Canada’s Investment in Universal Broadband Will Help Accelerate Growth of Online Travel Industry
The Canadian government’s recent announcement that it plans to connect 98% of Canadians to high-speed internet by 2026 will only accelerate online travel demand, says GlobalData.
The online travel intermediary market value already easily exceeds that of offline, reaching US$14.1bn in 2019 compared to US$9.2bn for in-store in Canada. A significant investment of US$1.75bn to develop universal broadband across the destination will only increase internet penetration and accelerate online travel bookings. GlobalData’s Q3 2019 consumer survey showed that Canadian tourists’ booking trends favoured online travel platforms.
Johanna Bonhill-Smith, Travel & Tourism Analyst at GlobalData, comments:“GlobalData forecasts international departures from Canada will decline by a staggering 43.9% over 2020 due to COVID-19 and associated international travel restrictions. Therefore, travel and tourism companies are facing significant difficulties. With digital innovations well under-way across Canada, it is clear that companies that do not hold a viable digital infrastructure or booking platform are likely to face further headwinds in servicing the future Canadian tourist.
According to GlobalData’s consumer survey, 36% of Canadian tourists book with an online travel agent (OTA) and 32% book directly with either a lodging or airline provider, meaning these online channels were the most popular for Canadian travellers in 2019. Only 13% stated that they typically use an in-store travel agent, desiring a face-to-face experience. With a total of US$1.75bn to be invested in universal broadband across Canada aspiring to reach 100% connectivity by 2030, the number of Canadians booking through an in-store travel agency is likely to further drop over the next few years.”
As early as 2013, the market value online travel intermediaries overtook that of in-store in Canada after experiencing year-on-year (YOY) growth of 12% reaching US$14.8bn. Since then, it has only accelerated further as major innovation with the online travel space has given travelers the opportunity to book holidays from the comfort of their own home.
COVID-19 sees the market value of both offline and online travel intermediaries naturally declining due to the dramatic slump in travel demand; GlobalData’s forecasts envision outbound travel from Canada to majorly decline over 2020 (-43.9%). Post-2020, however, as travel demand begins to recover, the growth rate for online travel intermediaries is far higher than that of in-store, forecast to grow at an expansive compound annual growth rate (CAGR) of 8.3% for 2021-24 compared to a compound annual rate of change (CARC) of -1.1% for in-store intermediaries.
Bonhill-Smith adds: “While there may always be a minority that will opt for a face-to-face conversation, seeking a more personal experience with an in-store travel agent when booking holiday, it is clear that online travel demand is accelerating at a much faster rate. In order to effectively service future demand, all companies need to be developing conversational platforms, app engagement and general digital infrastructure to ultimately offer that ‘seamless experience’ for the end user and to succeed in the future travel space.”