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OTAs Aggressively Pursuing Higher-margin Hotel Segment

The skies have not been friendly to online travel agencies (OTAs) in recent years, but OTAs are countering online market share lost to airlines with a strategic move of their own. OTAs have aggressively pursued the higher-margin hotel segment, and those efforts are paying dividends.

PhoCusWright The skies have not been friendly to online travel agencies (OTAs) in recent years, but OTAs are countering online market share lost to airlines with a strategic move of their own. OTAs have aggressively pursued the higher-margin hotel segment, and those efforts are paying dividends. According to an upcoming report from travel industry research authority Phocuswright, OTA hotel bookings are projected to grow 15% in 2014, outpacing hotel website gains for the third consecutive year. OTAs' share of the online hotel market will increase to 48%, up from 46% in 2012.

"OTAs have leveraged the return of deal-hungry, mid-market hotel shoppers to reverse the recent shift in favor of suppliers and replace revenue lost to airline-direct bookings," says Phocuswright research analyst Maggie Rauch. "A strong hotel market, paired with improving air sales and an early advantage in capturing mobile travel bookings, is boosting the outlook for intermediaries."

Hotel and lodging will comprise a growing share of OTA revenues, increasing from 44% of U.S. domestic OTA gross bookings in 2012 to 51% in 2016. OTA hotel bookings via the mobile channel -- a key driver of overall mobile bookings growth -- will contribute to those gains. In 2014, mobile will account for nearly one quarter of OTA hotel bookings, compared to 11% of hotel website bookings.

Phocuswright's U.S. Online Travel Overview Fourteenth Edition is a comprehensive analysis of the U.S. travel industry, providing market sizing and growth forecasts through 2016. The report focuses on the U.S. online leisure/unmanaged business travel marketplace, highlighting marketing and distribution trends for all travel segments including air, hotel, car rental, vacation packaging, rail and cruise. This comprehensive research provides a detailed overview of travel distribution in the U.S., with analysis of trends in market share, technological innovation and consumer behavior.



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