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Europe Embraces Internet as Greece Waits in the Wings

With about one-third of the European population connected to the Internet, the popularity of low-cost carriers and the emergence of dynamic packaging, the European online travel market is finally taking hold. Led by the U.K., France and Germany, travel e-commerce reached 7.6 billion euros in Europe in 2002.

Gross bookings are expected to more than triple in three years to reach 27.9 billion euros by 2005, according to PhoCusWright’s European Online Travel Marketplace: Focus on France. The report series covers the leisure and unmanaged business travel market in five markets – France (now available), Spain, the U.K., Scandinavia and Germany.

Although half of European online travel sales are generated in the U.K., that trend is expected to change considerably in three years, as Germany and Scandinavia gain ground. France will retain its market share over the next three years, and represent one-quarter of the European online travel market in 2005.

Consolidation has not yet taken hold in Europe, though the barriers to entry are getting higher and start-ups, such as Opodo, are having their challenges usurping the market leaders. In France, for example, there are currently nine competitive online travel agencies, and the top three have a 51% market share (that compares with the U.S. market, where the top three online agencies have more than a 75% share).

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Leading online travel agencies in Europe include Lastminute.com, Expedia, ebookers and Opodo. But in France, for example, three of the four largest online travel agencies are tour operators or owned by tour operators: Nouvelles Frontieres, Anyway and Karavel.

Expedia has a good presence in France, where it benefits from a partnership with the French state-owned railway company, SNCF. Still, even with high brand recognition, Voyages-sncf, the joint venture with Expedia and SNCF, garners a small 6% share of the fragmented French online travel agency marketplace.

Used to having a leadership position in the markets it serves, Expedia will have to surpass six more sites before it can overtake the current leader. Watching the evolution of the French and other European online travel businesses should prove interesting over the next several years as the various markets mature.

In Greece, online travel is still in its infancy. With the exception of travel services on global distribution systems and fragmented hotel booking systems, the country has yet to embrace travel via the Internet. However, many in the marketplace insist that the time is not yet ripe for travel sales via the Internet. Instead, they say Greece is in the process of building a base for the future of e-commerce on the Internet.


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