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
Aug 22, 2024 - Flat Wages Amid Travel Pullback
- Employment by online travel reservation services grew 2.4% in June compared to a year ago, while average wages at travel arrangement and reservation services were unchanged over the same period at $29.44 per hour, according to the latest US Bureau of Labor Statistics data. June’s flat annual comparison contrasts with a nearly 5% decline in average wages relative to their 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 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.
- A new California state law that took effect on July 1 bans hidden fees on purchases, including hotel rooms, concert tickets, and food delivery services, The New York Times reports. The new law (SB 478) makes it illegal for businesses to advertise a price for an item and then add hidden fees at the time of purchase. The law requires hotels and short-term rentals such as Airbnb and Vrbo to display the true cost of the room or property on offer. It amends California’s Consumers Legal Remedies Act to add to the list of unfair and deceptive acts “advertising, displaying, or offering a price for a good or service that does not include all mandatory fees or charges." A second law, which also took effect July 1, specifically targets the sometimes hefty hidden resort and cleaning fees at hotels, according to NYT.
- Responding to rising concerns over privacy at vacation rental properties, Airbnb has banned the use of all indoor security cameras at its listings worldwide, The New York Times reports. The ban took effect on April 30th. Previously, the vacation rental giant had allowed the devices to be installed in common spaces like hallways and living rooms as long as hosts informed guests of their use before booking. Airbnb said it would continue to allow outdoor security and doorbell cameras, as well as noise decibel monitors, as they are an effective way to monitor security and prevent guests from throwing unauthorized parties, according to NYT. Airbnb is one of the biggest players in the short-term rental market, with more than a 20% share of the vacation rental industry, according to the company.
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