U.S. hotels set for earnings bump from robust travel

U.S. hotel operators are expected to post a rise in fQ1 profit even as they pour in money to lure travelers to book directly, instead of turning to travel agencies

While bookings have been getting a boost from increased business and leisure travel, the investments hotels have made to reduce their reliance on OTAs, which tend to have higher marketing budgets, is eating into the gains.

Key takeaways

• Last year, U.S. hotels received about $49 billion from online direct bookings and $57 billion from OTA bookings, according to Phocuswright;
• Hospitality giants like Marriott and Hilton have doubled down on their own loyalty programs as they attempt to spend less on commissions and other costs related to third party businesses;
• However, in the face of an uncertain economy, travelers have increasingly relied on OTAs like Booking.com, which give them a wider range of choices and prices to book from, alongside incentives like advance cancellation, as opposed to upfront payment.

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