OTAs: How they work and why you should use one
What is an online travel agency (OTA)?
An online travel agency (OTA) is a website that allows travelers to book travel products such as hotels, transport and activities. Hoteliers and property managers can choose to work directly with OTAs, connect via a third party such as a global distribution system (GDS) or wholesaler, or via a channel manager. The OTA lists your rooms on its site(s), processes the booking, and is the guest’s main point of contact for booking amendments and cancellations.
Working with an OTA can help you to generate additional bookings for your hotel. This guide will help you understand what an OTA is, how to work with one and the benefits this partnership can bring.
How does an online travel agency (OTA) work?
OTAs enter into an agreement with hoteliers and property managers. Once an agreement has been signed, OTAs list your rooms across their site(s), showing them to travelers browsing your destination. OTAs also offer a variety of tools and services to their partners, free of charge (see Why work with an OTA?).
There is no upfront fee to list your property on an OTA, but instead OTAs make money by taking a percentage of the total value of each reservation made through their channels.
Why work with an online travel agency (OTA)?
OTAs are an increasingly popular distribution channel. In fact, travelers today use OTAs 50% more than hotel websites to compare leisure travel options. And that means OTAs can play an important part in your distribution strategy.
Here’s why hotels and property managers are choosing to use OTAs.
Free marketing and advertising
OTAs spend millions of dollars each year on marketing, allowing smaller properties to benefit from advertising budgets that they don’t possess themselves. That means travelers you wouldn’t otherwise reach are able to see your listing, helping you to grow your business.
Greater visibility for your own website
Evidence shows that being listed on an OTA can bring more traffic to your property’s own website, because consumers often use OTAs for their search before booking directly. This is known as “The Billboard Effect”.
A 2011 study which looked at consumers’ online pre-purchase behavior found that around 75% of people who made reservations with a major hotel brand had visited an OTA website before booking directly with the brand. Another report in 2017 showed that the “Billboard Effect” still occurs, as many people still visit an OTA prior to booking direct.
Exposure to diverse travelers
Working with an OTA helps you reach traveler segments that are difficult to reach on your own. For example, travelers looking to package flights with their hotel bookings, or international travelers. And what’s more, these types of travelers have a tendency to stay longer and spend more during their stay, so you can keep operating costs low and increase your revenue.
Access to tools and analytics
OTAs often provide you with access to data and tools that are expensive to acquire yourself or build in-house. Most OTAs offer guest communication tools, competitive insights and revenue management solutions. These tools can help you to give your guests the best experience possible, and to optimize your revenue strategy.
Dedicated support teams
Many OTAs allocate a dedicated regional market manager or team to each partner. This person (or team) generally has extensive market knowledge, can give advice on regional trends, and suggest promotions and packages based on their understanding of the market.
What should you consider when choosing an OTA?
Who is their audience?
Many OTAs target specific audiences. Think about the region and segment you want to target and whether an OTA caters to this audience. For example, if you own a small B&B mainly catering to families, you would want to avoid signing up with an OTA which mainly targets business travelers.
You can find out more about an OTA’s target audience by looking at the types of properties listed on their website, the types of messaging, or by simply asking a representative at the OTA before signing up.
What is the user experience for guests?
Take a look at the site and get a feel for what the searching, browsing and booking experience is like for your potential guests.
If you find the experience difficult or frustrating, it’s likely other travelers will too. Frustrated travelers are likely to look elsewhere to make their reservations.
What features do they offer to partners?
Every OTA has a different set of tools and analytics to help with revenue management, pricing decisions, and promotion of your property. Some larger OTAs have whole teams dedicated to creating these tools, so it is worth assessing which OTAs offer the most useful tools for you.
Another important thing to consider is whether an OTA integrates with your channel manager. This integration will be important to your distribution strategy, helping smooth management of bookings and eliminating the risk of overbooking errors.
Once you’ve considered all these options and found the perfect OTA, it’s time to sign up!
Get more value from an OTA partnership with Expedia Group
- Attract more of the right travelers
- Get valuable market insights
- Maximize your revenue potential