U.S. Online Travel Agencies Focus on Loyalty, AI, and B2B to Navigate Market Challenges

What's Happening?

U.S. online travel agencies (OTAs) are shifting their strategies to focus on loyalty programs, B2B partnerships, and AI-driven innovations to secure their future in a plateauing market. According to Phocuswright's U.S. Online Travel Agency Market Essentials 2025, these agencies are adapting to changing market dynamics by enhancing customer loyalty and expanding their business-to-business operations. Expedia's B2B business has seen significant growth, contributing 30% of its revenue, while its One Key loyalty program drives nearly half of its room nights. Similarly, Booking's Genius tiers account for 55% of hotel nights, with a substantial portion of bookings coming directly through mobile apps. Additionally, OTAs are investing in virtual travel assistants and partnering with AI companies like OpenAI and Microsoft to enhance their offerings.

Why It's Important?

The strategic shift by OTAs is crucial as they face a plateauing U.S. market. By focusing on loyalty programs, these agencies aim to reduce marketing costs and retain customers, which is vital for sustaining growth. The expansion into B2B partnerships allows OTAs to tap into new revenue streams and integrate travel services into various platforms, enhancing their market presence. The adoption of AI-driven solutions positions these agencies to offer more personalized and efficient booking experiences, potentially attracting tech-savvy travelers. This evolution in strategy reflects the need for OTAs to innovate and adapt to remain competitive, especially against major players like Airbnb.

What's Next?

OTAs are expected to continue expanding their B2B partnerships and enhancing their loyalty programs to solidify their market position. The integration of AI technologies will likely lead to more sophisticated virtual travel assistants, offering improved customer service and booking experiences. As these agencies compete with Airbnb, they may further diversify their lodging options and explore new markets. The ongoing development of dynamic packaging and connected trip strategies will be central to their efforts to become comprehensive travel solutions providers.