UK Travel Companies Focus on Direct Channels and AI as OTA Growth Slows
The UK travel market reached a record £56.6 billion in gross bookings in 2025, but new research from Phocuswright suggests the industry is entering a more stable phase in which online travel agencies and suppliers continue to grow without major shifts in market share.
The report describes the market as reaching “equilibrium,” with supplier-direct channels and OTAs competing aggressively, neither gaining a decisive advantage. Online bookings now account for roughly 90% of all travel sales in the UK, making it one of the world’s most digitally mature travel markets.
OTAs continue growing but slowly losing share
Online travel agencies still account for a major share of the U.K. market. OTA gross bookings reached about £10.3 billion in 2025, but their overall market share has gradually declined from 22% in 2023 to around 20% in 2025.
Booking Holdings remains the dominant OTA player in the UK, followed by Trainline and Expedia Group. At the same time, airlines, hotels, and rail operators continue to invest heavily in direct booking channels to reduce their dependence on third-party platforms and commission costs.
British Airways alone has committed hundreds of millions of pounds to IT modernization, AI systems, and digital infrastructure to improve direct customer relationships.
Hotels remain the industry’s biggest battleground
Hotels continue to be the most competitive distribution segment because the market remains highly fragmented compared with airlines or rail operators.
OTAs still play a major role in hotel discovery and price comparison, while hotel brands increasingly push loyalty programs, mobile apps, personalized pricing, and direct-booking incentives to improve margins.
The report suggests this supplier-versus-OTA competition is likely to remain strongest in accommodation rather than transport.
Rail reform could reshape distribution
One of the biggest future questions involves Great British Railways, the state-integrated rail body expected to launch in 2027.
The new structure could centralize rail ticketing and fare management across the country, potentially reshaping how rail inventory is distributed online. This creates uncertainty for Trainline, whose strong market position depends heavily on the current rail retail model.
The future structure of rail distribution could become one of the most important competitive developments in the U.K. travel sector over the next several years.
AI and digital identity are becoming the next focus
The report also highlights the growing role of AI and digital identity systems in travel booking.
Travel companies are increasingly investing in:
- AI-powered trip planning,
- conversational booking tools,
- mobile-first ecosystems,
- and digital identity verification systems.
Phocuswright says future competition may depend less on traditional OTA-versus-supplier battles and more on which companies control the next generation of AI-driven and frictionless travel infrastructure.
While suppliers pursue direct bookings, OTAs are trying to win over hotels. For example, Booking Holdings has introduced a new advertising setup that gives hotels and travel advertisers a simpler way to buy ads across three major online travel agency brands.
Photo by Collin Merkel on Unsplash