really, asked a Sky Business reporter, how can Australian rates be so low?

Logical question … Australians love the internet, have a very high tech adoption rate, a strong economy, use internet-focussed Low Cost Carriers in a very big way – so why don’t we book online travel at international levels?

It was a question our speaker was unable to answer. He thought the figure may have come from a well-known US research brand but was unsure if it applied to all online travel or just accommodation.

Not his fault, online travel penetration figures even lower than these have been doing the rounds for years, regularly repeated by the industry, perhaps because they are self-serving.

It’s hard to pinpoint where this myth began but in the last couple of years it’s been perpetuated by Wotif.com through its inclusion of  research from a company called Euromonitor International in its annual report each year.

Three weeks ago Wotif.com pushed the Euromonitor line that that “Online Sales as % of Total Accommodation Sales in Australia” during 2009 reached – wait for it – 16%.

That’s right, 16% of all accommodation bookings, including those made direct through suppliers in addition to room sales consummated via online travel agents.

Last year, when you and all your friends, and their friends, and their friends friends, booked virtually all travel online.

Doesn’t seem right, does it.

Evidence abounds that online accommodation sales rates are much, much higher.

Among many things, detailed interviews with 20 senior hotel sales and pricing professionals for Caught In the Web: An Insider’s Guide to the Online Accommodation Revolution, reveals that during 2009:

  • 39% of all accommodation bookings were made through the internet.

This figure, which does not include bookings resulting from email queries, has been verified by several major chains, a couple of which said their online sales were significantly higher.

Further validation came from Accor VP Simon McGrath who told delegates at the HICE industry conference just a few days ago that 37% of Accor’s bookings across 130 properties are online.

Of these, McGrath said 70% were web direct, while 30% were made through online travel agents.

At this point it is important to acknowledge that the Caught In The Web figures relate to the 6200 properties with five rooms or more tracked by the Australian Bureau of Statistics. Unlike the Euromonitor stats, it does not include campgrounds.

So … what about the general travel market?

No doubt the online penetration rates are lower but difficult to say by how much.

It also depends on what you classify as travel, a category that gets pretty rubbery with a lot of very marginal business included for the hell of it by government agencies.

No question the overwhelming majority of domestic airline bookings through Jetstar, Qantas, Virgin Blue, Tiger Airways, Rex etc are made online – you’d have to assume well in excess of 80%.

International would be much less overall but very high on popular city-pairs like Sydney-Singapore, Melbourne-London, Sydney-Los Angeles, Perth JoBurg etc.

Package holidays and cruises would also have a low internet penetration rate due to poor technology and the fact they’re mostly sold through traditional travel agents.

Robyn Nixon from Intrepid Travel gave some insight into the online adoption rates for package holidays at TRAVELtech 2010.

She said that while 84% of all customers visited the Intrepid Travel website before booking, only 16% to 18% of all its business – typically small group adventures – was consummated online.

Nixon added that the online sales rate was much higher for its North American and European customers than Australian and Kiwis.

That still doesn’t change the fact that, certainly for accommodation and domestic aviation, Australia’s online sales penetration rates are much higher than some in the industry would have you believe.

It’s time to kill that myth, once and for all.

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