Why OTAs Need Hotels to Sustain Growth
A new Phocuswright report highlights a major trend in online travel. While U.S. OTA gross bookings reached $100.3 billion in 2025, airline bookings through OTAs continue to lose ground. As a result, hotels have become the primary driver of OTA growth.
Hotels Drive OTA Growth
According to the report, only 13% of airlines’ online passenger revenue now comes through OTAs. Most travelers prefer booking directly on airline websites and apps. Airlines have also reduced the need for comparison shopping by limiting capacity and maintaining higher fares.
Meanwhile, hotels account for 63% of OTA gross bookings, making them the industry’s strongest revenue source. Although hotel growth has slowed, the segment continues to support overall OTA performance.
Airline Direct Bookings Continue to Rise
The report shows that air travel now represents only 20% of OTA gross bookings. Travelers increasingly choose airline-owned digital channels because they offer direct booking benefits, loyalty rewards, and greater control over reservations.
Consequently, OTAs have lost much of their influence in airline ticket sales, forcing them to depend more heavily on hotel bookings.
Why OTAs Need Hotels More Than Ever
The report suggests that the industry’s overall growth masks a growing imbalance. Hotels continue to generate most OTA revenue, while air bookings contribute less each year.
If hotel demand weakens, OTAs cannot easily replace that revenue through airline bookings. Instead, they must rely on smaller segments such as:
- Vacation packages
- Cruises
- Activities and experiences
- Other travel services
However, these categories remain much smaller than hotels and have yet to prove they can offset any significant slowdown.
AI and New Growth Opportunities
Beyond market data, the report explores how artificial intelligence (AI), B2B expansion, and travel packaging could influence future growth. AI-powered research tools and personalized booking experiences may help OTAs improve customer engagement and identify new revenue opportunities.
Nevertheless, hotels remain the foundation of the OTA business model for now.
Outlook for the OTA Market
Phocuswright projects that OTAs will account for 21% of all U.S. travel gross bookings by 2028. However, future growth will depend largely on the hotel sector, as airlines continue strengthening their direct booking strategies.
The report makes one point clear: despite steady overall growth, hotels remain the segment that keeps OTAs competitive in an increasingly direct-booking travel market.
