Online Travel Agencies (OTAs) have revolutionized how hotels sell their rooms online. Since their inception, OTAs have become an integral part of the travel industry—especially for hotels of all types. In this guide, we'll explore what an OTA is, trace its origins, and delve into how they work. We'll also offer insights into how hotels can select the right OTA, maximize their OTA/ online distribution strategies, and understand the role of channel managers.
What is an online travel agency (OTA)?
For hotels, an OTA is a third-party website that provides booking services for their target audience - travelers. These platforms list hotels, allowing users/travelers to compare prices, reviews, and amenities before making a reservation. OTAs can drive significant bookings for hotels, especially those that may not have strong brand recognition.
For guests, online travel agencies aggregate offerings from various service providers, presenting them in a user-friendly format that makes comparison shopping easy and efficient.
The Origin of Online Travel Agencies
The origin of online travel agencies can be traced back to the 1990s when the airline industry was deregulated and the internet was invented. This combination created a fertile ground for digital platforms that could offer airline tickets directly to consumers, bypassing traditional travel agents. Over time, these platforms expanded their services to include hotel bookings, car rentals, and more, evolving into the OTAs we know today.
How do OTAs work?
OTAs operate by forming partnerships with hotels to list their offerings on their platforms. When a customer books a service through an OTA, the platform typically earns a commission from the sale. These platforms use sophisticated algorithms to present options based on user preferences, making it easier for consumers to find and book the ideal hotel accommodation.
Here are some of the Best Online Travel Agencies
- Booking.com
- Expedia
- Tripadvisor
- Agoda
- Yatra
- Cleartrip
- Trip.com
- Traveloka
- Despegar/Decolar
Why do hotels need OTAs?
Today, about 60%-70% of travelers prefer booking hotels via OTAs. Do you often wonder why customers prefer booking with online travel agencies? Here are the reasons.
1. OTAs offer all options to travelers in one place.
2. It makes travelers' lives easier by allowing them to compare the prices of different hotels in one place.
3. OTAs offer a consistent and rich user experience, enabling travelers to look at and book their accommodations across platforms.
Online Travel Agencies (OTAs) can significantly boost hotel bookings by increasing visibility, providing access to a global marketplace, and offering market intelligence to optimize bookings and pricing strategies. OTAs act as a marketing and distribution channel for hotels, helping them reach a wider audience and generate bookings without heavy investments in marketing budgets.
Benefits of Online Travel Agencies for Hotels
Enhanced global visibility and broader reach
OTAs have revolutionized how hotels connect with potential guests, transcending geographical and language barriers. For small and mid-sized properties, which may need more resources for international marketing campaigns, being featured on an OTA can dramatically increase their visibility. These platforms are accessed by millions of users daily, providing unparalleled exposure to hotels.
Diversified customer base
The user base of OTAs is exceptionally varied, encompassing different demographics, travel purposes, and preferences. By listing on these platforms, hotels can tap into segments they might not reach through traditional marketing channels. This diversification allows for tapping into new markets, including last-minute bookers, international tourists, and niche travelers, thus ensuring a broader occupancy base.
Improved marketing and branding
OTAs invest significantly in marketing and search engine strategies to maintain online dominance. Hotels benefit indirectly from these efforts through increased online presence. Furthermore, OTAs offer promotional opportunities for hotels, such as featured listings or participation in sales events, which can significantly boost a hotel's visibility and bookings.
Enhanced online reputation
The review systems integrated into OTA platforms serve as a double-edged sword. Positive reviews on OTAs can significantly enhance a hotel's reputation, leading to more bookings. Negative feedback, while challenging, offers invaluable insights into potential areas for improvement. Hotels can use this feedback to refine their services and address any issues, thus improving their overall guest experience.
Cost-effective bookings
Although 15%-25% commission fees are a notable aspect of working with OTAs, the cost-benefit analysis often favors OTA listings due to the substantial increase in booking volumes. For many hotels, the commission paid to OTAs is outweighed by the reduced need for spending on direct marketing and the efficiency of reaching a wider audience.
Direct bookings, too
Yes, you heard it right! Many travelers check your hotel's website rates after discovering your brand on OTAs. This will get you some direct bookings, as conversion chances are high.
OTAs vs Direct Bookings
Balancing between Online Travel Agencies (OTAs) and direct bookings is crucial for hoteliers. While OTAs offer global exposure, last-minute room-filling, and lower marketing costs, direct bookings provide higher profit margins and better control over guest details. Finding the right mix between the two channels can maximize sales and revenue.
How to select the right online travel agencies for your hotel?
Understand your target audience and requirements
To start with, you need to know your target audience and the markets you want to get more bookings from. You need to connect with the right region-specific OTA to sell more. You can find out popular OTAs by looking at your competitors and analyzing market reports. In simple terms, select an OTA with a proven track record for similar property-type as yours.
Analyze the commission model
Various OTAs charge different commission rates, with some imposing significantly high fees. You can select the right OTA or a set of OTAs by examining the Customer Lifetime Value of the guests it attracts. Go for them if they align well with your target market and guest segment.
Look at features and support
Find out if the OTA allows you to leverage promotions. It would be beneficial to you if you can set up featured listings on special deals to boost visibility on the OTA platform. And yes, don’t forget to evaluate its support.
How to maximize OTA distribution Strategy
Optimize listings
Ensure your OTA listings are compelling and complete, with high-quality photos and detailed descriptions. Regularly update your information, including availability and rates.
Encourage reviews
Having more positive reviews can greatly benefit your hotel. That's why you must pay attention to customer satisfaction to encourage positive feedback, as it can significantly influence travelers' booking decisions in your favor.
Ensure rate parity
Maintain rate parity across all online travel agencies to avoid undercutting your OTA listings. Consumers often check multiple OTAs before booking, and consistency can lead to lost business opportunities.
The role of a Channel Manager
A Channel Manager enables hotels to manage their listings across multiple OTAs efficiently. It updates availability and rates in real-time across all platforms, reducing the risk of overbookings and ensuring rate parity. This tool is essential for hotels that work with multiple OTAs, as it streamlines and automates operations and saves time.
Online Travel Agencies offer a mutually beneficial platform for travelers and hotels, providing visibility, convenience, and a wide range of options. By carefully selecting the right OTAs, optimizing listings, and employing tools like channel managers, hotels can boost their online presence to sell more. In today's rapidly evolving landscape of online travel booking, embracing OTAs and leveraging their capabilities is crucial for success in the hospitality industry.
Sell more via online travel agencies with Axisrooms Channel Manager
Trusted by 4000+ hotels, AxisRooms Channel Manager assists hotels in pushing their rates and availability on multiple online travel agencies in real time. This automation saves about 90% of the time, ensures parity across online travel agencies, and eliminates overbooking hassles. It also improves a hotel's OTA visibility and enables it to reach a wider audience. In short, it helps hotels sell more via OTAs to boost occupancy and revenue. AxisRooms Channel Manager is connected to 60+ OTAs, 5+ GDSs, and 30+ Property Management Systems ( Hotel PMS) globally.
