North American

Online Travel Report 2009

- Car Rental Focus -
 EyeforTravel Research
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EyeforTravel Ltd, April 2009

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 North America Online Travel Report 2009

Table of Contents
Table of Contents

List of Figures 4
Methodology 7
Executive Summary 11

Chapter 1: North American Travel Market Analysis 15

North American Travel Market Overview 15

US vs. Canada Travel Market Analysis 35
US Travel Market Analysis 43
Canadian Travel Market Analysis 52

Chapter 2: North American Car Rental Sector Analysis 61

North American Car Rental Sector Overview 61

US Car Rental Market Analysis 70
Canadian Car Rental Market Analysis 81

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 List of Figures

List of Figures
Figure 1.1: North America Total Volume of Travel, 2002-2012F 15
Figure 1.2: North America Volume of Travel - Domestic vs. Outbound (%), 2002-2012F 15
Figure 1.3: North America Volume of Domestic Travel, 2002-2012F 16
Figure 1.4: North America Volume of Outbound Travel, 2002-2012F 16
Figure 1.5: North America Travel Market Gross Value, 2002-2012F 17
Figure 1.6: Spend per Trip in US$ (North America), 2002-2012F 17
Figure 1.7: North American Travel Market - Sector Breakdown (US$), 2002-2012F 18
Figure 1.8: North American Travel Market - Sector Breakdown (%), 2008 18
Figure 1.9: North American Travel Market - Sector Breakdown (%), 2002-2012F 19
Figure 1.10: North American Travel Market - Y-o-Y Growth by Sector, 2002-2012F 20
Figure 1.11: North American Travel Market - CAGR by Sector, 2002-2007 and 2008-2012F 20
Figure 1.12: Online Penetration of the North American Travel Market, 2002-2012F 21
Figure 1.13: Value of North American Travel Market - Online vs. Offline, 2002-2012F 22
Figure 1.14: Sector Breakdown of North American Online Travel Market (%), 2008 23
Figure 1.15: Sector Breakdown of North American Online Travel Market (%), 2002-2012F 23
Figure 1.16: North American Online Travel Market - CAGR by Sector, 2002-2007 and 2008-2012F 24
Figure 1.17: Online/Offline Distribution Values - North American Airline Market, 2002-2012F 25
Figure 1.18: Online/Offline Distribution Values - North American Hotel Market, 2002-2012F 25
Figure 1.19: Online/Offline Distribution Values - North American Car Rental Market, 2002-2012 25
Figure 1.20: Online/Offline Distribution Values - North American Bus Market, 2002-2012F 26
Figure 1.21: Online/Offline Distribution Values - North American Cruise Market, 2002-2012F 26
