Is your team searching for data-driven insights to identify emerging trends and seize new opportunities faster? Get straight to the data projections, consumer profiles and reporting of GenAI that should be top of mind for travel executives: Phocuswright projects that global gross bookings are expected to increase from $1.6 trillion in 2024 to $1.72 trillion in 2025, marking a steady, but slower growth rate as the market matures. Online bookings will advance more rapidly, with annual gains from 8-12%. 65% of travelers who used GenAI did so for ideas on where to go.
Decision-makers across all travel segments need informed insights that dig deeper into consumer behavior, shopping and booking trends, the state of payments and investments, travel market sizing and technology adoption.
So we compiled dozens of datapoints, trends and key findings from our research to help the industry make better decisions. Here are the most important points sure to dominate the discussions as travel faces a pivotal moment in its technology-laden trajectory.
ONLINE TRAVEL BOOKINGS
Digital travel adoption across regions
The consistent rise in bookings in all areas highlights a growing consumer preference for online travel services. This trend reflects a continuing shift toward digital platforms, encouraging travel providers to improve their online booking experiences to remain competitive.
Online gross bookings are estimated to reach $1.0 trillion in 2024 and climb to $1.2 trillion by 2026. By that time, nearly 65% of global travel gross bookings will be made online.
One example lies in short-term rentals: The dominance of online channels in short-term rental bookings highlights consumers’ clear preference for digital platforms. Online bookings reached $176.3 billion in 2024, far surpassing offline channels at $26.4 billion.
Travelers are booking supplier-direct for air
Globally in 2024, more than three in every four dollars spent online on air ticket purchases were transacted directly on an airline website or app. The aviation sector celebrated a milestone as global airline capacity exceeded pre-pandemic levels in 2Q24.
With increasing capacity and declining airfares, overall airline revenue growth is projected to slow to 10% in 2024 and drop to single-digit growth in subsequent years.
OTAs dominate online channels for hotels
As the second largest travel segment globally, hotel gross bookings exceeded $570 billion in 2024, with North America accounting for 38% of the market.
Global online gross bookings for hotels are projected to account for 55% of the market in 2024 and increase to 58% by 2026. OTAs dominate online channels, and captured more than one third of all hotel bookings. As the industry progresses, it’s essential for stakeholders to keep enhancing their online offerings to meet growing demands for digital convenience and efficiency.
GLOBAL MARKET
Shifts in international markets
North America remains the largest contributor to gross bookings among regions, growing from $543.8 billion in 2024 to $568.5 billion in 2025. This growth is consistent but indicates a slowing pace as the region approaches maturity in online travel.
In 2025, the U.K. is expected to overtake France in gross bookings, reclaiming a spot among the top five markets for the first time since the COVID-19 pandemic.
CONSUMER TRAVEL
The U.S. traveler profile
- 6.7-night average trip length.
- Average U.S. traveler is 48 years old with $85,601 average household income.
- Average of 3.2 trips taken in the past 12 months.
- There was an average of 2.2 people per leisure travel group.
Looking to friends and family recommendations for trip planning in the U.S.
For trip planning, the most relied-upon resources remain recommendations from friends and family (58%), general search (51%), and online travel agencies (OTAs) (41%).
Higher-spending travelers tend to use a wider array of resources, with general search holding the most sway in destination selection.
U.S. travelers are staying closer to home
EUROPE CONSUMER TRAVEL
European consumer traveler average annual spend
A positive outlook for future travel plans
Looking ahead, most Europeans have a positive outlook for future travel plans, though these may be mired by prolonged rising costs and some sustainability concerns.
Lodging
Almost all travelers booked paid lodging, and between 59-76% booked air, with Germans being least likely (59%) and the British and Spanish most likely (both at 76%) to book air.
Hotels vs. STR
The bulk of travelers continue to prefer hotels over STRs, though French and Spanish travelers were more likely than others to stay in an STR.
Price sensitivity
Convenience and price continue to be the strongest reasons travelers give for choosing both their air and hotel booking channels.
SOCIAL CONTENT AND CONVERSION
Complex trips
60% of converters describe themselves as more likely to use social media for logistically complex trips than simple ones, compared to only 34% of non-converters.
FUTURE INTENTIONS
Next 12 months
Travelers feel more confident about booking lodging in the next 12 months but are less sure about their transportation plans. The issue of cost and discretionary spending may have them cautious about spend in the future.
European outlook
Most European travelers expect to engage in leisure travel in the next year, with more planning international trips (either inside or outside of Europe) than domestic trips. British travelers are the most likely to be planning to travel outside of Europe.
TRAVEL TECHNOLOGY – GENERATIVE AI AND MORE
Overall usage
The overall rate of usage of GenAI for leisure travel among the traveling population is 18%.
Ideas on where to go
65% of travelers who used GenAI did so for ideas on where to go, and 41-50% used it to get ideas about things to do and actively compare and make travel choices.
GenAI uses
50% of travelers expect to utilize GenAI for leisure travel in the next 12 months.
Customer service expectations
Travel companies should note the strong continued interest in human customer service, despite the rise in use of artificial intelligence chatbots.
Digital ID and privacy
29% of travelers are interested in the benefits of a digital ID that allows them to control and share their data for a more seamless, personalized experience.
The potential for end-to-end automation
Ultimately, autonomous agents will access traveler preferences and automatically select choices that meet their needs in the booking process. This use of AI, combined with digital identity, has the potential to truly automate the end-to-end travel experience, removing friction and providing a greater degree of personalization.
THE STATE OF TRAVEL FUNDING
Lowest funding levels in a decade
Funding to travel startups dropped to a nearly 10-year low in 2023, coming in at $5.2 billion. Through the third quarter of 2024 (3Q24), funding rests at $4.3 billion, putting it roughly on track to be on par with 2023. These values represent the lowest funding levels in a decade.
Investing reboot
Despite past funding challenges, new travel-focused VC funds have been raised in 2024, signaling a fresh cycle of investment expected to continue into 2025. Investors are cautiously optimistic, focusing on quality and sustainable growth.
The shift from B2C to B2B
B2B travel startups have overtaken B2C in funding share for the first time, benefiting from GenAI applications in workflow automation and analytics. This trend could deepen in 2025, especially for startups supporting corporate travel and logistics.
Debt funding for mobility
Mobility companies are increasingly using debt instead of equity to fuel growth. In 2025, this may help maintain competitive positioning while avoiding valuation dilution, especially important as companies prepare for IPOs.
European market growth
Europe leads in regional funding, with significant investments in mobility and corporate travel. Expect further growth in these sectors in 2025, as companies leverage new funds to innovate and expand.
Market Volatility and Competition
Travel demand remains strong, but market conditions are volatile. In 2025, startups will need to balance lean operations with strategic branding investments to stay competitive amid rapidly evolving tech and consumer expectations.
TRAVEL PAYMENTS
Seven key trends in payments
An industry that’s slow to adopt AFPs
The travel industry historically struggles with emerging trends and technologies, and payments is no different…Travel companies have been slow to adopt alternate forms of payment (AFP), despite some like virtual credit cards that have been available for many years.
To prepare for the emergence of Central Bank Digital Currencies (CBDCs), travel companies should:
- Evaluate global markets, recognize those that are advancing their CBDC timetable, and analyze its impact on travel payment strategies.
- Join working groups such as the European Central Bank’s workstream dedicated to developing the digital euro scheme rulebook and requirements.
- Assign a team or individual to become educated on CBDCs, track their progress and contribute to a strategy for CBDC acceptance based on overall market acceptance.
LIST OF RESOURCES
