Hotels Fuel U.S. OTA Growth as Air Bookings Decline

PhocuswrightU.S. online travel agencies (OTAs) have long relied on airline tickets as the cornerstone of their business. But sliding air bookings are now forcing OTAs to seek growth elsewhere. According to a new PhoCusWright report, OTA air gross bookings are projected to drop 7% in 2013 as air suppliers succeed in driving direct bookings via online and mobile channels. Hotel and lodging, not air, is now the segment driving OTA growth.

via PhocusWright Newsletter.

PhoCusWright – The Affiliate Deal of the Decade


The Affiliate Deal of the Decade

Travelocity’s New Deal with Long-Time Rival Expedia Marks the End of an Era

It was the fall of 1999, the heyday of online travel 1.0, among many other heydays.

Sabre, the parent of Travelocity, had announced the acquisition of Preview Travel, then the third-largest online travel agency (OTA). The combined entity would be an online travel powerhouse, pushing Travelocity well past number two Expedia, with whom it had been in a rough-and-tumble knife fight for the top spot.

“This is going to be a very, very impressive business in terms of its reach,” said then Sabre Chairman Donald J. Carty, quoted in an October 1999 article in the Wall Street Journal.

And so it was. The acquisition catapulted Travelocity to a leading position, with 35% of the OTA market in the U.S. in 2000, when total OTA gross bookings reached $6.6 billion. But the experience of being top dog was a fleeting one. Sabre’s subsidiary was quickly outflanked.

Within just two years, Expedia had shot ahead with its market-making merchant model for hotels, powered in part by the acquisitions of two online lodging aggregators, Travelscape and VacationSpot. Expedia’s new hotel platform gave it an edge that left its competitors as well as hoteliers in a daze amid the recession of 2001 and 2002. By 2004, one year after the additions of Hotels.com and Hotwire, Expedia was the U.S. market leader by a longshot, with nearly half the market.

read more via PhoCusWright.