In a recent report, Bank of America analysts discussed what investors can expect from the online travel sector in 2015. Analysts describe a rapidly-evolving business with many positive growth catalysts and several risks ahead in 2015.
Growth Drivers
Analysts expect a 7 percent year-over-year growth in the online travel market in 2015. This projected growth rate suggests $381.2 billion in online bookings next year. The report includes estimates for online penetration of 43.3 percent in the United States, 41 percent in Europe and 39.5 percent in Asia. Bank of America expects penetration in all of these markets to eventually reach 50 percent.
Mobile expansion is also a huge driver of online travel growth. U.S. mobile travel bookings have more than doubled in each of the past several years. Analysts predict a 63 percent year-over-year increase in U.S. mobile bookings in 2015.
Possible Risks
The report details several unknowns that could pose threats to the online travel business in 2015. Competition in the space is one of the major risks for margins that analysts see. In addition, rising occupancy rates could put pressure on room inventories.
Weak economies in Europe and Asia could also put a damper on leisure activities such as travel.
Finally, Google Inc GOOG 1.03% GOOGL 1.05% directs a massive amount of traffic to the large online travel sites, and recent changes to the way in which Google displays travel-related search results could be an early indication of Google’s intent to steer traffic toward its own Google Hotel Ads.
Top Pick
Bank of America chooses…
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