From GDS Terminals to Generative AI: How Online Travel Agencies Are Rewriting the Rules of Travel

When Travel Moved From Strip Malls To Screens

Walk into any American strip mall in the late 1980s and you’d likely find a neon-lit storefront promising discounted fares and glossy brochures. Those brick‑and‑mortar agencies were the gatekeepers to the skies, jacked directly into airline reservation systems that most travelers never saw. The quiet revolution began when those closed networks, known as global distribution systems, or GDSs , crept onto the internet and suddenly ordinary consumers could peer behind the counter. (See: IMARC online travel market overview)

The first wave of online travel agencies emerged in the mid‑1990s as dial‑up modems screeched and Netscape loaded pages line by line. Travelocity launched in 1996 as a joint venture with Sabre, one of the dominant GDS providers; Expedia followed that same year as a scrappy startup inside Microsoft before being spun off and later becoming a travel behemoth in its own right. Their early promise was simple but radical: let travelers search flights, compare options, and book directly, without ever speaking to an agent.

By the early 2000s, the model expanded beyond flights. Priceline popularized opaque bookings and “name your own price” deals, while European upstarts like Booking.com transformed fragmented hotel inventory into a searchable, bookable catalogue that fit neatly into a browser window. Consumers were quick to trade paper tickets for confirmation emails. Airlines and hotels, meanwhile, embraced OTAs as powerful distribution channels, even as they worried about ceding pricing power and customer relationships to new digital middlemen.

The OTA Boom And The Post‑Pandemic Rebound

Two decades later, online travel agencies are no longer a curious alternative; they are the default. Research firm IMARC estimates the broader online travel market—spanning flights, hotels, packages and more—was worth about US$566.7 billion in 2024 , with forecasts pushing it to roughly US$1.38 trillion by 2033 as digital booking continues to displace offline channels. (See: IMARC global online travel market)

Zoom in on agencies specifically and the numbers tell a similar story. One recent industry analysis pegs the global online travel agency market at about US$61–65 billion in 2024–2025, with steady single‑digit to low double‑digit growth expected through the next decade. The United States alone accounts for roughly a third of that revenue, buoyed by high smartphone penetration and a population that has grown comfortable booking complex, multi‑city itineraries from a phone while standing in line for coffee. (See: Global OTA market size and US share)

COVID‑19 briefly broke this machine. In 2020, travel nearly ground to a halt, refunds and vouchers jammed call centers, and OTAs faced consumer fury for delays they often couldn’t control. Yet the recovery has been swift and, in some ways, transformative. The World Travel & Tourism Council estimates travel and tourism will contribute around US$11.7 trillion to global GDP in 2025, above pre‑pandemic levels, a rebound powered in large part by digital booking platforms that could scale back up faster than physical storefronts ever could. (See: WTTC global tourism rebound cited via Reuters)

In Asia, where rising middle classes are discovering international travel at scale, online players like Trip.com and Klook now sit alongside Booking Holdings and Expedia in investor decks. Online travel bookings are projected to account for around 65% of all global travel bookings by the middle of this decade, underscoring how thoroughly the OTA and direct‑to‑consumer digital ecosystem has re‑written the rules of distribution. (See: Global online travel share of bookings)

How OTAs Really Make Their Money Today

To most travelers, an OTA looks like a simple search box and a cascade of options. Underneath is a layered business model built on commissions, markups and, increasingly, data‑driven personalization . Airlines and hotels pay agencies a percentage of each booking, or offer discounted wholesale rates that agencies can then mark up. Packaging flights with hotels and experiences does more than make the interface look tidy; surveys show more than half of OTA users now prefer bundled deals, which let agencies capture higher margins per trip while presenting the bundle as a single, seemingly better value. (See: OTA market data on bundling and user behavior)

Mobile has become the oxygen of this model. Industry reports suggest that by 2023, mobile devices drove more than 65% of traffic to travel and hospitality websites , a share that continues to grow as last‑minute hotel bookings and same‑day experiences become standard behavior. For OTAs, that shift changes everything from how they design interfaces—thumb‑friendly filters, biometric log‑ins—to when and where they surface upsells like seat upgrades, insurance or late checkout. (See: Mobile share of travel web traffic)

Layered on top of this is a race for loyalty and relevance. Points programs and member‑only discounts are no longer a nice‑to‑have; they are survival tools in a market where, by some estimates, over two‑thirds of global travelers say they prefer OTAs for their transparency and convenience. Every search, click and abandoned cart feeds algorithms that try to guess whether a traveler is more likely to respond to a beach in Portugal or a long weekend in Chicago, and at what price point that nudge becomes irresistible.

