What has been trend of ota spend on ppc and what has management of major ota said about future spends on ppc

The Overall Trend in OTA PPC & Performance Marketing Spend

Online Travel Agency (OTA) spending on paid search (PPC) and performance marketing has reached historic highs in absolute terms, while shifting from aggressive volume acquisition to strict margin defense.

TOTAL SPEND TREND                     STRATEGIC FOCUS
(Absolute Dollars: Rising)             (Efficiency & Direct Mix)

2021 ──────► 2024 ──────► 2026         Top-of-Funnel PPC Bidding
~$9B         ~$15B        ~$16B+                   │
▼
Driven by:                             Proprietary App & Loyalty Loops
• Rising Google CPCs                   (Booking Genius, Expedia One Key)
• Hotel supplier bidding wars                      │
• Deprecation of commission models                 ▼
Margin Expansion & Direct Retention

1. Absolute Spend Reaching Record Levels: Combined performance ad spend from Booking Holdings, Expedia Group, and Trip.com Group has exceeded $16 billion annually. This is driven by post-pandemic travel volume, inflation in Average Daily Rates (ADRs), and aggressive bidding in core travel corridors.
2. Auction Inflation & Rising Realized CAC: As Google sunsetted its risk-free "commission-per-stay" models in favor of upfront Cost-Per-Click (CPC) and Target ROAS (tROAS), OTAs have shouldered all cancellation risks. Combined with direct bidding competition from hotel chains (Marriott, Hilton, IHG), average travel CPCs have trended upward.
3. Marketing Leverage as a % of Gross Bookings: Despite rising nominal dollar spend, OTAs have stabilized—and in some quarters decreased—marketing spend as a percentage of gross bookings (typically 4.5% to 5.5% at Booking Holdings and 6.0% to 7.5% at Expedia). This efficiency stems from automated algorithmic bidding and a higher proportion of direct bookings.
4. The App-First Hegemony: The era of desktop web-search arbitrage is winding down. Performance budgets have redirected toward app-install campaigns and paid social (TikTok, Meta, YouTube), where user retention rates and zero-CAC repeat bookings are substantially higher.

What Management of Major OTAs Is Saying About Future Spend

1. Booking Holdings (Glenn Fogel, CEO; Ewout Steenbergen, CFO)

Booking Holdings remains the world's largest travel advertiser, typically directing 85%+ of its $8B+ marketing budget into performance channels.

• Performance Spend is Variable, Not Fixed: Management consistently reinforces that Booking has no arbitrary marketing budget cap. Glenn Fogel maintains that if performance channels (primarily Google) offer positive return on investment (ROI) within strict mathematical hurdles, the company will spend aggressively. If auction prices rise and ROIs deteriorate, they pull back immediately.
• The "Connected Trip" as an Efficiency Moat: Management views cross-selling (flights, attractions, and car rentals to hotel bookers) as the primary way to gain marketing leverage. CFO Ewout Steenbergen has emphasized that as more travelers book multi-vertical trips, revenue per customer increases without requiring an additional Google search click.
• Direct Mix Acceleration: Over 50% of Booking’s room nights now occur through its mobile apps, and upper-tier Genius members account for nearly 60% of room nights. Fogel’s stated goal is to use paid search strictly as a "front door" to harvest new travelers, and then immediately migrate them into the app ecosystem to eliminate subsequent search acquisition costs.

"We have been adapting and changing as the world of digital marketing has been changing for 20 years... We look for ways to capture demand in performance channels at appropriate ROIs while driving direct mix."

— Glenn Fogel, CEO, Booking Holdings

2. Expedia Group (Ariane Gorin, CEO; Scott Schenkel, CFO)

Under CEO Ariane Gorin, Expedia has undertaken a disciplined operational pivot aimed at closing its EBITDA margin gap with Booking Holdings.

• "Making Every Dollar Count" & Return Hurdles: Gorin has introduced stricter return hurdles and faster decision-making on performance spend. The mandate is to stop "buying empty calories"—slashing unprofitable PPC campaigns that drive low-intent, price-sensitive shoppers with high cancellation rates.
• B2B as an Alternative to Consumer PPC: Expedia’s fastest-growing, highest-margin engine is its B2B partner division (powering travel portals for airlines, banks, and offline agencies). Management highlights B2B growth as an explicit counterweight to consumer PPC volatility, as B2B expansion delivers gross booking volume with negligible direct search marketing expense.
• Loyalty & Product Consolidation: With the rollout of the unified One Key loyalty program and the completion of its backend tech migration, Expedia’s stated strategy is to direct marketing funds toward retaining high-lifetime-value (LTV) members rather than perpetually repurchasing users on search engines.

"At the highest level, we are taking a more disciplined and data-driven approach to our marketing... We talk a lot about being brilliant at the basics and making every dollar count."

— Ariane Gorin, CEO, Expedia Group

3. Trip.com Group (Jane Sun, CEO; James Liang, Chairman)

Trip.com operates a bifurcated performance strategy reflecting its distinct domestic and global markets.

• Domestic China (App Native): Domestic transactions through Ctrip and Qunar are overwhelmingly app-based (90%+ direct mobile transactions). Management notes that traditional search PPC is not a major cost center in China, allowing them to maintain domestic sales and marketing expenses at lower percentages of revenue than Western peers.
• Aggressive International Expansion (Trip.com & Skyscanner): Globally, Trip.com Group is in an aggressive customer-acquisition phase. Jane Sun has stated that the company will continue allocating capital into performance marketing across APAC, Europe, and the Americas to capture inbound and cross-border travel demand. However, management emphasizes strict ROI discipline to ensure international expansion does not dilute overall operating margins.

The Industry Outlier: Airbnb's Contrast

No discussion of OTA performance marketing is complete without contrasting the traditional OTAs against Airbnb.

While Booking and Expedia spend 30% to 50% of their net revenue on marketing (primarily performance/PPC), Airbnb fundamentally altered its model:

• Airbnb allocates only 15% to 18% of its revenue to marketing, and the vast majority of that is dedicated to brand marketing and PR, having permanently cut its performance marketing spend by ~90%.
• Over 90% of Airbnb’s traffic remains direct or unpaid.

Booking and Expedia executives frequently field analyst questions regarding whether they could replicate Airbnb's low-PPC structure. The consensus from both Fogel and Gorin is that because OTAs sell commoditized hotel inventory (where the same hotel room is available across dozens of sites), they cannot entirely abandon the bottom-of-the-funnel Google auction without suffering catastrophic market share losses to each other and to hotel direct channels.

The Emerging Wildcard: Generative AI & Search Real Estate

Executive commentary across all major OTAs increasingly focuses on how generative AI search will impact future PPC models:

• Risk of Disintermediation: If platforms like Google (via AI Overviews), OpenAI, or Apple transition travel search from a "list of links" to conversational booking agents, the traditional CPC link-auction model may fragment.
• Management’s Defense: Management at both Booking and Expedia argue that an AI agent still requires real-time pricing feeds, cancellation processing, fraud protection, and supplier customer support—infrastructure tech companies cannot easily replicate. Consequently, OTA leadership expects performance marketing spend will simply evolve from bidding on text keywords to integrating into agentic AI booking feeds, maintaining the underlying commission and ad-revenue dynamics under a different technical wrapper.