The process of “search and book,” as it is commonly known, now includes the use of online travel agencies by many passengers. It used to be significantly more time-consuming and inconvenient to book travel because you had to either make a phone call or pay a visit in person to an actual travel agent. Now, every step of the travel process, from research to booking, is open to independent travelers.
If you’re like the majority of people who travel, you’ve probably used an online travel agency (OTA) without giving it much thought. The website performs effectively and provides users with a diverse array of booking options in addition to being easy to navigate. But if you’ve ever been curious about what online travel agencies (OTAs) are, how they generate money, why travelers like you use them, and which ones are the most popular, then you’ve come to the right spot. We have aggregated some of the most frequently asked questions that travelers have about OTAs and provided answers to all of them in this one convenient location. Let’s get curious!
What exactly is an OTA?
The abbreviation “OTA” refers to a “Online Travel Agency,” which is a travel agency that focuses primarily on operating through online channels. Consumers are able to look for and book travel on their own without the assistance of the conventional “gatekeeper” travel agency by using a website and/or a mobile device. Because OTAs are connected to the whole spectrum of travel providers, they are able to provide customers with access to all of the available inventory for the trips that they are interested in booking. Online travel agencies are the most important source of bookings for the travel industry. In order to drive more bookings to its airline and hotel partners, online travel agencies frequently use package deals that include airfare and rooms as well as special offers such as flash sales. These enormous travel websites, such as Booking and Expedia, each receive millions of visitors every single month.
Large hotel companies, such as Hilton and others like it, have been consolidating and establishing new subbrands, which means that they have a decreased reliance on online travel agencies (OTAs). Travelers can find many different types of lodgings on the websites of the global brands themselves. However, many independent hotels do not have their own booking engine, thus they have to rely exclusively on online travel agencies (OTAs) to drive their bookings. In either case, online travel agencies (OTAs) have a vast travel inventory that caters to a variety of market subsets, geographic areas, and types of customers.
It is also essential to have an understanding of the types of businesses that ARE NOT online travel companies. The likes of TripAdvisor and Google Flights, for example, are not considered to be online travel agencies (OTAs). However, Booking.com, which was originally known as Priceline.com, is the owner of metasearch player Kayak, thus there are some instances of overlap (although with different brands). Expedia is the most important player in the market in the United States, whilst Booking.com is the most important player in Europe.
How do online travel agencies generate money?
The vast majority of OTAs generate revenue by charging customers a charge on each reservation they make. This commission can be anywhere from 5–25 percent. The actual commission rate is negotiated on a case-by-case basis, depending on the brand and the property in question. In general, larger hotels and larger hotel brands that have multiple properties are able to use their clout to negotiate lower rates for their guests. If you book your stay at a boutique hotel through an online travel agency (OTA), you should know that it is likely that the OTA is paying a higher commission rate than the name brand hotel down the street.
The majority of OTAs also make money from advertising, which is when hotels pay to be prominently positioned above organic results in passenger searches relevant to their business. This is how they make money. This strategy, which is also utilized by sites that perform metasearches (for more information on this topic, see the section titled “What is metasearch?”), is often based on a pay-per-click basis.
Why do people utilize online travel agencies?
Over a fifth of passengers have said that they had booked all or part of their trip through an online travel agency. And online travel agencies (and their metasearch relatives, which are frequently controlled by major OTA organizations) continue to be popular among people of all ages.
Online travel agencies are present at a variety of touchpoints across the entire consumer journey.
Why is it the case?
At the most fundamental level, there are three primary reasons why many tourists choose to book their vacations through an online travel agency:
Choice. The phrase “one stop shop” well describes the function of online travel firms. You can find just about any kind of travel product that you’re looking for on an online travel agency (OTA), including flights, hotels, short-term rentals, vehicles, and holiday packages.
Price. Despite the fact that they are not always the most affordable option or the one that provides the most value, online travel agencies (OTAs) have done a fantastic job of building a perception of value. Comparison shopping is where the true value may be found here. An online travel agency (OTA) makes it simple to compare different possibilities, and this kind of information is extremely valuable to customers.
Convenience. Online travel agencies (OTAs) are akin to a one-stop shop for vacation planning that can be accessed from any device. It is a useful location for making a single reservation for your flight, hotel stay, and auto rental all at the same time. Dealing with a single point of contact makes everything lot simpler, especially in situations where you require assistance and things have gone wrong. You only need to call one number to get everything taken care of rather than having to call a number of different places to piece together a fresh itinerary.
