The European hospitality sector in 2025 has settled into a fierce new reality. While the market is thrivingvalued at approximately USD 158.24 billion and projected to reach USD 158.24 billion by 2030, the balance of power between direct suppliers and Online Travel Agencies (OTAs) is shifting. We are witnessing a market characterised by intense digital competition. Although direct suppliers currently hold a majority share of the broader market, OTAs are growing faster, fueled by massive marketing budgets that create a “visibility moat” independent hotels struggle to cross. In fact, some reports indicate that it remains notably high compared to other regions.
The real battleground for the next five years is the mobile market. While desktop bookings still hold weight, mobile usage is forecast to explode at a nearly 14% annual growth rate through 2030. This shift isn’t just about screen size; it’s about speed. Modern travellers, especially the younger demographic driving the “vacation package” resurgence, demand instant gratification. For hotels, a static website is no longer enough. To compete, properties need mobile-optimised engines that integrate digital wallets and offer curated experiences that rival the convenience of an OTA bundle.
New Rules for OTAs and Google
In 2024, the Digital Markets Act (DMA) delivered a massive shock to the system. The designation of Booking.com as a “gatekeeper” effectively rendered the rate parity clause null and void, legally freeing hoteliers to offer lower prices on their own websites without fear of contract penalties. Data confirms this shift, with the frequency of OTAs undercutting hotels dropping significantly across the EU. However, legal freedom hasn’t removed commercial pressure. “Algorithmic persuasion” is still in play; hotels that aggressively undercut OTAs often find their visibility “dimmed” in search results, forcing revenue managers to constantly weigh the cost of visibility against the savings of commission-free bookings.
Paradoxically, while the DMA aimed to level the playing field, it has made it harder to capture organic traffic on Google. To comply with new rules, Google removed clickable maps in search results and introduced the “Places sites” block, which often pushes direct hotel links further down the page. This friction has caused clicks on some properties. As a result, the direct booking strategy in 2025 has evolved from a simple SEO play into a sophisticated paid media game, where hotels must bid on their own brand keywords to protect them from being poached by intermediaries.
Why Modern Tech Matters
Technology is now the primary defence against OTA dependency. The era of the clunky, on-premise Property Management System (PMS) is over, replaced by cloud-native, API-first platforms like Mews, Cloudbeds, and Apaleo. These open systems allow hotels to build a “best-of-breed” stack where data flows seamlessly between the PMS, CRM, and upselling tools. This interoperability is essential for deploying the new wave of “Agentic AI” autonomous agents that act as booking qualifiers. These AI tools handle complex queries about amenities or dietary needs and guide users directly to the booking engine, capturing intent that would otherwise be lost and bounce back to Google.
Smarter Pricing and SEO
In this post-parity world, revenue management has morphed into “Algorithmic Direct Revenue Management.” Hotels are utilising AI-driven tools to ingest real-time market signals, from competitor rates to weather forecasts to dynamically adjust their pricing. This allows properties to implement channel-specific pricing, such as keeping direct rates consistently lower than OTA rates to ensure they never lose a price comparison. At the same time, SEO strategy has pivoted away from generic terms like “Hotel in Paris,” which are dominated by OTAs. The winning strategy for 2025 is focusing on long-tail, high-conversion queries like “pet-friendly boutique hotel in Shoreditch with rooftop,” where the user knows exactly what they want.
Real Examples of Success
The shift to a direct-first model is already proving successful for forward-thinking properties. Hotel Europe utilised dynamic AI pricing to achieve a nearly 48% increase in revenue and a 31% jump in Average Daily Rate (ADR) during peak months, proving that smart pricing is about capturing willingness to pay, not just filling rooms. In Berlin, The Circus Group utilised the Mews platform to automate administrative tasks, saving staff two hours per day, which they reinvested in guest interactions and upselling. Similarly, GuestHouse Hotels in the Netherlands integrated their booking engine with the upselling tool Oaky, generating an additional €9,000 per month in ancillary revenue and boosting direct bookings by 45%.
What Travellers Want Now
Looking toward 2030, success will depend on understanding the value-conscious traveller. Trends like “Coolcationing”, travelling to cooler northern climates to escape summer heatwaves, and “Hushed Hobbies” are redefining demand. Travellers are cutting back on goods to spend on experiences, but they demand value. A direct rate that matches the OTA price but includes free breakfast will win the booking. By combining these hyper-specific offers with a robust, API-driven tech stack, European hoteliers can forge a Hybrid Optimisation model by using OTAs for acquisition while ruthlessly optimising their own channels for retention and profit.
