Report Overview
This report looks at how online travel booking habits changed during the pandemic and how these behaviors will continue to evolve. Since February 2020, Skift has been regularly surveying 1,000+ Americans about their travel behaviors first on a monthly, and then a bi-monthly basis. The topline results of these surveys are published as our U.S. Travel Tracker. However, we ask more granular travel questions that have not been published previously.
This report teases out specific insights around which channels Americans use to book their hotels and flights. With this data we can see how direct bookings changed during the pandemic and whether it has reverted to pre-crisis trends. We can also look at specific booking site market share shifts and investigate whether the trip planning process shifted.
What You'll Learn From This Report
- How did the pandemic impact direct bookings and are these trends still in place?
- How has online travel agency market share shifted since 2020 in the U.S.?
- Did the pandemic change Americans’ trip planning process?
Executive Summary
Using new data from our survey of American travelers we find that online travel booking trends are in flux. The early pandemic drove a wave of direct bookings, likely spurred by safety fears, customer service concerns around cancellations, and a lack of trust that third-parties could provide up-to-the minute in-destination information.
However, we see mounting evidence that these first-party gains may not be durable. As financial concerns loom larger over trust and safety, our surveys show more shoppers reverting to third-party bookings, likely as they seek out discounts and comparison shopping to find the best value.
Our survey data also hints at changes in the U.S. online travel agency landscape. Expedia Group’s multi-brand strategy makes it the largest family of booking sites in the U.S. by a wide margin. But their dominance is being challenged by aggressive investment from Booking.com and new challenger brands like Hopper.com and HotelTonight.
Despite the many shifts happening in online travel bookings, we see little evidence that the online travel planning toolset changed much. Online search and word of mouth recommendations remain the most important sources of travel planning (but not inspiration!) by far. This has been the case for the last three years since 2020 and throughout the pandemic.
Overall Booking Trends
Let’s start with the big picture. Skift Research asked U.S. travelers which channels they used to book their hotels and flights. We tagged all channels as either direct or third-party and then aggregated activity across both hotel and flight bookings.
This gives us our broadest look into how travel direct booking has been trending. We find it is on the decline after a peak early on in the pandemic, although more than half of all transactions still come direct.
According to our survey results, 64% of U.S. flight and hotel bookings came direct in 2020.. This fell to 61% in 2021 and to 57% in 2022.
We can rechart this to examine how the trend evolved over time. We exclude 2020 data here as it was too volatile at the monthly level with such limited travel activity taking place. What we see in the time series is that direct bookings peaked in early 2021 and quickly fell off into summer and fall 2021.
We suspect that it is no coincidence that this quick fall-off in direct bookings coincides with the rapid return of mass travel in the U.S. as vaccines became widely available and international locations began to re-open.
Let’s split this aggregate data into its two component travel products: Airlines and Hotels. Individually the broad direction of the trend is the same and since the summer of 2022, both hotels and airlines have been operating at parity in terms of direct booking share. However, Airlines fell farther, coming from a high of 70%+ direct bookings down to 57%, today.
Our best guess for this divergence is flight vouchers issued in the wake of mass cancellations in 2020. Online booking sites struggled to handle these future flight credits and we suspect most consumers rebooked directly. This would explain why Airline direct bookings remained elevated throughout all of 2021 even as Hotels fell. It would also neatly fit with the rapid decline of airline direct bookings in Summer 2022 as that is around the same time we began anecdotally hearing that consumers had used up many of their outstanding travel credits.
After a mostly stable 2022, in both hotels and airlines, we see a small dip in the most recent reading from December 2022. It is still too early to tell if this is the start of another, larger, leg down or just a blip. But overall, what we see is a strong decline in direct bookings as we get further out from the heart of the pandemic.
This is consistent with our ongoing thesis around online travel built on the core that the pandemic was a crisis of trust and not of finances. We believe that consumers have higher confidence in both the travel product and the customer experience they will receive when they book direct. This is even more so in the case of booking branded travel experiences. But staying within a brand ecosystem limits the consumers’ ability to shop around for deals. Comparison shopping is the strong suit of the online booking platforms while their ability to control the end product experience and to resolve customer service issues is limited by their nature as third parties.
Skift Research believes that online travel booking sites stumbled in the early phases of the recovery because consumers didn’t trust that these brands could deliver on the very specific and safety-conscious experiences they were seeking. Consumers were also skeptical of third parties’ ability to provide real-time updates as to what amenities and activities were available in both properties and destinations. Plus, consumers were flush with savings from the pandemic and held branded travel vouchers.
All of this drove a strong direct booking push that benefited travel supplier brands. To wit, in 2020, just 9% of American travelers told Skift that they had booked a trip because of discounts being offered. Trust and safety far outweighed financial concerns. That share of travelers remained mostly unchanged in 2021, rising to 11% of travelers incentivized by discounts.
