Search Travel Market Report

mainlogo
www.travelmarketreport.com
  • News
  • Tours & Packages
  • Cruise
  • Hotels & Resorts
  • Destinations
  • Retail Strategies
  • Niche & Luxury
  • Well-Being Travel
  • Training & Events
  • Who We Are
    • Anne Marie Moebes
    • Brian Israel
    • Dan McCarthy
    • Denise Caiazzo
    • Dori Saltzman
    • Kelly Fontenelle

Study Sees Shrinking Profits on Package Sales

by Maria Lenhart / December 11, 2013

At a time when leisure travel agents are increasingly focused on selling land vacations, a new PhoCusWright study indicates that trouble is brewing in the traditional vacation package segment.

The outlook is not all bad. Travel agents are still the preferred source for booking traditional vacation packages and are likely to retain their command of this segment over the next few years, according to PhoCusWright’s U.S. Travel Online Review 13th Edition.

But traditional vacation packages show little growth potential, and they are becoming less profitable for suppliers and agents alike, according to PCW’s annual study of the U.S. online leisure and unmanaged business travel marketplace.

Complexity is best
For travel agents, packages “with the most complex and long-haul itineraries hold the most business potential – as is also true of cruises,” PhoCusWright (PCW) analyst Maggie Rauch told Travel Market Report. “So to the extent that this type of travel grows, it’s good for agents.”

Squeezed margins
But the study noted that agents will continue to see margins squeezed on package travel.

“Wholesalers are challenged to source air at discount prices, leaving less profit to share with travel agencies through commissions,” it said.

Flat market
Other key findings in the PCW study regarding vacation packages include:

•    The U.S. packaged travel marketplace was flat in 2012. The market is expected to achieve 2% to 3% year-over-year growth in 2013 to 2015.

•    Traditional travel agencies remain the largest distribution channel for packages (67%) despite growth in online packaging and supplier direct sales.

•    Travel agency share of traditional vacation packages sales will be virtually flat from 2013 through 2015.

•    OTAs’ share of the packaged travel market fell from 32% in 2011 to 31% in 2012, and it will remain at that level for the next few years.

•    Only some of the largest vacation packager brands have meaningful amounts of website bookings; online direct sales account for only 7% of all traditional vacation package bookings.

Web-direct sales
While the study noted that most vacation package suppliers have had limited success with online sales, it also said that as suppliers continue to “update their websites and expand in-destination ancillary bookings, direct sales are likely to grow.”

The website sales of traditional vacation packagers hit $800 million in 2012 and are expected to increase by 4% to $835 million in 2013, eventually reaching $922 million in 2015, according to the study.

Despite these gains, website sales of traditional vacation packagers will represent just 5% of all packaged travel revenue through 2015.

Little growth overall
In general, traditional vacation packages are stagnating as more travelers have begun to seek Internet options to create their own vacations, the study said.

According to PCW, the segment is having particular difficulty in appealing to younger consumers.

However, it said that “a handful of TVPs [traditional vacation packages] that serve faithful niches and/or appeal to upscale travelers looking for unique experiences have survived – some have even thrived.”

  0
  0
Related Articles
Japan Sees Uptick in Inbound Tourism
Suppliers Build Lead Over OTAs in Online Sales
Rogue Travel Declines as Suppliers Gain Distribution Share
Study Sees Agents ‘Stagnating’ as Cruise Distribution Channel

MOST VIEWED

  1. All U.S. Flights Grounded Due to FAA Computer Outage
  2. FAA Closes Three U.S. Airports Over National Security Risk
  3. Norwegian Cruise Line Brings Back COVID-19 Requirements
  4. Forbes Says ‘You Need a Travel Advisor in 2023’
  5. What’s New in Travel Agent FAM Trips
  6. U.S. Embassy Issues Security Alert for Mexico After Cancun Taxi Protests

MOST EMAILED

  1. Forbes Says ‘You Need a Travel Advisor in 2023’
  2. All U.S. Flights Grounded Due to FAA Computer Outage
  3. Visitors to the U.K. Will Soon Need to Pay an Application Fee Prior to Travel
  4. Here Are the Automatic & Suggested Gratuity Policies for Each Major Cruise Line
  5. Beverage Carry-On & Corkage Fee Policies by Cruise Line
  6. Tour Operators & Advisors Forced to Cancel Trips as Peru Shuts Down Machu Picchu
TMR Subscription

Subscribe today to receive daily in-depth coverage, analysis of industry news, trends and issues that affect how you do business. Subscribe now for free.

Subscribe to TMR

Top Stories
What to Know About Travel to Cyprus in 2023
What to Know About Travel to Cyprus in 2023

An island steeped in history and culture, Cyprus is having a moment.

Read...
Hurtigruten Offers 2-for-1 Deal on Galapagos Sailings
Hurtigruten Offers 2-for-1 Deal on Galapagos Sailings

Bookings must be made and deposited by February 15, 2023. 

Read...
Seven Extraordinary Culinary Experiences for Foodie Travelers
Seven Extraordinary Culinary Experiences for Foodie Travelers

Seven experiences perfect for clients looking for culinary adventures. 

Read...
Viking to Add New Ship on Seine
Viking to Add New Ship on Seine

A fifth Viking Longship is coming to the Seine in 2025. 

Read...
USVI Tourism Poised for a Huge Year
USVI Tourism Poised for a Huge Year

New hotels, restaurants, and excursions highlight the United States Virgin Islands' plans for 2023. 

Read...
VisitBritain Appoints New Executive Vice President for Americas
VisitBritain Appoints New Executive Vice President for Americas

VisitBritain made two major appointments this week. 

Read...
TMR OUTLOOKS & WHITE PAPERS
river cruise 2022
group outlook 2022
lux cruise outlook
CP White Paper
Multi-Gen Outlook
River Cruise Outlook 2019
View All
Advertiser's Voice
Celebrate National Don’t Plan for Vacation Day with Delta Vacations
About Travel Market Report Mission Staff Advisory Board Advertise
TMR Resources Webinars Calendar of Events Outlook/Whitepapers Previous Sponsored Articles Previous This Week Articles
Subscribe to TMR
Select Language
Do You Have an Idea Email
editor@travelmarketreport.com
Give Us a Call
1-(516) 730-3097
Drop Us a Note
Travel Market Report
71 Audrey Ave, Oyster Bay, NY 11771
News |Tours & Packages |Cruise |Hotels & Resorts |Destinations |Retail Strategies |Niche & Luxury |Well-Being Travel |Training & Events |Who We Are
© 2005 - 2023 Travel Market Report, an American Marketing Group Inc. Company All Rights Reserved | 243 South Street, Oyster Bay, NY, 11771 USA | Telephone (516) 730-3097| Terms and Conditions
Cookie Policy Privacy Policy