Big Tech, AI And The Next Platform Wars

If the first online travel revolution was about access, the next is about orchestration —which platform will stitch flights, stays and experiences into a single, adaptive plan. Google, whose search bar often serves as the front door to travel discovery, is now pushing aggressively into this space. In late 2025, the company began testing an AI‑powered trip planning workspace, an expanded “AI Mode” with a Canvas feature that pulls flights, hotels, maps and reviews into one interactive board. A traveler can ask for a four‑day Tokyo itinerary under a specific budget, see options update in real time, then refine the trip with plain‑language prompts. (See: Google AI Mode travel planning features)

Google has also been quietly expanding agent‑like booking powers, allowing users to reserve restaurants, events and other services directly through partners like OpenTable and Ticketmaster, with hotel and flight bookings expected to follow. Its AI‑driven Flight Deals tool, now active in more than 200 countries and over 60 languages, doesn’t just surface cheap tickets—it watches price patterns and nudges users when it’s a good time to buy. For traditional OTAs, this is both a distribution boon and an existential question: what happens when the main search gateway tries to become the booking engine too? (See: Google AI upgrades and agentic bookings)

OTAs are not standing still. Expedia and Booking Holdings are investing heavily in their own AI recommendation engines, while newer platforms like Klook build their brands around curated experiences, influencer‑driven discovery and app‑first design. Klook’s decision to file for a US IPO on the back of more than 24% revenue growth in 2024 underscores how investors see not just recovery, but long‑term structural change in how people discover and purchase travel. (See: Klook IPO and growth context)

The Future: From Booking Engines To Travel Operating Systems

Project the current curves out a decade and a different silhouette of the online travel agency emerges. Forecasts suggest the overall online travel market could approach or exceed US$2 trillion by the early 2030s , with digital channels capturing an ever larger share of global travel spend. But the real shift will be qualitative rather than just quantitative. Instead of functioning as transactional booking engines, the most successful OTAs are likely to evolve into travel operating systems —always‑on companions that monitor flight disruptions, rebook connections, suggest dinner spots, surface carbon‑light alternatives and file insurance claims, often before the traveler even realizes there’s a problem. (See: ResearchAndMarkets global online travel forecast)

That evolution will surface uncomfortable questions. Data‑hungry personalization can easily tilt into surveillance; opaque ranking algorithms can bury smaller hotels and local operators; and the platforms that control demand can subtly steer travelers toward the inventory that maximizes margins, not necessarily experiences. Regulators in Europe and elsewhere are already probing how online platforms present rankings and disclosures, a scrutiny that is likely to intensify as AI‑driven interfaces make it harder to see where recommendations end and advertisements begin.

Yet the same tools that concentrate power can also lower barriers. Smaller eco‑lodges, local guides and independent tour operators can plug into global demand without negotiating with dozens of wholesalers. Startups focused on climate‑conscious routing, accessibility or niche communities can ride the rails built by giants, even as they challenge them. In that tension—between consolidation and diversification, convenience and control—the next chapter of online travel agencies will be written.

For travelers, the practical takeaway is deceptively simple. The interface may feel like magic, especially as generative AI turns vague dreams into crisp itineraries, but the underlying trade‑offs remain human: whose incentives shape what you see, whose stories and stays get surfaced, and how much of your own data you’re willing to spend in exchange for a smoother trip. The future of OTAs will not just determine how we book our journeys. It will quietly, powerfully influence where we decide to go in the first place.