Now let’s assume both of these things in order to obtain a more specific and technical perspective on what customers desire from OTAs. This precise issue was posed in the headline of a recent research report that came out in July of 2020 and was titled “Why do individuals purchase from online travel agencies?” (see geeky graph below). Even though study was based on a small sample size of customers from a budget hotel brand, the results suggest that passengers utilize online travel agencies because they have a perception of increased trust, safety, and quality:
Hygiene. Customers who are going to be traveling want to know that whatever they are purchasing is relatively clean. When customers book their trips through respected online travel agencies, they have certain quality standards that they anticipate being met. The characteristics of the brand have a significant impact on how it is perceived to be of high quality.
Privacy and safety are paramount. Additionally essential are confidentiality and safety. And just like with cleanliness, travelers have a certain amount of faith in the brand of the OTA to provide them with a satisfying experience that will not put them in danger of having their personal information compromised or being physically harmed.
Reviews. The extent to which passengers rely on OTAs is significantly influenced by social proof. When potential customers have the impression that others in their demographic have enjoyed using an online travel agency (OTA), they are more likely to use one themselves.
Where do online travel agencies fall short, and why?
The use of online travel agencies (OTAs) is not without its drawbacks, which passengers should be aware of. To begin, vacationers are frequently enticed by the low pricing offered by a variety of online travel providers. However, if they try to book, they discover that the price includes hidden costs or other restrictions, which they would not find if they booked directly with an airline or hotel. This is something that they would not find if they booked directly.
It is common practice for specialized online travel agencies (OTAs), which can appear seemingly overnight, to conceal the actual cost of a vacation during a specific search in order to persuade customers to go on to their website. Even up until the point where a reservation is made, the worst actors will give the impression that they can provide the best deal. On the other hand, once you check in to their flight or hotel, you might be surprised to see additional expenses. The price that was first advertised as a “discount” ends up being far higher than the cost would have been if the reservation had been made directly.
Examples of these strategies come to light from time to time, such as when an online travel firm was accused of employing inappropriate charges and bait-and-switch pricing practices. Consumers who view an online travel agency (OTA) as the cheapest choice in search results and click through to book their reservation may be misled by the strategy.
Another significant negative is the lack of support for customers. On this particular front, not all OTAs are created equal. Travelers frequently experience less-than-ideal support, particularly when it comes to those that are regional. When everything goes according to plan during a typical trip, this is significantly less of an issue. When things aren’t going as planned, having support is extremely important. Nobody wants to be in a situation where there is no one to aid them while they are stuck!
This problem can become even more severe when direct workers are given priority by travel suppliers over other customers during times of interruption. When a traveler makes a direct reservation with a hotel or airline, they will have their difficulties resolved by working directly with the respective firm.
It is therefore not always the case that an online travel agency (OTA) will be able to provide you with better or more effective support than a travel company. In some instances (especially with more specialized or regional OTAs), there is spotty support that can cause more annoyance than the savings in price, which can be extremely frustrating.
Which 20 internet travel providers are considered to be the best?
Expedia brands,
When it comes to making reservations, the vast majority of customers go with either Booking Holdings or Expedia Group, two of the most prominent online travel agencies (OTAs). Due to the fact that these two corporations control the majority of online bookings, doing so is not overly difficult. Expedia and Booking have every nook and cranny of the world as well as every travel submarket covered thanks to their various brands that span both categories and countries.
Expedia Group
The company operates websites that cover hotels, ground transportation, cruises, vacation rentals, metasearch, and business travel in addition to its namesake online travel agency (OTA), Expedia.com, which sells all types of travel to a global audience.
Hotels.com. The hotel-focused online travel agency (OTA) operated by Expedia is most known for its generous and user-friendly loyalty program, which awards customers with a free night’s stay on the site for every 10 nights that they book there.
Vrbo. Vrbo, which recently combined with HomeAway to become Expedia’s primary destination for holiday rentals, focuses primarily on providing short-term rentals as its primary product offering.
Egencia. Egencia is utilized by corporate travel managers as a means of supporting their business travel requirements. The emphasis is placed on cost reductions and convenience of use, with self-service alternatives available to travelers and compliance capabilities available to management.
trivago. After appearing in advertisements without a belt, the “trivago guy” quickly became a household name all over the world. The hotel metasearch platform offers pricing comparisons for a range of hotels across its 55 different regional sites.
