The US travel sector and the role of digital platforms
How online travel agencies are supporting the recovery of the US travel & tourism sector
Ask ten people what traveling the US looks like to them, and you’ll no doubt get ten different answers. It’s hiking in Yosemite, route 66 in a Cadillac, sundrenched Florida, pizza in NYC, and much, much more. It’s the boundless options that make the US one of the world’s top tourist destinations.
Travel and tourism generated $1.9 trillion in economic output prior to the pandemic while supporting 9.5 million — or 1 in every 20 jobs — jobs.
Nearly 80 million international arrivals came to the US in 2019 alone. These numbers are what make the travel and tourism sector an important part of the country’s economy through its contributions to GDP, taxes, and employment.
But just how crucial is the travel and tourism sector to the American economy, and what can online travel platforms do to support its recovery in a post-pandemic world?
When looking at trends and opportunities, 2019 is the most recent and important benchmark for the travel and tourism industry as it was the last full year of data before the pandemic in early 2020.
Travel and tourism has grown over the years to become the largest services export for the United States
US travel and tourism in numbers
The US Department of Commerce’s National Travel and Tourism Strategy is one of many sources of insight to fully appreciate the importance of this sector. The federal government wants to further promote the United States as a global tourist destination by fostering a sector that “drives economic growth, creates good jobs, and bolsters conservation and sustainability”. It’s clear that the US government values our uniquely localized industry, and it’s no surprise when we look at the numbers.
Travel and tourism generated $1.9 trillion in economic output prior to the pandemic while supporting 9.5 million — or 1 in every 20 jobs — jobs. These employment opportunities were found in industries like accommodation, retail, food services, recreation, entertainment, transportation and education. What’s more, travel and tourism has grown over the years to become the largest services export for the United States (pre-pandemic) generating $53.4 billion trade surplus in 2019 alone.
Just 40% of the nation’s hotels remain independent, a marked decrease from 30 years ago when 66% of hotels were non-chains
The hotel sub-sector alone is a force to be reckoned with: 2.3 million Americans were directly employed by hotels in 2019, with a further 8.5 million employed in roles supported by hotels. Hotels are also important contributors to communities through local and state tax revenue –generating $41 billion in local taxes across the US in 2019.
Searching for stability in a post-pandemic world
Few industries were hit as hard by the coronavirus pandemic as the travel and tourism sector and, although the return to pre-pandemic levels is well underway, the industry still finds itself in a fragile state. Governmental support remains crucial for the recovery effort.
Alongside this, in a trend similar to what is being witnessed in Europe, the US accommodation sector is at increasing risk of what the travel and tourism publication, Skift, called “brandification". According to estimates, just 40% of the nation’s hotels remain independent, a marked decrease from 30 years ago when 66% of hotels were non-chains. It is here, as well as other areas, that online platforms, like Booking.com, can lend a helping hand.
Research conducted by Oxford Economics highlights the important role that online platforms play in supporting the US travel and tourism sector. We see that platforms increase choice by showcasing millions of listings to travel hungry consumers, while promoting transparency by acting as an intermediary trusted by both sides.
When booking a stay, travelers need to know their choice of accommodation is legitimate, especially when the traveler is unfamiliar with their destination. Features such as secure payment environments and verified reviews go a long way in reassuring travelers.
Direct sales and sales through hotel chain call centers dominate the distribution mix — online travel platforms only account for a quarter of sales
Online platforms also create additional demand for US accommodations; 47.5 million additional room nights in 2019 were attributable to platforms, generating an extra $18.6 billion of GDP. Travelers also benefited from better prices, saving nearly $50 billion during a three year period covered in the research (2019–2021).
Small and independent accommodations in particular benefit from working with online travel platforms. Before the pandemic — 46% of stays sold through online platforms went to independent properties, compared to 28% for the market overall. In the US, on Booking.com alone, 185,000 small and medium sized hospitality businesses list their rooms.
Moreover, revenue growth generated by online platforms can have a transformative effect on geographies outside of major tourist markets — from 2012 to 2021, the share of bookings on online platforms for accommodations in rural areas increased from 9.7% to 16%.
Entrepreneurs of all stripes are the driving force behind the US travel market and they are free to make use of online platforms as one tool amongst many. Platforms are largely risk free, with no commission taken until the point of sale, and highly flexible, but they can’t (and don’t) underwrite their lodging partners’ revenue by themselves. Direct sales and sales through hotel chain call centers dominate the distribution mix — online travel platforms only account for a quarter of sales, with the rest made through direct channels or other intermediaries.
Booking.com is here to support its lodging partners in the US through whatever 2023 might have in store
The US travel and tourism industry is well-placed to navigate the post-pandemic world, according to analysis by STR. And Booking.com is here to support its lodging partners in the US through whatever 2023 might have in store, so we can see the sector thrive once again.