Figure 1.22: Online/Offline Distribution Values - North American Railway Market, 2002-2012F 26
Figure 1.23: Online/Offline Distribution Values - North American Package Market, 2002-2012F 27
Figure 1.24: Value of the North American Travel Market - Domestic vs. Outbound, 2002-2012F 27
Figure 1.25: North American Travel Market - Domestic vs. Outbound (%), 2008 28
Figure 1.26: North American Travel Market - Domestic vs. Outbound (%), 2002-2012F 28
Figure 1.27: North American Travel Market - Y-o-Y Growth Domestic vs. Outbound (%),
2002-2012F 29
Figure 1.28: Spend per Trip (North America Averages) - Domestic vs. Outbound, 2002-2012F 29
Figure 1.29: North American Online Travel Market - Domestic vs. Outbound (%), 2002-2012F 30
Figure 1.30: North American Online Travel Market - Domestic vs. Outbound (%), 2008 31
Figure 1.31: Value of the North American Online Travel Market - Domestic vs. Outbound,
2002-2012F 31
Figure 1.32: North American Online Travel Market - Y-o-Y Growth Domestic vs. Outbound (%),
2002-2012F 31
Figure 1.33: North American Domestic Online Travel Market - Sector Breakdown (%), 2002-2012F 32
Figure 1.34: North American Domestic Online Travel Market - Sector Breakdown (%), 2008 33
Figure 1.35: North American Domestic Online Travel Market - Sector Breakdown Values (US$),
2002-2012F 33
Figure 1.36: North American Outbound Online Travel Market - Sector Breakdown (%), 2002-2012F 34
Figure 1.37: North American Outbound Online Travel Market - Sector Breakdown (%), 2008 34
Figure 1.38: North American Outbound Online Travel Market Value - Sector Breakdown (US$),
2002-2012F 34
Figure 1.39: US vs. Canada Total Volume of Travel, 2002-2012F 35
Figure 1.40: US vs. Canada Total Volume of Travel (%), 2002-2012F 35
Figure 1.41: US Volume of Domestic Trips, 2002-2012F 36
Figure 1.42: US Volume of Outbound Trips, 2002-2012F 37
Figure 1.43: Canada Volume of Domestic Trips, 2002-2012F 37
Figure 1.44: Canada Volume of Outbound Trips, 2002-2012F 37
Figure 1.45: Value of the North American Travel Market - US vs. Canada, 2002-2012F 38
Figure 1.46: North American Travel Market - US vs. Canada (%), 2002-2012F 39
Figure 1.47: Average Spend per Person per Trip - US and Canada, 2002-2012F 39
Figure 1.48: North American Online Travel Market - US vs.Canada (%), 2002-2012F 40
Figure 1.49: Value of the North American Online Travel Market, US vs. Canada, 2002-2012F 40
Figure 1.50: Online Penetration Comparison of the US and Canadian Gross Travel Markets,
2002-2012F 41
Figure 1.51: Online Penetration of the US Gross Travel Market, 2002-2012F 42

