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Uk Online Travel Agencies Essay

3814 words - 16 pages


Global Context of Management

Online Travel Agency – UK

Table of Contents

Introduction 3
Global View 4
PESTEL Analysis 5
Porters Five Forces 6
Appendix 1: PESTEL Analysis 7
Political & Legal 7
Economic 8
Social/Cultural 9
Technological 10
Environmental 11
Appendix 2: Tables & Graphs 12
Appendix A 12
Appendix B 12
Appendix C 13
Appendix D 13
Appendix E 14
Appendix F 14
Appendix G 15
Appendix H 15
Appendix I 16
References 17


This report aims to analyse the online travel agency industry in the United Kingdom (UK). It does so using a variety of techniques:
1. Offering a global view of the ...view middle of the document...

The growth of this industry can be explained by a multitude of reasons, such as the increase of internet usage in China and the world as a whole, the rise of the middle class in developing countries, the rise of credit card holders, and the change/reduction of visa restriction to Chinese travellers by foreign countries, has led to a boom in this industry.

In India in 2011, online travel sales increased in real terms by 21%. This exceeded the overall travel industry’s increase of 19% (Euromonitor, 2012). Growth was believed to be have been hampered by unreliable payments online. Despite this, India has seen an increase both of traditional travel agencies offering online services and from online travel agencies.

Internet users in India by 2013 are forecast to double to 216 million from 2007 levels (Euromonitor, 2009), and in turn this is expected to eat into the share of the traditional bricks and mortar travel agencies (Euromonitor, 2012).

The trend for online travel retail sales in the UK is upward, but at a slowing rate. In 2010, 35% of total travel retail sales were online, accounting for a total market of £9.2 billion. Year on year, this result is the second lowest ever growth for online travel sales, indicating that the market is reaching maturity. Further growth is still expected as the younger generation, who are more akin to book travel online, make up a greater percentage of holiday makers (Euromonitor, 2011).

Despite the fact that internet sales are expected to increase both in market share and overall sales, it is expected to reach a ceiling in the next few years. Of the online travel retailers in the UK, Expedia leads the pack. Expedia is also the worldwide leader in online travel agencies, and the leader in the US market, the largest online travel retail market in the world.

Global online sales totalled US$207 billion in 2011, an increase of 7% from 2010. North America made up over 50% of the market, with nearly $119 billion in sales. From this perspective, the largest North American companies, Expedia and Priceline, with their experience and established roots, are the best positioned to capitalise on the global market overall.

On the back of higher internet penetration and more reliable transaction methods, the emerging markets are expected to show solid growth for the foreseeable future. Leading the way are China, India and Russia, with Latin America and the rest of Asia set to balloon alongside the increased internet usage.
PESTEL Analysis

Herein contains a summary of the notable factors as described in the full analysis in the appendix.

Political & Legal
• Air Passenger Duty – this has significant opposition to it from industry groups and consumers alike. The cost it adds to flights is substantial.
• Government campaign – this campaign aims to maintain tourism levels before and after the Olympics. This will be critical to the success of the tourism industry in general given the trend for a severe...

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