Phocuswright Report 2026: Short-Term Rentals and Luxury Travel Drive Growth

Published on December 15, 2025

The global travel market is evolving, with significant shifts expected as we approach 2026. According to Phocuswright’s Travel Forward 2026 report, the industry remains resilient despite facing economic and geopolitical challenges. With a projected total gross booking value of USD 1.67 trillion, travel and tourism continue to play a critical role in the global economy, contributing over USD 11.7 trillion to global GDP and supporting nearly 371 million jobs. As the industry embraces digital transformation and artificial intelligence (AI), both consumer behaviour and the business landscape are poised for dramatic change.

Steady Growth Amid Economic Pressures

The global travel market enters 2026 with steady momentum. Phocuswright’s report projects a 1.67 trillion USD market in gross bookings, a reflection of strong international demand. While ongoing economic pressures and geopolitical challenges continue to influence global markets, the sector has proven resilient, with tourism showing signs of recovery, particularly in regions like Asia Pacific. Despite hurdles, travellers are increasingly prioritising experiential travel, choosing to spend on memorable experiences rather than material goods.

The report highlights that global tourism spending is poised to surpass previous records, underlining how the sector is evolving. The travel industry’s contribution to GDP and its ability to generate employment globally underscore its crucial role in economic recovery.

Digital Transformation: The Shift to Online Bookings

Online bookings continue to be a dominant force in the travel market. By 2025, online travel bookings are expected to reach USD 1.07 trillion, driven by significant growth in the Asia Pacific region and the increasing accessibility of digital tools in emerging markets. Phocuswright notes that online travel agencies (OTAs) will generate USD 408 billion in bookings, reinforcing their significant role in global digital spending.

This shift towards digital platforms has been accelerated by the convenience and speed of online booking systems, which are particularly popular among younger generations. Travellers now prefer booking trips online, where they can easily compare prices, read reviews, and access information in real time. This growing trend reflects the increasing comfort with digital tools and mobile technology.

Artificial Intelligence Revolutionising Travel Planning

The growing role of artificial intelligence (AI) in travel is another defining trend highlighted in the report. By late 2025, 58 percent of active U.S. travellers will use AI tools for various aspects of their travel experience, with 39 percent specifically using AI for travel research and planning. This shift marks a fundamental change in how travellers make decisions, with AI offering personalised recommendations, helping to filter through options more efficiently, and offering tailored experiences based on individual preferences.

Millennials, in particular, are leading this shift, opting for generative AI platforms to help them plan trips, replacing traditional search tools. The adoption of AI is transforming the travel booking experience, making it faster, more efficient, and more personalised.

Key Travel Segments: Short-Term Rentals and Luxury Travel

Phocuswright’s report dives into the performance of various travel segments, revealing the growing importance of short-term rentals and the luxury travel sector. The short-term rental market, driven by platforms such as Airbnb, continues to expand, as travellers seek more personalised, flexible accommodation options. The luxury travel sector is also thriving, with high-net-worth individuals looking for exclusive, one-of-a-kind experiences, sparking growth in this premium segment.

Meanwhile, corporate travel is undergoing a significant transformation. Companies are adapting their travel policies, focusing on efficiency, sustainability, and cost management while catering to employees who are seeking more flexible and personalised travel options.

Regional Variations and Emerging Markets

While the travel industry sees strong growth globally, regional variations are notable. Asia Pacific continues to lead in terms of growth, with China, India, and other Southeast Asian countries leading the charge in outbound tourism. The region is benefiting from increased digital connectivity, expanding middle-class populations, and evolving travel habits. Latin America and the Middle East are also becoming increasingly important as travel hubs, contributing to overall growth.

A Bright Future for the Travel Industry

Phocuswright’s Travel Forward 2026 report paints a picture of a robust and evolving travel industry. While the global market faces uncertainties, it is clear that digital transformation, AI adoption, and an evolving travel landscape will continue to shape the industry in the years to come. Travel businesses are encouraged to embrace emerging technologies and data insights to stay competitive and meet the changing demands of travellers. As the industry grows, it remains essential for stakeholders to adapt to these new trends to maintain momentum and drive future growth.