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 North America Online Travel Report 2009

List of Figures
Figure 1.52: Online Penetration of the Canadian Gross Travel Market, 2002-2012F 42
Figure 1.53: Value of the US Gross Travel Market, 2002-2012F 43
Figure 1.54: Value of the US Online Travel Market, 2002-2012F 43
Figure 1.55: US Travel Market - Domestic vs. Outbound (%), 2002-2012F 44
Figure 1.56: Value of US Gross Travel Market - Domestic vs. Outbound, 2002-2012F 45
Figure 1.57: Outbound Travel Destination Trends, 2002-2012F 46
Figure 1.58: Value of US Online Travel Market - Domestic vs. Outbound, 2002-2012F 46
Figure 1.59: US Online Travel Market - Domestic vs. Outbound (%), 2002-2012F 47
Figure 1.60: Online Penetration Comparison of US Domestic and Outbound Travel Markets,
2002-2012F 47
Figure 1.61: US Travel Market - Sector Breakdown (%), 2002-2012F 48
Figure 1.62: US Travel Market - Sector Breakdown (%), 2008 49
Figure 1.63: US Travel Market - Sector Breakdown (US$), 2002-2012F 49
Figure 1.64: US Travel Market - Y-o-Y Growth by Sector, 2002-2012F 49
Figure 1.65: US Online Travel Market - Sector Breakdown (%), 2002-2012F 50
Figure 1.66: US Online Travel Market - Sector Breakdown (%), 2008 50
Figure 1.67: US Online Travel Market - Sector Breakdown (US$), 2002-2012F 51
Figure 1.68: US Online Travel Market - Y-o-Y Growth by Sector, 2002-2012F 51
Figure 1.69: Sector Online Penetration, 2002-2012F 51
Figure 1.70: Value of the Canadian Gross Travel Market, 2002-2012F 52
Figure 1.71: Canadian Travel Market - Domestic vs. Outbound (%), 2002-2012F 53
Figure 1.72: Value of the Canadian Travel Market - Domestic vs. Outbound, 2002-2012F 53
Figure 1.73: Value of the Canadian Online Travel Market, 2002-2012F 54
Figure 1.74: Canadian Online Travel Market - Domestic vs. Outbound (%), 2002-2012F 55
Figure 1.75: Online Penetration Comparison of Domestic and Outbound Canadian Travel Market,
2002-2012F 55
Figure 1.76: Value of the Canadian Online Travel Market – Domestic vs. Outbound, 2002-2012F 56
Figure 1.77: Canadian Travel Market - Sector Breakdown (%), 2002-2012F 57
Figure 1.78: Canadian Travel Market - Sector Breakdown (%), 2008 57
Figure 1.79: Canadian Travel Market - Sector Breakdown (CAD $), 2002-2012F 58
Figure 1.80: Canadian Travel Market - Y-o-Y Growth by Sector, 2002-2012F 58
Figure 1.81: Canadian Online Travel Market - Sector Breakdown (%), 2002-2012F 59
Figure 1.82: Canadian Online Travel Market - Sector Breakdown (%), 2008 59
Figure 1.83: Sector Online Penetration, 2002-2012F 60
Figure 1.84: Canadian Online Travel Market - Y-o-Y Growth by Sector, 2002-2012F 60
Figure 1.85: Canadian Online Travel Market - Sector Breakdown (CAD $), 2002-2012F 60
Figure 2.1: Value of the North American Gross Car Rental Market, 2002-2012F 61
Figure 2.2: North American Car Rental Market - Domestic vs. Outbound (%), 2002-2012F 61
Figure 2.3: Value of North American Gross Car Rental Market - Domestic vs. Outbound,
2002-2012F 62
Figure 2.4: Online Penetration of the North American Car Rental Market, 2002-2012F 63
Figure 2.5: Value of the North American Online Car Rental Market, 2002-2012F 63
Figure 2.6: Value of the North American Offline Car Rental Market, 2002-2012F 64
Figure 2.7: Online Penetration of the North American Domestic Car Rental Market, 2002-2012F 64
Figure 2.8: Value of North American Domestic Car Rental Market - Offline vs. Online, 2002-2012F 65
Figure 2.9: Online Penetration of the North American Outbound Car Rental Market, 2002-2012F 65
Figure 2.10: Value of North American Outbound Car Rental Market - Offline vs. Online, 2002-
2012F 66
Figure 2.11: North American Car Rental Market - US vs. Canada (%), 2002-2012F 67
Figure 2.12: Value of the North American Car Rental Market - US vs. Canada, 2002-2012F 67
Figure 2.13: North American Online Car Rental Market - US vs. Canada (%), 2002-2012F 68
Figure 2.14: Value of the North American Online Car Rental Market - US vs. Canada, 2002-2012F 68
Figure 2.15: Car Rental Sector Contribution to Total North American, US and Canadian Online
Travel Markets, 2002-2012F 69
Figure 2.16: US Car Rental Market - Domestic vs. Outbound (%), 2002-2012F 70
Figure 2.17: Value of the US Car Rental Market - Domestic vs. Outbound, 2002-2012F 70
Figure 2.18: Car Rental Sector Contribution to US Total, Domestic and Outbound Travel Markets,
2002-2012F 71
Figure 2.19: US Car Rental Market - Online vs. Offline (%), 2002-2012F 72
Figure 2.20: Value of the US Car Rental Market - Online vs. Offline, 2002-2012F 72

