The share of the online channel, which grew to 65% in 2021, moderated slightly to 63% in 2022 (see figure below), as offline channels showed signs of recovery. Online travel agencies (OTAs) accounted for just over one-fifth of the total US market, while the supplier-direct online channel accounted for 41% of the market.

Phocuswright's US Online Travel Agency Market Report 2022-2026 provides a comprehensive overview of the US online travel agency channel, including detailed market sizing and projections to 2026, distribution trends, key developments and more.

Looking ahead

With the general stabilisation of the market expected over the next few years, growth will moderate, but will remain positive for the remainder of the forecast period.

Looking ahead, the research focuses on 4 key areas:

• Loyalty and retention: Different approaches, same goal.

Given that most travellers only take a few trips a year and that price is the main driver of what and where they book, attracting travellers and retaining their loyalty is a difficult task. 

OTAs are making a significant effort on this front, although their approaches vary. Loyalty as a battleground will continue to be contested in the coming years.

• A renewed focus on apps

While OTAs such as Hopper and HotelTonight have always prioritised apps or apps alone, mobile was only part of the puzzle for the larger OTAs. But several factors, including their reduced marketing spend and dependence on Google, along with their need to acquire first-party data, have made direct customer interaction through their own sites and apps increasingly important.

Phocuswright's research has consistently shown that consumers visit multiple sites when shopping for travel in an attempt to save a few dollars. Will discounts or rewards turn them into loyal, repeat customers? Are apps the channel to induce that behaviour? Loyalty and apps together will continue to be a closely watched area in the coming years.

• B2B gains traction

While the consumer side of the business has gone from strength to strength, OTAs have continued to grow their B2B portfolios, as supply partners, driving various service offerings or through white label platforms.

Historically, it was travel providers that partnered with OTAs in an attempt to complement their core products. But now more non-travel brands, especially financial institutions, are partnering with OTAs to sell travel. The goal, as noted in a recent Phocuswright article, is not to earn substantial revenue, but to keep their customers coming back and encourage card usage (more points to redeem). For OTAs, these partnerships can be quite profitable.

• Short-term rentals

Although Airbnb continues to dominate the conversation, STRs remain an important part of the business for the two big OTAs. Booking.com increased its RPT room-nights by 56% in 2022 and they now account for 30% of total room-nights. It has also introduced new policies and services for property owners/managers, such as a damage policy, liability insurance and a booking request function. The importance of STRs to Booking.com is evident in its Superbowl LVII ad, featuring Melissa McCarthy.

Meanwhile, Expedia is migrating Vrbo to the same platform as its other major brands in 2023. It expects the new OneKey loyalty programme, which will offer short-term renters the benefits of a loyalty programme, to also drive growth in the future.

This report is part of the U.S. Travel Market Report 2022-2026 series, which presents an overview of the U.S. travel market, along with detailed data and analysis for five key segments: airlines, hotels and lodging, car rentals, cruises and package tours. This separate report, dedicated to online travel agencies, completes the coverage. Taken together, the series provides comprehensive projections and analysis of the US travel industry market from 2019 to 2026.

Author: Phocuswright