The role of an online travel agency (OTA) is becoming increasingly important in the accommodation industry as they provide a convenient way for travelers to arrange their stay. From the comfort of their home, travelers can compare hotel prices and book them over the internet.
In this blog, we are going to discuss what an OTA is, best OTA platforms, to develop travel website and how to do it right and more.
Ready? Let’s go.
What Are Online Travel Agencies?
An online travel agency (OTA) arranges and sells accommodations, tours, transportation and trips on an online platform for travelers. They are third parties who sell services on behalf of other companies.
Usually, these OTAs offer many benefits with added convenience with more of a self-service approach. They also include a built-in booking system which allows instant bookings.
How Do Online Travel Agencies Work?
OTAs generally work on two models. They are,
1. Merchant model
In this model, hotels sell rooms to OTAs at a discounted or wholesale price. Then, the OTA sells them to the customer at a markup price
2. Agency model
This is a commission-based model where OTAs acts as a distribution partner. OTAs receive full commission after the stay has taken place. The hotel directly receives the payment from the end customer and does not wait for the payment transfer from third-party distributors.
What Are the Benefits of Partnering with Online Travel Agencies?
In one word – exposure! Online travel agents get thousands of website visitors from all over the world. Plus, they have positioned themselves as an authority on everything related to travel. So, people trust the recommendation they receive from OTAs.
By listing in OTAs, accommodation businesses like hotels not only reach a vast set of audience but will also find their service among many other reputable sources of information.
In addition, hotels that are listed on OTAs can also benefit from what is referred to as the ‘billboard effect’. This means that OTAs provide a form of advertising for service providers such as hotels on their platforms. Once the user gains this awareness, they may even go to the website of that particular hotel to make a direct booking.
What Are the Advantages and Disadvantages of Selling Through Online Travel Agents?
Accommodation businesses like hotels and B&Bs have pros and cons of getting listed in OTAs. Let’s take a look at them.
Advantages of online travel agents
- Low-cost method of selling accommodation services
- Reduced online marketing spend as OTAs invest in advertising to attract potential customers
- Impartial reviews give customers the confidence to book
- Users can easily compare various accommodation costs at one place
Disadvantages of online travel agents
- Commission rates are charged on every sale. It can range between 10-15% of the gross cost
- Restrictive cancellation terms
- Even if accommodation businesses use OTAs, the need for their own website and booking engine does not go away
- Investment in a balanced multi-channel strategy may be needed to boost sales
Even though OTAs can help to fill your rooms, accommodation businesses must try to maximize revenue through their own website. Consistent work on search engine optimization tactics and other digital marketing techniques is a must. Accommodation businesses must focus on customer retention techniques and directly target their existing customers through emails and direct marketing.
How To Start an Online Travel Agency?
Travel agencies no longer inform customers about the availability of flights and rooms. They issue rooms and get a commission from the respective accommodation businesses. That is why most of the new travel businesses follow the OTA model.
If you plan to enter the OTA arena, you can specialize in pilgrimages, leisure travel, business travel or any niche. But, focusing on how effectively you offer things is the key to success.
Here are some points you have to consider when starting an online travel agency.
- Register the name of your agency and if applicable, take a license as per your local laws
- Try to get a membership in IATA or any other reputed travel organization
- Gain more knowledge about the travel industry and particularly the nice you want to concentrate
- Get your travel website designed by a professional company like ColorWhistle
- Offer deals that focus on a specific geography. Focusing on a particular niche will also bring more success
- Publicize your business in the online space
- Utilize the power of blogging
- Create a good social media presence
Why Do People Use Online Travel Agencies?
Here are some of the main reasons they prefer OTAs.
- Few OTAs offer reward programs which can be used for future travel needs
- Special rates which cannot be found elsewhere
- Some OTAs may have generous cancellation policies. For example, Priceline does not offer any penalty if the user cancels the ticket until the end of the next business day
- Most users may not have an idea on where to book other than an OTA
- OTAs make it easy to compare different rates
Who Are the Top Online Travel Agents?
- Every day, 1,550,000 nights are booked
- 68% of nights booked came from families and couples
- 42% of nights booked came from unique places such as homes and apartments
- 38% of reviews are given by guests which are useful for other travelers
- 75% of nights booked come from guests who booked more than 5 times
2. Expedia’s Hotels.com
- Gets over 675 million monthly site visits
- Operates in 70+ countries and 40+ languages
- Attracts 75 million monthly flight shoppers
- 2.9 million hosts are present on Airbnb
- Average of 800k stays each night
- 14k new hosts join every month
Apart from these major OTAs, there are many small ones such as OneTravel, Vayama, Tripsta, TravelMerry, ExploreTrip, Kiss&Fly, Webjet, GoToGate, Travelgenio, Bookairfare, Fareboom, Skybooker, Travel2be, OneTwoTrip!, and eBookers.
What the Future Holds for Online Travel Agencies?
It is clear that, in the near future, accommodation businesses are not about to back down from OTAs. They are enjoying the billboard effect and trying their best to retain website visitors and convert them into direct booking. Sure, there is a cost involved. The upside of this is that accommodation businesses are working hard to create a loyal customer base that will continue to seek direct bookings.
The chances of OTAs suffering in the long run are pretty slim. Smaller accommodation businesses have a lot to gain from the exposure they receive through OTAs. Plus, a large portion of the younger generation prefers OTAs. So their market will continue to grow.
If you need any help to design, develop or market an OTA website, contact our travel web design and development experts at ColorWhistle. We can create an amazing website with beautiful designs combined with dynamic content such as live rates and special offers. Contact us today for your free business analysis and consultation.