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 List of Figures

Figure 2.21: Online Penetration Comparison of Total, Domestic and Outbound US Car Rental
Market, 2002-2012F 73
Figure 2.22: Car Rental Sector Contribution to US Total, Domestic and Outbound Online Travel
Markets, 2002-2012F 74
Figure 2.23: US Online Car Rental Market, Domestic vs. Outbound (%), 2002-2012F 74
Figure 2.24: Value of US Online Car Rental Market - Domestic vs. Outbound, 2002-2012F 75
Figure 2.25: Online Penetration of the US Domestic Car Rental Market, 2002-2012F 75
Figure 2.26: Value of US Domestic Car Rental Market - Online vs. Offline, 2002-2012F 76
Figure 2.27: Online Penetration of the US Outbound Car Rental Market, 2002-2012F 76
Figure 2.28: Value of US Outbound Car Rental Market - Online vs. Offline, 2002-2012F 76
Figure 2.29: US Online Car Rental Market - Direct vs. Indirect Distribution (%), 2002-2012F 77
Figure 2.30: Value of the US Online Car Rental Market, Direct vs. Indirect Distribution, 2002-2012F 77
Figure 2.31: US Domestic Online Car Rental Market, Direct vs. Indirect Distribution (%),
2002-2012F 78
Figure 2.32: US Outbound Online Car Rental Market, Direct vs. Indirect Distribution (%),
2002-2012F 79
Figure 2.33: Value of the US Domestic Online Car Rental Market, Direct vs. Indirect Distribution,
2002-2012F 79
Figure 2.34: Value of the US Outbound Online Car Rental Market, Direct vs. Indirect Distribution,
2002-2012F 80
Figure 2.35: Canadian Car Rental Market - Domestic vs. Outbound (%), 2002-2012F 81
Figure 2.36: Value of the Canadian Car Rental Market - Domestic vs. Outbound, 2002-2012F 82
Figure 2.37: Online Penetration of the Canadian Car Rental Market, 2002-2012F 82
Figure 2.38: Value of the Canadian Car Rental Market, Online vs. Offline, 2002-2012F 83
Figure 2.39: Online Penetration Comparison of Total, Domestic and Outbound Canadian Car
Rental Market, 2002-2012F 84
Figure 2.40: Car Rental Sector Contribution to Canadian Total, Domestic and Outbound Online
Travel Markets, 2002-2012F 84
Figure 2.41: Canadian Online Car Rental Market - Domestic vs. Outbound Distribution (%), 2002-
2012F 85
Figure 2.42: Value of the Canadian Online Car Rental Market - Domestic vs. Outbound
Distribution, 2002-2012F 85
Figure 2.43: Value of the Canadian Domestic Car Rental Market - Online vs. Offline, 2002-2012F 86
Figure 2.44: Online Penetration of the Canadian Domestic Car Rental Market, 2002-2012F 87
Figure 2.45: Value of the Canadian Outbound Car Rental Market - Online vs. Offline, 2002-2012F 87
Figure 2.46: Online Penetration of the Canadian Outbound Car Rental Market, 2002-2012F 87
Figure 2.47: Canadian Online Car Rental Market - Direct vs. Indirect Distribution (%), 2002-2012F 88
Figure 2.48: Value of the Canadian Online Car Rental Market - Direct vs. Indirect Distribution,
2002-2012F 88
Figure 2.49: Canadian Domestic Online Car Rental Market - Direct vs. Indirect Distribution (%),
2002-2012F 89
Figure 2.50: Canadian Outbound Online Car Rental Market - Direct vs. Indirect Distribution (%),
2002-2012F 89
Figure 2.51: Value of the Canadian Domestic Online Car Rental Market - Direct vs. Indirect
Distribution, 2002-2012F 90
Figure 2.52: Value of the Canadian Outbound Online Car Rental Market - Direct vs. Indirect
Distribution, 2002-2012F 90

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 Executive Summary
North America Online Travel Report 2009

Executive Summary
> North American Travel Market Overview
2009 to be the first year this decade that a decline in travel expenditure is
expected in the region

The value of the North American travel market reached an estimated US$389,376 million
in 2008 and a further 16% increase in volume is expect by 2012, but growth has slowed.
2009 is expected to be the first year this decade for a decline in the total value of travel
expenditure and we forecast a recovery in 2010.

Fastest growth in Hotel and Cruise sectors

Airlines continue to account for the largest proportion of travel spend, followed by Hotels.
In 2008 these sectors accounted for 35% and 25% of the total market respectively. Fastest
growth has been in the Hotel and Cruise sectors.

Online penetration of North American travel market reaches 35%

Distribution trends within the North American market reveal some particularly interesting
patterns. Whilst offline channels continue to account for the majority of travel spend
online channel have been rapidly gaining share. In 2008 the online penetration of the
North American travel market reached about 35% of the value. By 2012 we are expecting
almost half of travel expenditure to be online. Growth rates of the online channel are
expected to be lower than previous years but between 2008 and 2012 a total growth in
value of almost 50% is forecast. The online travel market by 2012 is predicted to reach
a value of US$201,382 million. That is an additional US$57,498 million annually to be
circulated online by the end of 2012.

