Travel Agencies in the US Industry Market Research Report Now Available from IBISWorld

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As the economy moves into recovery and traveling trends pick up, demand will increase and fuel growth for the Travel Agencies industry. Over the past five years, the industry was hit hard by falling domestic travel and international arrivals into the United States during the recession. Consumers were less likely to travel as unemployment rose and disposable income decreased. In the next five-year period, the industry is set to return to growth, driven by internet technology as consumers increasingly choose online travel agencies for flexibility and efficiency. While this trend will effectively eliminate many smaller brick-and-mortar establishments, profitability for online operators is expected to rise. For these reasons, industry research firm IBISWorld has added a report on the Travel Agencies industry to its growing industry report collection.

IBISWorld Market Research

IBISWorld Market Research

The online segment will facilitate growth for travel agencies, with major firms acquiring websites

The Travel Agencies industry began its recovery in 2010 after a disappointing 2009, when revenue declined 13.5% and brick-and-mortar travel agencies lost sales to internet businesses. According to IBISWorld industry analyst Nima Samadi, “A number of factors, including the state of the economy and other travel-related trends, drive growth and contraction in the Travel Agencies industry.” Despite the losses incurred over the past few years, IBISWorld estimates revenue will grow at an average annual rate of 2.4% over the five years to 2012, with revenue expected to grow 8.8% to $19.5 billion in 2012.

“In 2009, the decline of the domestic economy and increase in the unemployment rate forced people to become more selective regarding how they spent their disposable income,” Samadi adds. As such, consumers were less likely to spend money on nonessential travel. With the economy slowly improving throughout 2010 and 2011, consumer spending grew 2.0% in 2010 and an estimated 2.2% in 2011 as a greater number of consumers and business customers took trips. In 2012, consumer spending is forecast to rise, aiding Travel Agencies industry growth.

The era of storefront travel agencies is entering a long-term decline and being replaced by online services, which offer a relatively high-profit, low-cost way to handle transactions. This segment of the industry has grown significantly and will likely continue to display strong growth during the next five years. The vast majority of agencies still operate with only one or two employees in total, making it a small business-oriented industry. The proportion of small revenue operators has increased over the last five years, and mid-range agencies, in terms of revenue, are being squeezed by both larger agencies and niche operators. Major players include Carlson Wagonlit Travel, American Express Company, Expedia and Priceline. Large operators will continue to acquire global, regional and local websites to improve their revenue and profit growth performance and capture a larger share of this growing area. From 2012 to 2017, industry revenue is forecast to increase. For more information, visit IBISWorld’s Travel Agencies in the US industry report page.

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