However, our last two surveys, conducted in October and December of 2022, mark a potentially significant shift in this trend. Most recently, 18% of respondents told us that discounts proved effective in driving their travel booking decision in December 2022, a six point share shift versus December 2021.
When paired with the broad lifting of COVID restrictions, rising prices due to inflation, and growing recessionary fears, we think the stage is set for a change in sentiment among the U.S. traveling public. We may be moving from a regime where trust and safety are the top priority to one where price is king. If not yet broad based, we suspect this change is rapidly taking place in certain demographics, especially in the more midscale and economy chain scales.
Let’s focus in on inflation which we think is rapidly supplanting COVID-19 as the top concern impacting travel for the American public. The below chart shows how lodging and airfare prices have increased relative to 2019. While this is not the traditional way an economist would display inflation, we think that benchmarking the numbers against 2019 helps visualize the gut reactions that many consumers feel when looking to book travel today and comparing it in their minds eye against their last pre-COVID trip.
As of January 2023, lodging prices were up 15% relative to the same period in 2019. Air fares were 6% higher, though note the summer spike when tickets were briefly 27% pricier than the same time in 2019. Broad U.S. inflation along the same methodology was actually 16% above 2019 levels. This means that in inflation adjusted terms, both hotels and airlines are still cheaper relative to 2019. But consumers struggle to think in real (inflation adjusted) price terms and instead see nominal price changes. Plus, broad inflation hurts the wallet just as well. When groceries and fuel prices go up, consumers have less to spend on travel, even if they can recognize that hotel price increases have lagged broader price changes.
Our travel tracker survey says that inflation is already impacting traveler decisions. A majority of respondents told us that they had altered their travel plans due to rising prices. The most common decisions made were to take an alternative form of transport rather than flying and to pick a less expensive destination. We also saw nearly a third of respondents indicated that they had shopped around to pick a less expensive flight or hotel.
This ties directly into our thesis on brand value growing in importance relative to brand trust. We see evidence that discounts are becoming more effective and we suspect hotels and airlines alike will increasingly need to compete on price. This would undermine the current situation where brands have held the line on pricing power and much revenue growth is being driven by rising yields. It would also play straight into the hands of the online travel agencies which excel at comparison shopping and are strongly associated with value pricing.
Even if an individual brand is not discounting, online travel agencies help consumers find properties within a market that are offering below market rates or else help them discover well-reviewed ‘trade-downs’ into lower price scales in the same market.
This narrative is consistent with the direct booking data that we are receiving from our travel tracking survey. If correct, it suggests that the high direct booking rates may have been a pandemic-only event and that we are on track to return to a more competitive mix of channel booking shares. Ultimately, we see this as a positive tailwind for online travel agencies.
Online Booking Site Share Shifts
With the trend shifting in favor of third-party bookings, let’s examine what specific booking sites American travelers told Skift they used.
We asked travelers to tell us if they booked either their flights or hotels via one of 16 specific online travel sites. Of these, three brands were owned by Booking Holdings (Booking.com, Priceline, and Agoda) while six were owned by Expedia Group (Expedia.com, Hotels.com, Orbitz, Hotwire, Travelocity, and Cheaptickets.com). Alternative accommodations were not included in these survey questions and so Airbnb and Vrbo.com are excluded from our data. Bear in mind that, as sample sizes in our survey get smaller at this granular level, these results likely don’t represent true market shares. But we believe this is still useful data to help us understand the order of magnitude of differences across brands and how trends in their relative positions are changing.
What we find is that Expedia Group is overwhelmingly the most popular family of booking sites used in the United States. In 2022, our survey suggested that 49% of airline or hotel bookings made on OTAs were done via one of the Expedia Groups’ brands. That is nearly double the share of its rival competitor, Booking Holdings.
But it is not all smooth sailing for Expedia Group. Although it remains the largest family of brands in the U.S., our data suggests a worrying trend that these sites are ceding market share. In our data, Expedia Group websites saw a ten point share decline, falling from 59% of OTA bookings in 2020 to 49% in 2022.
Looking at individual websites and brands rather than at the parent company level gives us a bit more insight into the puts and takes of what is happening here. However, we again caution that as sample sizes get thin here, this data can be helpful in drawing an informed thesis about what is happening in the market, but it is not a conclusive market share.
We asked respondents to tell us what site they used when booking a flight or hotel. This data was then aggregated by year, and each site was ranked. This lets us come to a more nuanced conclusion about how consumer usage of OTA brands is evolving.
Right off the bat, the most shocking result is that, in our survey data, Booking.com surpassed Expedia.com as the most used booking site in the U.S. in 2022. Expedia.com had been number one in 2020 and 2021 with Booking.com in second place.
We should note here that this finding does not tie out with web traffic data from SimilarWeb that ranks Expedia.com above Booking.com. But then again, SimilarWeb only measures web traffic and not actual bookings. It is possible that Booking.com has a better conversion rate of lookers to bookers as compared to Expedia.com.