All growth is online

While the gross travel market experiences a relatively stagnant period, amongst this,
the online travel market is showing very healthy growth and continuing to erode offline
share. This illustrates the growing importance of online channels and the resilience to the
economic downturn.

The Airline sector dominates the online travel market (56%) and online expenditure on
Airline products reached US$75,964 million in 2008. The value of the online travel market
is forecast to grow in value by 44% between 2008 and 2012.

The Hotel sector accounts for 32% of the total online travel market and US$42,831 million
in 2008. Growth by 2012 is forecast to be up by a value of over 50%. The Car Rental sector
is the next largest sector accounting for 7.7% and a value of US$10,389 million (2008).

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 Executive Summary

Growth in the value of the outbound travel market has been higher than the domestic
travel market, but in 2009 a decline of 4.8% is expected in the outbound market for the
first time. Good recovery is forecast for 2010.

Domestic travel accounts for around 64% of the total online travel market and outbound
36%. Outbound travel products for North American consumers have performed well
online and increased in share from 28% in 2002. From 2010 we expect grow in both
domestic and outbound online markets to hit double digit figures again.

Canada increases it significance in the North American travel market but US spend
more per trip

Canadian travellers accounted for 9.4% of total North American travel trips in 2002 and
by 2012 we expect this to increase to 11.3%. Canada has out performed the US from a
volume growth perspective. Canada is expected to grow by 1.8% in 2009, while the US
experiences a decline of around 1%.

In value terms, the US contributes 90% to the North American market and this is expected
to remain relatively consistent during the review period in this report. US travellers have
a higher spend per trip than Canadian travellers.

US online travel market valued at US$123,346 million in 2008

The US accounts for 91% of the total North American online travel market. The US online
travel market reached an estimated value of US$123,346 million in 2008 and Canada
US$12,252 million (CAD $12,869 million). The US online market is slightly more advanced
than Canada but penetration is relatively similar. 35.2% of US travel expenditure was
online in 2008 against a 31.5% penetration for Canada. By 2012 we forecast 44.8% of all
US travel expenditure to be online and 42% of Canadian.

A continuously changing travel distribution landscape

The contrast between the performances of online and offline channels is enormous.
Online channels have been remarkably productive and growth rates have remained in
double digit figures for every year reviewed in the report – with the exception of 2009
when annual growth is expected to fall to a level of 6.3% (still well above growth levels
for the offline market for the entire period). Put alongside offline productivity, the 5.2%
decline in the offline market for 2009 makes a very strong statement. The online channels
certainly now seem strong despite times of instability.

US outbound travel market is growing

Just under 70% of US travel expenditure is currently on domestic travel. Outbound travel is
growing well and at higher rates than the more mature domestic market. 2009 is however
expected to result in an estimated 4.8% decline. Mexico and Canada are receiving the
most outbound travellers, followed by the UK. Growth has been strongest in Germany

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 Executive Summary
North America Online Travel Report 2009

and Japan. A slightly higher proportion of domestic travel is bought online in comparison
to outbound travel, but only marginally.

Canadian travel market reaches US$38,869 million (CAD $40,825 million) in 2008

By 2012 the Canadian travel market is expected to be 73% larger in size than it was in 2002.
The Canadian market is very different from the US in that outbound travel accounts for
the majority of the Canadian travel market. In 2008 outbound travel contributed around
67% to the total Canadian travel market. Annual growth has generally been higher for
outbound travel and a 5.5% CAGR is expected for the 2007-2012 review period.

