# U.S. Online Travel Agency Market Essentials 2026: Why OTAs Need Hotels

**Publisher:** Phocuswright  
**Published:** n/a  
**Category:** Research, media & analysts  
**Type:** Report  
**Access:** Registration  
**Official source:** https://www.phocuswright.com/Travel-Research/Research-Updates/2026/the-number-that-explains-why-otas-need-hotels-to-keep-working  
**Canonical:** https://tourismintel.ai/reports/13-is-the-number-that-explains-why-otas-need-hotels-to-keep-working-phocuswright

## At a glance
- U.S. OTA gross bookings rose 4% in 2025 to $100.3 billion; OTAs represent one-fifth of all U.S. travel bookings.
- Only 13% of airlines' online passenger revenue flows through OTAs, indicating airlines have largely bypassed the channel.
- Hotels account for 63% of OTA gross bookings and drive near-total growth; air segment share declined to 20%.
- OTA share of U.S. travel bookings projected to reach 21% by 2028, though growth concentration narrows risk exposure.
- Air is no longer a growth lever for OTAs; future growth depends on packaged trips, cruises and activities—smaller, less proven segments.

## What the report covers
Phocuswright's U.S. Online Travel Agency Market Essentials 2026 examines OTA market sizing, segment composition, and competitive dynamics in the United States through 2029. The analysis breaks down air, hotel and other category performance, revealing structural shifts in how airlines and OTAs interact. The report explores competitive positioning among platforms including Expedia and Booking, and identifies emerging drivers such as AI and B2B expansion. Published July 2026.

## Key findings
U.S. OTA gross bookings reached $100.3 billion in 2025, representing 4% growth year-on-year. OTAs now control one-fifth of all U.S. travel gross bookings, with this share projected to reach 21% by 2028. Surface-level headline metrics suggest stability and steady expansion, masking significant underlying segment divergence and structural risk.

Only 13% of airlines' online passenger revenue flows through OTAs according to Phocuswright estimates. Air's share of OTA gross bookings has declined to just 20%, driven by traveller migration to airline-owned direct channels and airline strategies—tighter capacity and higher fares—that reduce shopping incentives. Airlines have effectively recaptured the online customer.

Hotels are the primary engine of OTA growth, representing 63% of gross bookings. Despite this dominance, hotel revenue growth within the OTA channel has begun to slow in line with broader U.S. hotel market cooling. The industry's 4% headline growth and rising market share are substantially a hotel story, not an OTA-wide phenomenon.

OTA dependency on a single segment creates concentration risk. If hotel growth continues decelerating, no offsetting revenue from air is available—that segment is closed off. Growth would rely on smaller, unproven-at-scale categories: packaged trips, cruises, activities and other suppliers. These segments remain structurally smaller and lack the revenue reliability of hotels.

The report covers market sizing through 2029, segment-by-segment shares, and competitive dynamics shaping major players. Additional analysis addresses where artificial intelligence, B2B expansion and packaging investment drive the most impact on growth. This research forms part of the U.S. Travel Market Report 2026 series, which includes parallel essentials for airlines, hotels, car rental, cruise and packaged travel.

## Key numbers
| Metric | Value | Note |
|---|---|---|
| U.S. OTA gross bookings 2025 | $100.3 billion | Observed; 4% year-on-year growth |
| OTA share of U.S. travel gross bookings (2025) | 20% | Observed current state |
| OTA share of U.S. travel gross bookings (projected) | 21% | Forecast for 2028 |
| Airlines' online passenger revenue through OTAs | 13% | Phocuswright estimate; reveals OTA penetration in air segment |
| Air segment share of OTA gross bookings | 20% | Observed; has declined from higher historical levels |
| Hotel segment share of OTA gross bookings | 63% | Observed; primary OTA revenue driver |

## Why it matters
**DMOs & destinations** — OTA dependency on hotels creates vulnerability for destination marketing. If hotel bookings through OTAs cool further, DMOs cannot rely on air traffic growth to compensate—airlines have shifted booking to direct channels. Destination strategies must diversify booking channels and develop packaged experiences (activities, cruises) that OTAs less heavily control.

**Hotels & hospitality** — Hotels remain OTA backbone but face margin pressure as growth slows. The 63% booking share masks declining growth rates as U.S. hotel revenue cools. Properties should reduce OTA dependency via direct channel investment, brand loyalty programmes, and corporate/wholesale partnerships to offset commission erosion and channel concentration.

**Travel tech & distribution** — OTAs must urgently diversify revenue beyond hotels to offset air segment loss and hotel slowdown. Packaging, experiences and cruises are smaller but faster-growing. Tech platforms should develop AI-driven bundling, B2B capabilities and supplier integrations to scale ancillary segments before hotel headwinds intensify margins further.

## Methodology and limits
This brief is based on the publicly available summary of Phocuswright's U.S. Online Travel Agency Market Essentials 2026. The full report includes market sizing through 2029, segment-by-segment analysis, and competitive dynamics. Figures cited are Phocuswright estimates and observed data; the methodology of the underlying research (sample size, data sources, modelling approaches) is not detailed in the available text. The 13% airlines-to-OTA figure and booking-share percentages derive from Phocuswright's analysis. Forecasts to 2028–2029 are projections, not observed data.

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© Phocuswright for the original report. This brief is an original editorial summary by TourismIntel (https://tourismintel.ai). Read the original: https://www.phocuswright.com/Travel-Research/Research-Updates/2026/the-number-that-explains-why-otas-need-hotels-to-keep-working