OTAs vs. Direct Booking: Rivals or Competitive Teammates?

It’s an interesting time for hotel chains and online travel agencies (OTAs). Sizable marketing campaigns and enhanced reward programs from Hilton, Marriott and others are designed to get travelers to direct book. OTA loyalty programs, such as Expedia+ and Priceline Rewards ^TM Visa ® card, offer travellers numerous benefits for not booking direct.

While each side claims victory from recent promotions, it appears that OTAs are having greater success. Or as Douglas Quinby, SVP of Research at Phocuswright describes it, “The OTAs are crushing it. In fact, 2016 was the first year when OTA lodging bookings in the US exceeded total hotel website gross bookings.”

At WIT Hospitality in Hong Kong this spring Quinby’s colleague Lorraine Sileo shared, “OTAs are driving the online hotel market. OTA hotel success is all about the power of single bookings. Hotels are certainly better at retaining customers than OTAs, but the global online hotel market is not built on loyalty, it’s built on volume.” 

How will OTAs continue building volume? Hospitality Technology took a look at booking trends and tech for 2017 and found exciting things happening with OTAs looking to secure some loyalty and offer customers more of what they want (particularly in terms of being able to seamlessly move from one device to another).

A few highlights:

• Expedia’s My Lists (formerly Scratchpad) saves hotel and flight information customers have viewed to a list they can go back to at anytime
• com is offering customers who’ve either booked in the past or need to complete an online booking a customer service representative contact to easily finish their booking
• With Hipmunk’s HelloHipmunk feature travelers can ask for recommendations and advice via email. It also integrates with calendars, offering suggestions for out-of-town travel

It’s likely that innovation will continue with OTAs and hotel chains as both look to gain a greater share of the market. In Skift’s 2017 Megatrends “Distribution Wars Have Moved Beyond Black and White,” Deanna Ting and Dennis Schaal write about the evolving relationship of these two groups. They explain that OTAs need hotel chains’ lowest rates to “offer their customers the greatest array of choices” and support the market’s desire to comparison shop. And hotel chains “need the online travel agencies to attract a subset of consumers who are focused on price — not loyalty — and who wouldn’t normally book direct on a chain website.”

Hopefully the current climate is more a case of two powerful teammates adjusting their game strategy than the “war” it has been described as because each needs the other and the travel industry needs them both too.

Watch now to find out want Ian Johnson, Commercial Director, Virtual Payments, Europe, from WEX has to say on this subject.