The high-flying years of travelers turning to online travel agencies in droves to book flights, hotels and more may be slowly tapering off.
A new report from Phocuswright says the U.S. OTA market may be “hitting a plateau.”
“While global expansion keeps the overall trajectory [of the OTA industry] positive, domestic performance tells a more nuanced story,” says the new report.
In 2024, U.S. OTA sales reached $108.5 billion according to Phocuswirght’s latest research report covering U.S. Online Travel Agency Market Essentials 2025.
That figure amounts to only modest year-over-year growth. Meanwhile, market share remains steady for now, but the new Phocusright report indicates that subtle shifts that are taking place—especially toward supplier-direct bookings—could ultimately reshape the landscape through 2028.
Here’s a closer look at what the report reveals.
Softening market, growing competition
American travel technology company Expedia, which owns and operates a long list of platforms including travel fare aggregators and travel metasearch engines like Hotels.com, Vrbo, Travelocity, Hotwire.com, and Orbitz, as well as many others, has long been the heavyweight in the OTA market.
But even Expedia may be impacted by the shifting market dynamics, says the new report.
“Expedia’s headwinds are mounting, as it grapples with a softening U.S. market and intensifying competition. Booking.com appears more insulated, but neither player is immune to the shifting tides” says the report.
Hotel bookings remain strong…for now
Travelers continued to turn to OTAs when booking a hotel reservation. But that tendency may be shrinking
“Hotel bookings remain the backbone of OTA profitability, but that strength may be fading,” continues the report. “With average daily rates stabilizing and traveler demand cooling, the pressure is on to find fresh growth engines, from short-term rentals and dynamic packaging to global markets and business-to-business solutions.”
The role of new technology
Tech is everywhere these days and is impacting all levels of the travel industry. And that includes the OTA landscape. In fact, it seems tech is the new battleground in the OTA marketplace, according to Phocuswright.
“With generative and agentic AI playing a growing role in shaping how OTAs sell and serve. These tools are more than just bells and whistles — they’re becoming vital in personalizing offers, bundling services, and boosting conversion,” says the report.
Total gross bookings by channel
At this point, bookings via OTAs make up the smallest segment of the market at just 22 percent of total gross bookings by channel.
The clear leader in today’s marketplace is supplier-direct bookings, which command a solid 42 percent of of total gross bookings. Meanwhile offline bookings make up 36 percent of total gross bookings by channel.
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