Orbitz. This online travel agency places a significant emphasis on the North American market and allows users to search for flights, hotels, and vacation packages. The online travel agency’s corporate travel division is known as Orbitz for Business. CheapTickets. Cheaptickets is a subsidiary of Orbitz that offers reduced hotel stays, airline tickets, tickets to local events, vacation packages, and cruises. The Vacation Value Finder on this website provides assistance to tourists in their search for the best deals.
Travelocity. The Roaming Gnome marketing campaign has been one of the most successful ads ever run in the tourism industry. The online travel agency is also famous for its Price Match Guarantee, in which it promises to match any price offered by a rival.
Hotwire. This is a shady deal website that caters particularly to the hotel industry. The star rating and pricing for the dates the traveler is interested in can be displayed, and they can then make reservations that are non-refundable based on an overview of the hotel’s category.
Wotif. The Wotif portfolio includes the companies Wotif and LastMinute, which provide travelers, primarily situated in Australia and New Zealand, with access to last-minute savings on flights, hotels, and vacation packages. ebookers. Travelers from the United Kingdom and throughout Europe are the primary customers for this regional online travel agency (OTA). The website allows users to look for and book flights, hotels, vehicle rentals, excursions, and vacation packages.
CarRentals.com. Travelers have the option of renting cars from both the larger national brands and the more localized, family-owned businesses. The specialty online travel agency provides coverage in 29,000 places across 197 countries.
Expedia Cruises. The cruise division of Expedia Group provides customers with the freedom and control necessary to book cruises, which are typically more difficult to organize than other types of vacations. Additionally, there is a retail store chain, allowing passengers on cruises to receive face-to-face assistance from trained professionals.
Booking Holdings
Booking Holdings is best known for its flagship brand, Booking.com, which provides all different kinds of travel to customers all over the world in 43 different languages. Booking Holdings’ headquarters are located in Amsterdam. Additionally, the international corporation has specialized websites that cater to particular subsets of the tourism and hospitality industries.
Priceline. This online travel agency focuses mostly on the North American market and is well-known for offering attractive discounts and package deals. The newest shopping option is called Pricebreakers, and it is a semi-transparent platform that gives passengers three different hotels from which they will be required to book one.
Agoda. This online travel agency has a large presence in Asia, where it provides access to over 2 million lodging options including hotels, houses, resorts, and hostels. In addition to that, it sells flights. Kayak. Kayak is a metasearch engine that allows users to compare prices for a variety of products, including flights, accommodations, vacation packages, and rental vehicles. Kayak currently offers 60 regionalized webpages that are available in more than 24 languages.
Cheapflights. The promise of the brand is conveyed in the very name of the business: this is the place to discover affordable flights. The website is a subsidiary of Kayak and applies the metasearch paradigm developed by its parent firm to the field of flight booking.
Momondo. This website is yet another subsidiary of kayak; it performs travel and aircraft fare searches and aggregates the results. The prices of flights, hotels, rental cars, and vacation packages may all be researched and compared for the convenience of travelers. RentalCars.com. This Booking platform offers vehicle rental options in 160 countries and provides passengers with access to millions of verified reviews to help them make informed decisions.
OpenTable. Booking made the decision to buy OpenTable, the most popular online reservation system for restaurants, as part of its quest to provide services for the entire tourist experience. It operates as a separate brand, through which customers may book reservations online at restaurants located all over the world.
The market leader in short-term rentals has recently expanded its service offerings to include boutique hotels. Even if the epidemic has caused some adjustments to the platform’s vision, it is now an OTA that directly competes with other services.
Ctrip
Up until very recently, Ctrip’s primary area of concentration was Asia. This was remedied when it made the decision to acquire Trip.com, which provided it with a global footprint on significant markets in both North America and Europe.
Google Hotels
Pay-per-performance is the only method of operation supported by this company’s business model, therefore technically speaking, this is not an online travel agency. However, the most obvious problem is that Google Hotels is a major rival from the most popular search engine, which is where the vast majority of people start when looking for travel information. Simply having it there alters the equations for online travel agencies all over the world. That isn’t to claim that these websites are flawless or that there aren’t any other options available in the area. Verified evaluations are not always the most positive (see some examples here), but at least with the main companies, travelers have a better chance of getting responsive service and correct pricing, and they have a lower chance of being defrauded or deceived in any other way. Check out our ranking of the best websites for making hotel reservations in 2022 for a complete list.