Online travel agencies are taking back some of the distribution market share they lost to hotel chains during the years leading up to the pandemic, as companies such as Expedia Group and Priceline parent Booking Holdings have ramped up marketing investment and product improvements to sell more room nights to prospective U.S. lodging guests.
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Direct-booking incentives and loyalty program pushes have made strides in driving guests to book on the websites of the big hotel brands. But as the industry’s recovery from the pandemic has progressed, OTA bookings have again outpaced hotel website bookings.
According to travel-research firm Phocuswright, online travel agencies’ share of bookings dropped to as low as 49% before the pandemic, but has since rebounded to 52%. In 2012, OTAs had a 54% share of that business.
While such gains appear incremental, one percentage point of online gross bookings can account for as much as $1 billion worth of business and anywhere between $100 million and $200 million in commissions swapped between the hotel companies and OTAs.
“It became easy and cheaper if you were a member of a loyalty program to book direct, but that’s been countered by [OTAs’] marketing programs, and hotels can’t compete with that,” said Lorraine Sileo, senior analyst at Phocuswright. “When things ramped back up in 2022, the OTAs hit it hard and gained share back.”
Executives at both Expedia and Booking Holdings indicated in recent earnings calls that the momentum has carried over into this year.
Expedia’s total lodging bookings increased 38% year over year in 2022, and the company reported record fourth-quarter bookings last year. Expedia CEO Peter Kern, speaking on the company’s earnings call in February, partly attributed the gains to investment in integrating its Hotels.com site into Expedia’s booking platform.
“In January, we saw a step change where our lodging gross bookings accelerated even further, growing over 20% versus 2019,” Expedia Chief Financial Officer Julie Whalen said on February’s call. “While it is still early in the quarter in 2023, we are pleased to see strong lodging demand continue.”
The number of rooms booked on Booking Holdings’ channels increased 52% last year to almost 900 million, an annual record for the company.
