etravel   e-tourism newsletter
No 2000/5 - Paris, Monday August 24, 2000

emarket news
e-market strategies
enewsletter sign up free


  Lastminute/Degriftour: will eTourism become a sub-product of the retail business?  

Just as has had to throw in the towel in the online tourism BtoC arena and has also gone into receivership under British law, the prospects for have opened up through its acquisition of the French travel company, Degriftour.

The deal raises a number of points.

To start with, this is the first time that a totally virtual company has bought a large offline company in France in the field of tourism.

This may seem like an obvious remark, but the fact is that the consequences for the French market - which has long been skeptical about the Internet business - will be far-reaching. In fact, the deal should pave the way for similar acquisitions in the coming months.

In France, there are no real "industrial" players, apart from a few rare exceptions such as the Accor group. The French tourism business is, in fact, largely dominated by individually or family-run medium-sized companies.

This is quite different from other European countries, such as Germany for instance, where tourism is a well-organised industry.

The result is that French players in the eTourism sector today do not have the means to succeed on their own and most of them will have to limit their European ambitions to France.

Degriftour is no exception, and its attempts to develop on a European level have not, so far, met with the success expected, mainly because it lacked the extensive funds needed for this type of web project.

The deal with Lastminute was, in my opinion, a very sensible move.

It seems sure now that Degriftour is slipping from the privileged position it has held on the French market up to now, and that the company would have run the risk of being less interesting strategically for a future purchaser had it waited.

Degriftour has stated that, in 1999, it held 50% of the French eTourism market share; in 2000 this is unlikely to be more than 25% to 30%.

The Degriftour site itself (see our French-language eIndices) does not have the intrinsic qualities needed to stay at the top for much longer.

The leading position the site has achieved is due more to the fact that the company has been well-known in France for some time and was able to enter the Internet business very quickly (its business model based on the Minitel - a text-based information service popular in France for many years - was easy to duplicate on the web) than from the quality of its eServices.

Although it provides an extensive range of products, its content, presentation and online services are a long way from the customer-centric expertise acquired by, which currently boasts 2.1 million subscribers.

Degriftour will benefit from's web experience and this should help it to win back some of the market share it has lost.

The deal also raises another important point.

To date, eTourism only represents 53% of the "items" sold by (not to be confused with the turnover). This also means, then, that part of the eTourism market is slipping away from the traditional travel circuit.


The fact that a non-negligible part of this business sector is moving into the hands of an eRetailer is also symptomatic of the impact of the Internet on the economy, since it allows not just the emergence of new business models, but also for whole economic sectors to be reshaped (the record business is just one example of this).

Nonetheless - and this is perhaps the greatest risk faces - although Degriftour's gross margin is currently almost double its own (18% compared 10%), the price battle expected to take place in the eTourism world could rapidly change this situation and make the British site regret its decision to sell gifts and other last minute services.

Moreover, as Degriftour's web success is due more to its well-known brand image than to its Internet capacities, the long-term weakening of its brand image, as Lastminute gradually takes a more high-profile role, could be a major strategic error, since Lastminute is not nearly so well known in France.

In addition, if Degriftour wants to continue its European Internet project, this will require considerable financial means, which will therefore be drained away from itself.

Getting the balance right between these two strategic positions is going to be difficult; Martha Lane Fox, Lastminute's CEO, will have her work cut out for her if she is to achieve the right blend.

The success or failure of the exercise will have an important influence on the future of European eTourism, which will either be partially "captured" by eRetailers or will manage to reorganize itself around some of the major sites in the sector.

I believe, moreover, that the danger in the online travel market for will, in the future, come more from European sites such as eBookers, than from endeavors such as the European airline portal (Air France, British Airways, Lufthansa, Iberia, SAS, KLM, Alitalia, Finnair, Austrian Airlines) which, like (see article: " no future?" in eTourism newsletter 2000/4) still have a long way to go before they become a real threat.

Back to titles

| Top | Home | eCommerce | eMetrics | eFocus | eIndices | Archives | Links |
| © Copyright | Privacy Pledge | Contact | Reports | eShopability Expertise |

The Last eTourisme Trends and Figures: Sign Up Free

eTourism Newsletter Web Site Editor: Luc Carton