Nonetheless, we think it is unlikely that Booking.com truly overtook Expedia.com in 2022 in the U.S. But we do think that this data captures a very real surge in momentum that Booking.com experienced in North America because of its increased strategic focus on this region. Also, it seems that Booking.com’s U.S. push cannibalized bookings from Priceline. Priceline fell from a fourth place ranking in 2021 to sixth in 2022. This explains why market share at the parent company level for Booking Holdings didn’t budge last year.
It also emphasizes the importance of Expedia Groups multi-brand strategy. Expedia.com goes toe-to-toe with booking.com and both have similar usage amongst our survey respondents. But Booking Holdings has a weaker bench, and traction for Priceline and Agoda is slim. Expedia Group, on the other hand, owned four out of the five top brands in the U.S. in our survey. This is how the parent company has such greater U.S. share in aggregate than its European rival.
This also explains why Expedia Group has been so reluctant to abandon its multi-brand strategy. It has good reason to fear that it could lose market share by shutting down its smaller brands. But despite these valid concerns, a multi-brand strategy may face challenges in a future where Google continues to grow at the expense of other metasearch sites and where travel supplier brands consolidate and push direct loyalty.
If Booking Holdings kept its overall share the same, then who stole Expedia Group’s market share since 2020? Our survey suggests a number of emerging competitors that are growing in the U.S. Each is small individually but add up to a notable market share shift in aggregate. Independent Lastminute.com and Airbnb-owned HotelTonight both have climbed our rankings since 2020. But the most dramatic was Hopper.com.
Hopper has rapidly risen as a new and formidable competitor in the online travel space. We only began including Hopper.com as a specific booking site in May 2022 (before that respondents would’ve included it in the “other” category) but it immediately shot up our ranking to become the seventh most popular OTA in our survey.
Hopper proves that it is still possible to grow as a challenger brand in the U.S. online travel market, which many have long assumed to be fully saturated. Hopper has employed unique tactics like the development use of new fintech products and a heavy dose of user gamification a la Chinese social media apps.
U.S. Online Travel Share in Airlines and Hotels
We can slice the booking site data for our survey by product type. The decline in Expedia Group market share and the rise of new OTA competitors is most pronounced in the market for hotels. In the market for flights, Expedia Groups’ share has remained consistently higher, unsurprising since booking.com sells few flights.
U.S. Traveler Planning Habits
Skift Research asked respondents to tell us what tools and sources they used when planning a trip. We provided 13 different options. The most popular choices were online search, recommendations from friends and family, and travel review websites like Tripadvisor.
We wanted to test a theory that the pandemic pushed Americans to do more of their travel planning online. To do this, we categorized each of our options into either an online or offline source and aggregated them.
Did these travel planning patterns change much because of the pandemic? Short answer: no.
Note that percentages add to greater than 100% as most respondents use multiple travel planning sources. Online travel planning source usage has remained mostly consistent since 2020 and the same is true for offline sources.
In fact, when we dig into the numbers, we saw few major changes in travel planning source usage. There were some small changes. The sources that saw higher usage in 2022 over 2020 were online travel publications, online metasearch sites, travel books, and traditional travel. This was offset by a moderate decline in recommendations from friends and families and online search.
Note however, that because respondents can select multiple answers here, the percentages don’t add up to 100% and the percent shifts don’t net out to zero. With the gains in sources outweighing declines, it seems that Americans simply added more research sources into their travel planning process rather than swap out one source for another. This makes sense in the context of a more complicated travel landscape during and after the pandemic.
Conclusion
Let’s wrap up this report by returning to our three original core questions and try to answer them.
How did the pandemic impact direct bookings and are these trends still in place? The pandemic drove a large bump in direct bookings traffic to hotel and airline suppliers. The pandemic created a trust, safety, and customer service crisis that online booking third-parties struggled to overcome. As we increasingly put the pandemic in the rearview mirror and instead financial concerns take center stage, third-party bookings are returning. However, more than half of all bookings in our survey still come direct to suppliers.
How has online booking site market share shifted since 2020 in the U.S.? Expedia Group was, and remains the largest family of online booking sites in the United States. But it seems to have lost some market share during the pandemic. Booking.com grew as it heavily invested in a U.S. presence but our data suggests that Priceline declined for an overall neutral impact on Booking Holdings corporate. Instead most of the market shares during the pandemic flowed to OTA challenger brands, most notably Hopper, but also HotelTonight and Lastminute.com.
Did the pandemic change Americans’ trip planning process? Not really. Our survey data suggests that travel planning habits remained mostly static during the pandemic. Americans are turning to more information sources than in the past, but these new sources are incremental and not replacing previous modes of planning. There was little shift in preference for online vs. offline travel planning sources.
— Skift Senior Research Analyst Varsha Arora contributed to this report.