How online travel agencies affect the hotel and the accommodation industry

If you have planned and booked accommodation online, whether it's a vacation or a business trip, you will surely come across some online travel agencies (OTAs), for example, companies like Agoda, Trip Advisor, Expedia & Booking.com. These OTAs have been present since the late 1990s and early 2000s, and each year they grow in size, strength and popularity, so much so that in today's online market you can literally not avoid them when you book any type of travel arrangement online; Everything from hotels, villas and rooms to cars and bicycles, as well as flights – You'll always see a handful of OTA on the first page of Google results and also dominate Google Adspace Positions. Of course, with the rise of this monstrous travel agency, there has been a growing concern of hotel owners, car rental companies and other businesses that need to include more direct reservations to avoid completely or almost completely relying on third party booking portals. The reason for concern is, of course, if due to the loss of profits that businesses have to take when they receive their reservations from booking agents, not directly from the consumer; rates are slightly different from each agency, although it will never be so small% that there is no noticeable impact on the bottom line of the service provider. Hotel owners and property owners, for example, must pay from 15-35% of the OTA commission for each booked reservation, the% value usually depends on the location of the property / hotel, as well as the number of rooms listed in OTA (the more rooms it says, the lower % of commission that will have to pay OTA).

With this huge expense coming from the partnership with OTA, you might think to yourself, "why do hotels and resorts still rely on third party booking agents when they can enjoy much more profit margins from making direct reservations?" this is something that all accommodation providers will consider and think about themselves and talk to their teams, and the answer is that most of them are now in a position that they can not live without OTA reservations. Unless the hotel or resort is one that has gained so much fame in itself and it's so popular that they can successfully fill up their rooms all year round, then it's the case that you join OTA or a few so they can survive. In fact, even with the famous and popular hotels and resorts I am talking about, there will be a low season and other times and occasions when reservation numbers will be low and there will be a need for additional exposure to bring room / villa booking; so in reality the partnership with OTA is now necessary for all companies that are in business for a holiday.

Where did OTA come from and who owns them?

When we talk about the majority of OTA people will imagine a handful of companies, who are really major "big players" who have extremely aggressive marketing activities to ensure that almost all travelers often see their brands and promotions online and offline. The four most famous OTA vehicles are Expedia, TripAdvisor, Agoda & Booking.com; These are room reservation platforms that create the biggest market change and those that will be on most of the list of hotel owners with whom the partners will join. Out of these four agencies, the earliest two are Expedia, which was formed by a small department in Microsoft in 1996, and then Booking.com that was created in Amsterdam and in 1996. a small office in Massachusetts, USA and last but not least, Agoda, founded in 2002 and originated from Bangkok, Thailand. In fact, almost all major OTA platforms and on-line reservations are now owned and fall under the umbrella of only two major, monstrous organizations; Expedia Inc. is one, and the other is the Priceline Group.

So, let me answer the original question of this post that asked how OTA is affecting the holiday accommodation industry; for the consumer is actually getting more and more accessible, and the user experience has been significantly improved by making it easier to compare different locations more easily and efficiently. Also, with the added benefit of being able to check reviews of each site before making any reservation, another positive change that consumers can enjoy. For accommodation providers, on the other hand, it had some negative effects, but also some positive effects. Fees and additional costs for better-placed ads within OTA sites greatly equalize the profits that real estate owners can realize, but on the other hand, for many hotels, resorts and other accommodation providers who have exposure they get from the list within OTA sites means that they are now able to get much more reserved rooms and at the same time their brand / location is placed on the map, so to speak, and as long as they provide good rooms at a good price, efficient service, then they can grow in time because of the support they receive from their OTA partners.

All in all, I think OTA is positive for the industry.