Online Travel Reservation Services
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 1,400 online travel reservation service providers facilitate travel purchases between travelers and a wide range of travel resources, including airline seats, lodging, rental cars, and tours. Through websites and mobile applications, online travel agencies (OTA) use proprietary technology to streamline the travel booking process and provide a one-stop platform for researching, comparing, and reserving travel services. Lodging reservations account for the vast majority of revenue.
Dependence on Changing Technology
OTAs depend on sophisticated technology to support and enable customer interaction and manage data from different travel suppliers on a single platform.
Travel Industry Recovery Ongoing
The post-pandemic recovery of the US travel market is ongoing, with the leisure market bouncing back faster than the business and group travel markets.
Industry size & Structure
The average online travel reservation service provider operates out of a single location, employs about 40 workers, and generates about $18 million annually.
- The online travel reservation services industry consists of about 1,400 firms that employ about 56,000 workers and generate $25 billion annually.
- The industry is concentrated with the top 50 companies accounting for about 70% of industry revenue.
- Large companies include Booking.com, Airbnb, Expedia, and AAA.
- Household consumers and individuals account for almost 60% of industry revenue, businesses account for 23%, and travel agencies and other resellers account for 16%. Less than 3% of establishments are franchises.
- Because of the global nature of travel, large firms typically have operations in foreign countries.
Industry Forecast
Online Travel Reservation Services Industry Growth
Recent Developments
Oct 22, 2024 - Travel Agent Renaissance
- A new survey suggests traditional travel agents may be staging a comeback, with younger travelers preferring the in-person service and expertise travel advisors provide to booking travel themselves online. The survey commissioned by IBS Software, a software provider for airlines, cruise lines, and other transportation providers, found 38% of millennials (1981-1996) and Gen Z (1997-2012) are opting to use traditional travel agents rather than booking themselves online. That figure is significantly higher than the 12% of Gen X and 2% of baby boomers who said they use a traditional travel advisor. Gen X (1965-1980) far prefers to use OTAs when booking their holiday travel (35%). This renaissance of the travel agent amongst the younger generation has contributed to just 22% of respondents booking hotel stays and airline tickets directly through their vendor’s websites, the study found.
- Employment by online travel reservation services grew 2.7% in July compared to a year ago, while average wages at travel arrangement and reservation services fell 3% over the same period to $28.54 per hour, according to the latest US Bureau of Labor Statistics data. In July, the average industry wage was down 7.4% from its peak in January 2023. The wage decline comes amid a pullback among would-be US travelers who say budget constraints and high prices are preventing them from traveling this summer, according to Deloitte’s 2024 summer travel survey.
- The current slowdown in demand for travel is good news for deal seekers, with airfares falling and hotels discounting rooms this fall, The New York Times reports. During earnings calls in August, online travel agencies, like Expedia Group and Booking Holdings, and short-term rental (STR) companies noted slowdowns. “The revenge travel effect is finally receding, and so are prices,” the CEO of the Kayak search engine, Steve Hafner, told NYT, adding that the fall season will be an ideal time for travelers to “snag up a deal.” The chief economist at AirDNA, a STR data and analytics company, said lower-priced listings at hotels and STRs are showing weakness. To attract budget-conscious travelers, some hotels are discounting rooms while others are offering perks, including upgrades. Travelers booking rooms at the last minute are finding attractive deals on online travel sites and agencies, NYT notes.
- The Travel Technology Association (Travel Tech) in July urged the US Trade Representative to act in response to Canada’s new digital services tax (DST), given what it claims is the DST’s outsized impact on the travel technology industry. The new legislation, which took effect in January and is retroactive to 2022, imposes a 3% tax on digital services revenue exceeding C$20 million. (The first payment is due on June 30, 2025.) Travel Tech notes the new tax applies to online marketplace services, but not their suppliers including hotels and airlines, even though they sell the same rooms and plane tickets. In its letter to the USTR, Travel Tech objected to Canada’s methodology of taxing gross revenue rather than net income for digital services, noting that while digital service companies may earn the same gross revenue, they may have a different cost base, resulting in very different margins.
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