Analysis of Major Online Travel Agencies – OTAs

With so many online travel agencies (OTAs) to choose from, each with its own commission costs, target markets, and user experience, managing your property’s distribution can be a complicated endeavor. Within a constantly shifting distribution environment, it can be difficult to zero in on the optimal channel mix. 

A major aspect of effective channel management and a smart revenue strategy is to distribute your property’s inventory in a manner that helps you achieve your goals. Whether that’s filling rooms in a period of low demand, increasing market share from a particular group or region, or increasing visibility with a target demographic, you need to get your rooms in front of your ideal guests. 

That’s where online travel agencies shine. When managed correctly, these third-party distribution channels give you the flexibility and control to maximize bookings and meet your revenue goals. 

But which online travel agencies are right for your property? 

This guide will help you answer that question by giving you a comprehensive overview of the world’s top OTAs. Before we dive into the hotelier’s guide to online travel agencies, we’ll explore the benefits of these partners and recommendations for using them wisely. 

Here’s a list of the global online travel agencies we’ll cover: 

1. Agoda
2. Airbnb
3. Booking.com
4. Expedia
5. Google Hotel Ads
6. Hostelworld
7. Hotelbeds
8. Tripadvisor

We’ve also included a list of major localized OTAs that are prominent in specific regions:

1. Ctrip
2. Ingoibibo/Goibibo
3. Traveloka
4. eDreams/ ODIGEO
5. HRS
6. Despegar/Decolar
7. Ostrovok

How Online Travel Agencies Work: The Benefits of OTAs

Online travel agencies emerged in the 1990s, using the internet’s extensive reach to aggregate global travel supply into a single place so consumers could book their own travel online. These self-service tools reshaped the way travel was researched and booked, as the general public could now easily plan their trips and reserve their airfare, accommodations, and tours on their own rather than rely on a physical travel agent. 

Sites such as Expedia, Booking.com, Airbnb, and TripAdvisor are often consumers’ first stop when researching travel plans. These sites offer value to consumers at all stages of the buying process: problem/need recognition, information search, evaluation of alternatives, purchase decision, and post-purchase behavior. 

For consumers, there were additional benefits beyond the convenience of self-service. These include:

• • Global access. Travelers could now view and book inventory from anywhere in one place without having to ask for help or do extensive research. This led to the discovery of new destinations and contributed to a dramatic expansion of tourism worldwide.
  • Price transparency. With travel agents working as the intermediary to book trips, it wasn’t always easy to do direct price comparisons. For the first time, travelers could see prices in one place and make decisions accordingly.
  • Competitiveness. Hotels could also see the prices of competitors much more easily than they could before, which led to an increase in competitive pricing that benefited the consumer.
  • Trust and versatility. OTAs have created their own brands that consumers trust and recognize as thought-leaders. They also offer consumers a versatile experience, with a multitude of travel options, trusted reviews, and accurate local information.

For hoteliers, OTAs have evolved into sophisticated marketing channels for properties of all sizes. Never before have consumers been able to easily compare different travel options side-by-side in terms of price, dates, and location. 

Simply being present on these channels can have a dramatic influence on a property’s visibility. For example, many hotels benefit from the “billboard effect” which happens when potential guests discover a hotel on an online travel agency and do further research about the property, thus increasing traffic to the hotel’s website and leading to more direct bookings.

Additional benefits include:

• • Access to new markets. These platforms offer access to travel markets once unattainable by smaller, independent property owners. Hoteliers of all sizes rely on OTAs to access new regions, guest segments, and customer demographics.
  • Micro-targeting. OTAs channels, especially niche OTAs that cater to a specific type of property or traveler, allows hotels to dive deeper into segmentation and target certain markets with specific offers. OTAs benefited from new ways to target travelers and market their properties.
  • Variable demand. Rather than having to rely solely on their own marketing efforts, hotels turn to OTAs for variable demand. Hotels can control how much inventory to make available on each channel and take a more nuanced approach to distribution.
  • Known and trusted brands. OTAs provide a reputable brand that travelers trust,  which makes them much more likely to book. Being seen on an OTA platform especially benefits independent properties that lack global brand recognition.

