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For the first time, US research firm PhoCusWright has conducted a comprehensive study of the online travel marketplace in Canada: the Canadian Online Travel Overview. Though it has long been thought that Canadians lag behind Americans when it comes to using the Internet to plan and purchase travel, this report finally provides an overview of the actual situation. The following article was prepared by Claude Péloquin, of the Tourism Intelligence Network of the ESG-UQAM Chair in Tourism at the University of Quebec at Montréal.

Who took part in the study?

PhoCusWright interviewed nearly 1,500 Canadians for the study, including more than 200 Quebeckers, to analyze their travel planning and booking behaviour. To qualify, a respondent had to have made at least one trip by plane or by train in the preceding 12 months, and stayed in commercial accommodations. The Canadians used in the sampling also had to have used the Internet in the preceding month. Approximately 27% of the adult population meets this profile.

Although this sampling method is very restrictive because it eliminates three‑quarters of the adult population, the findings are nonetheless very valuable since the segment of Canadians used in the PhoCusWright study meet the profile of the industry’s ideal potential tourist.

In addition, the study only looked at consumer leisure travel and “unmanaged� business travel, in other words, business travel arranged by individuals without the help of a corporate travel agency or the company itself. In Canada, this market was worth over CAD$24 billion in 2006. Of this amount, 27% was purchased online, or the equivalent of CAD$6.5 billion. PhoCusWright predicts that this percentage will rise to 39% by 2009. By way of comparison, 34% of all travel‑related purchases in the United States were made online in 2006.

Travel planning and purchases

Approximately two‑thirds of Canadian online travellers use the Internet to plan and shop for their travel products. Online travel agencies (25%), search engines (23%) and supplier Websites (20%) are the primary sources consulted to compare travel products (Figure 1). On average, Canadians consult four sites before making a travel purchase.

When it comes to purchasing travel, nearly one‑third (31%) prefer to deal online directly with the supplier. Despite this tendency, traditional agencies remain competitive and are the trusted source for 27% of online travellers (compared to only 19% for online agencies), once the shopping process is over.

Online purchases

Plane tickets top the list of Canadian online travel purchases, accounting for 73% of the market. Hotel rooms come in second with 12%, compared to 10% for packages and 4% for rental cars. On the other hand, Canadian online travellers purchase plane tickets and hotel rooms in a greater proportion than Canadians in general (88%). (See Figure 2)

Furthermore, supplier Websites, particularly those of the airlines, clearly do better than online agency sites like Expedia. Major players like WestJet, Air Canada and the big hotel chains manage to generate a large percentage of their business online.

Factors influencing the purchase method

A large number of Canadians continue to be attracted by the lowest price, with 37% of those who make online purchases listing this as the primary reason for shopping online (Figure 3). The search for a deal is also an important criterion for those who deal directly with suppliers (25%) or through an intermediary (26%). People who buy their travel products offline do so primarily out of habit (29%) and because of better customer service (28%).

Factors influencing travel decisions

Regardless of whether a travel product is purchased online or offline, many Websites exercise a major influence on the consumer’s planning process and travel decisions (Figure 4). When shopping online, 90% of Canadian online travellers use general search engines like Google and 63% say that these tools influence their travel decisions.

First appearing approximately three years ago, personal review sites (see: Today’s consumers influence tomorrow’s choices) like TripAdvisor already play a major role, both at the planning stage (73%) and as an influence on purchasing decisions (43%). Not surprisingly, destination portals like Bonjour Québec also continue to play an important role. It is interesting to note that meta‑search engines like Kayak and SideStep, already popular in the United States, are also becoming indispensable in Canada. According to the study, 57% of Canadian online travellers use them and 26% feel they are influential when it comes to the decision to buy.

Leisure travellers use both online and offline channels

Despite the Web’s growing popularity among travellers, it is important to remember that traditional distribution channels continue to play a role in the purchasing process, particularly among leisure travellers. In fact, only 22% of online leisure travellers purchase their travel products exclusively online (Figure 5). At the same time, the percentage of those who never use the Internet to purchase travel is even higher (27%). Almost half (48%) have adopted a sort of hybrid approach by using both offline and online channels for their purchases. Overall, approximately 35% of all travel spending is transacted online.

Still plenty of untapped potential

The online travel marketplace in Canada has not yet reached its full potential. The PhoCusWright study examines the potential interest of Canadian online travellers who, at the moment, have still not made online travel purchases. It appears that it is only a matter of time, because 68% of them said they were interested in doing so in the future.

It is often said that the Canadian online travel market lags far behind the American market. According to the new information presented in this study, the Canadian market has made obvious inroads when it comes to using the various online tools available to travellers. Now it is up to businesses to stop hesitating and take action to build an effective Web presence to tap this market.

See also:

- Today’s consumers influence tomorrow’s choices

Sources:

- PhoCusWright. Canadian Online Travel Overview, 2007.

This entry was posted on 9 November 2007 at 11:50 am.