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Multinational corporations will drive much of the fourfold growth in Europe and sixfold expansion in Asia-Pacific of corporate online booking volumes over the next two years, according to newly released research by PhoCusWright. These projections greatly exceed PhoCusWright's expected 70 percent growth by 2008in the more mature United States market.
Gross online managed corporate travel (air, car, hotel) bookings in 2005 totaled $1.2 billion in Asia-Pacific and $4.4 billion in Europe, according to PhoCusWright's "Corporate Travel Distribution: Key Markets" report, which was written based on interviews this year and last with more than 160 executives at technology companies, travel management companies, online travel agencies, suppliers and global distribution system providers.
By 2008, Asia-Pacific is expected to generate $7.9 billion in gross online managed corporate travel while Europe would drive $21.6 billion. PhoCusWright pegged the United States at more than $50 billion by then.
"Across all sizes and types of companies in Europe, average online corporate travel gross bookings remain low," according to PhoCusWright. "Of course, this average does not properly illustrate the aggressive use of self-booking tools among U.S. multi-nationals and larger local firms which are leading market consumption and are rigorous about driving down transaction costs and total travel spend. PhoCusWright research indicates that among these large corporations, as much as 15 to 25 percent of corporate travel spend is being transacted online." In general, however, "corporate culture resists (or hesitates to adopt) self-booking tool mandates, thus limiting the size and pace of growth."
In Asia-Pacific, general use in Australia and "multinationals in Singapore and Hong Kong" are primary drivers, with such firms as General Electric, Hewlett Packard and Motorola "achieving some degree of traction" despite certain regional and/or national challenges, including lack of e-ticket and credit or charge card penetration. Another challenge in many Asian nations is the traditional economic structure of TMCs. "Australia, the strongest online market representing an estimated 50 to 60 percent of the region's  online sales, is the only market to change its fee structure," according to PhoCusWright. "This open sharing of costs (transparency) is essential in order to show the value proposition of online booking."
Other factors frustrating higher use in Asia-Pacific include low agent labor costs and high agent value for such ancillary services as visas; the prevalence of multi-leg international trips and paper tickets; and uneven GDS participation by airlines.
In Europe, PhoCusWright noted, multi-TMC and multi-GDS relationships, the importance of rail, greater use of non-GDS hotels and higher percentages of international travel pose challenges. Regional and national nuances also prevail. Travelers from France, Italy and Spain tend to "place a high value on high-touch and like to discuss options with travel agents," the report indicated. "Here, travel is arranged by assistants or secretaries, rather than the travelers themselves." By contrast, the Benelux countries, Germany, Scandinavia and the United Kingdom show high usage.
"Even though tool usage is not mandated, some companies [in the northern countries] have reached adoption levels of 70 percent with the assistance of TMCs and major distributors," PhoCusWright wrote. The United Kingdom, in particular, is beginning to show rates and development that "rival the American market."
The research firm said it expected TMCs to continue to "dominate" online corporate travel in Europe, although their share would drop by 2008 to 85 percent from last year's 95 percent as airline channels and "Internet" TMCs grow.
According to the report, online and offline corporate travel in the 15 original European Union nations plus Switzerland generated about $88 billion last year, while the 44 nations of Asia-Pacific drove about $60 billion in overall managed corporate travel spending.
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