Canadian online travel market valued at US$1,986 million (2008)

Online channels are also becoming increasingly significant for the Canadian travel
market. Online penetration has jumped from 11% in 2002 to around 32% in 2008. Growth
is expected to slow but continue to expand and penetrate around 42% of the market by
2012. The online travel market is divided fairly evenly between domestic and outbound
markets, despite the domination of the outbound segment in the gross market. The
domestic market has a higher online penetration and when in 2012 we forecast that
60% of domestic travel will be purchased online, 33% of the outbound segment will be
online. Growth online for both has been remarkable though. Airline products make up a
significant 61% of the Canadian online travel market and the data reveals that there is a
lot of room for growth for some of the travel sectors.

> Car Rental Sector

North American Car Rental market reaches US$26,282 million in 2008

The Car Rental sector accounts for around 6.8% of total North American travel market
(2008), which is an estimated value of US$26,282 million and an increase of 1.6% on
2007. In 2009 a further 1.7% growth is forecast and a 3.5% CAGR for the 2007-2012
review period. The domestic market dominates at about 63%. The US market generated
US$24,553 million in 2008 after modest growth of a 4.3% CAGR (2002-2007). The
Canadian market generated US$1,880 million (CAD $1,896 million) in 2008 after a slightly
higher growth of a 7.2% CAGR (2002-2007). In Canada the outbound market accounts for
the majority whereas in the US the domestic market dominates.

Online penetration of Car Rental market behind Airline and Hotel sectors

Online distribution in the North American Car Rental market has increased but remains
behind the Airline and Hotel developments. In 2008 online expenditure was around 39%
for Car Rental and a value of US$11,157 million, this was an increase of 9% from 2007. By
2012 the sector is expected to reach the half way mark between online/offline distribution.
Growth has been good with a 20.3% CAGR during 2002-2007 and although expected to

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 Executive Summary

slow in the upcoming period we forecast a 9.5% CAGR (2007-2012). Growth is expected
to be particularly lower in 2009 but double digit growth forecast from 2010.

Online growth for US Car Rental market drops for 2008/09 but still very positive

Online penetration of the US Car Rental market reached 40% in 2008 and in fact most
growth in the market has been online. During 2002-2007 the online market grew at a
19.4% CAGR and offline experienced an almost 1% decline. Similar trends are forecast for
the latter review period. Besides 2008/09 online growth is recorded in double digit figures
but in 2009 it is still expected to grow by 7.6% online.

The US Car Rental market accounts for around 93% of the total North American online
Car Rental market and reached a value of US$9,767 million in 2008 which was an increase
from US$3,684 million in 2002. Annual growth in the US appears to be more erratic.
Online penetration is higher in the US domestic market for Car Rental.

Offline channels for the Canadian Car Rental market started weakening around
2007/08

The Canadian online Car Rental market reached an estimated value of US$622 million
(CAD$653 million) in 2008 after a 30% CAGR during 2002-2007. which from US$99 million
(CAD $155 million) showed slightly higher growth rates than the US. Online penetration
in the Canadian Car Rental market reached 33% in 2008. The online market is forecast to
grow in double digit figures for the upcoming period and a 14.3% CAGR is forecast. For
Canada, online penetration is slightly higher in the outbound segment in comparison to
the domestic segment.

Direct online distribution dominates the Car Rental market

Direct online distribution dominates the online Car Rental market in both markets and
the proportion has increased. In 2008 66% was Direct in the US market. As with some
other sectors, the OTAs have held their share better in the outbound market. In 2008 the
Indirect Car Rental market in the domestic segment declined for the first time by 2.7%.
Growth in the value is expected to pick up again in 2009 but higher growth is expected
from Direct channels. Direct online distribution accounts for the majority of sales in the
Canadian market as well.

Airline products make up the majority of OTA revenue and accounted for around 52%
in 2008. This is largely accounted for the sheer size of the online Airline market. Hotel
products are also very dominant. Expenditure on Bus, Rail and Package products is mainly
channelled direct to suppliers. Nevertheless, these sectors have edged up their share in
OTA revenues marginally and have as a consequence eroded some of the Airline share.
The share of OTAs in the Canadian market is more pronounced that in the US. In 2008
25% of the Canadian online market was Indirect and 36% of the US market.

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