How Online Travel Agencies Make Money

Hotels basically outsource marketing to OTAs, who then make money in two ways: the merchant model (guest pays in advance) and the commission model (guest pays at check out). Most OTAs offer a blended model so that hotels can allow guests to decide which one they’d prefer.   

• The merchant model. In this model, the online travel agency acts as the merchant of record and collects payments from guests at the time of booking. Once the guest has checked out, the OTA pays the hotel. Contracts exist between hotels and OTAs to provide a set number of rooms to the OTA at a favorable rate. The OTA then makes a profit off each room sold but must meet its contractual thresholds. 
• The agency (commission) model. In this model, the consumer books via the OTA but pays the hotel directly at time of checkout. The hotel then pays the OTA a commission on the total value of the booking after checkout. There are no contracts and rates are set by hotels.

Over the years, as hoteliers began to rely on online travel agencies for more of their bookings, OTAs leveraged their dominance to shift to the commission model and gradually increase commissions. Part of this increase reflected the growing cost of advertising online but these are also public companies under pressure to meet margins. Independent hotels also suffer from higher commissions (as high as 30%), compared to the 10-15% paid by larger brands, who have greater leverage to negotiate lower commissions

For hotels,  it can be frustrating to watch distribution costs rise without getting more in return, but there are costs associated with direct bookings too. Demand doesn’t appear without at least some sort of distribution or marketing strategy in place, and those marketing campaigns, loyalty offers, special deals, and direct booking tools have a cost to the hotel. That’s why it’s important to use OTAs wisely, which we’ll cover next. 

How to Use OTAs Wisely

While third-party channels are often criticized for rising commission costs and lacking collaborative relationships with hoteliers, OTAs most definitely have a place in a profitable hotel distribution strategy. Strategic distribution via OTAs not only provides access to specific customer segments and geographies but can also help your property achieve greater return on marketing investment. 

OTAs also offer more than extended reach. They serve culturally-relevant user experiences that attract travelers from all over the world. This includes currency conversions, language support, and tailored experiences based on purchasing habits. OTAs offer hoteliers access to non-brand-loyal travelers, active travelers, and the packaged traveler. 

Either way, hotels, in general, cannot compete with the marketing budget that OTAs have available. So even though hotels have to pay OTAs a commission, these bookings may actually be more profitable than those secured through direct marketing. It all hinges on how well your property manages its customer acquisition costs.

Here are a few recommendations on how to get the most out of your OTA partners:

1. Optimize your profile on each channel. Pay close attention to how your profile looks to potential guests. Each channel is different, so make sure to complete every field, upload high-resolution images, and keep your information current. Having a quality profile on each channel will optimize your property’s OTA ranking and make it more competitive in search results.
2. Manage your reputation carefully. Most OTAs use guest reviews as a key factor in determining a property’s reputation and use the review score as a determining factor in search ranking. Carefully manage your hotel’s reputation by asking guests for reviews, monitoring those reviews, and responding consistently. 
3. Use a channel manager. Effective hotel channel management means that your room availability is optimally distributed across all of your chosen channels. It helps you put the right room in front of the right customer at the right time, and will update your availability across all your distribution channels, your PMS, and your website’s booking engine. 

Now that we’ve set the context around how to leverage your OTA partners, let’s look at the best OTAs for your property. 

What Is the Best Online Travel Agency for Your Property?

Not every online travel agency is right for every property. By analyzing each OTA and identifying what works best for your property, you can leverage OTAs to their full advantage within a diversified channel management strategy.

Check out our analysis of the most popular OTAs in the world, below. Cloudbeds integrates with each of these channels and hundreds more. 

Global  OTAs 

Regional OTAs

ASIA 

EUROPE 

LATAM 

Russia

Conclusion

Online travel agencies offer hoteliers and hosts of all property types a valuable opportunity for reaching travelers worldwide and turning them into guests. Not every OTA is right for every property. By analyzing each OTA and identifying what works best for your property and you can leverage OTAs to their full advantage.

Check out Cloudbeds’ Big Book of OTAs for a more in-depth look into building a smart distribution strategy and additional niche and regional online travel agencies you can benefit from today.  

Find out more about how you can grow your business with Cloudbeds. Request a personalized demo.