The UK online leisure travel market will represent 14% of total leisure travel sales in 2005, according to a new Report by Forrester Research (Nasdaq: FORR). But only a dozen suppliers and agents will survive the forthcoming dogfight for the 22 million UK online leisure travellers. Players will need to tailor online marketing to focus on one of the three emerging Web consumer profiles — what Forrester terms Hardshells, Backpacks and Softshells.

“Forrester predicts that the UK market will grow from a paltry £592 million in 2000 to more than £3.7 billion in 2005,” said Jaap Favier, senior Forrester analyst. “But as new opportunities arise online for UK travel players, the industry itself faces an overhaul due to the Net. The number of Internet users booking flights online will grow fourfold between 2000 and 2005 from 1.6 million to
5.7 million, and the online flight market in the UK will account for 45% of the total £3.7 billion industry in 2005. To reach and keep the British online travel shopper, Web travel sites will have to understand the specific travel needs of the various online shoppers.”

Hardshells are a small group of big spenders that form the top 3% of the online travellers but represent 20% of all vacation spending. For this market, airlines will prevail with exclusive Net offers, and special services like free upgrades and bonus miles to members booking at their Web sites, and sending personal flight information via WAP phones.

Backpacks are a big group that book cheap fares and actively search for the cheapest fares using their PC or phone — 8% book through the Net. The online ventures that can consistently offer Backpacks the cheapest deal, such as no-frills airlines, will win their business.

Softshells are the majority, representing 56% of the travel market but spending the least on leisure travel. They use offline travel agents to book their leisure trips. High-street tour operators will use their glossy brochures to promote their Web sites, which are designed to fit their brand experience with rich graphics and extensive destination information. Selling marginally cheaper on the Web than in the store, the tour operators will stimulate Net sales and capture Softshells for repeat business.

“With UK iDTV penetration at 25% of households by the end of 2000, many Softshells will use this device to book travel online,” added Favier. “Players without a strong brand will have a very hard time convincing the Softshells that it is safe to buy their products. In the highly competitive online leisure market, the pure plays without venture-capitalist backing will have no other option but to outspend established brands with lower fares.”

For the Report “The UK Online Travel Dogfight”, Forrester spoke with 35 travel companies, including agents and direct sellers, about their online strategies.