In the current digital era with an abundance of choices and overwhelming options, the role of an Online Travel Agency (OTA) and travel club have become increasingly important within the travel and hospitality industry. Back in 2015, OTAs accounted for about 60% of online bookings of independent properties and hotel chains combined.
Currently, OTA travel controls nearly 2/3rd of all online hotel bookings. Let us delve into how they play a crucial role in increased hotel bookings and how to implement them correctly.
Table of Content:
- What is an Online travel agency?
- How Do Online Travel Agency (OTAs) work?
- How Online Travel Agency (OTA) help to increase revenue?
- How do OTAs make money?
- Why do travelers use OTAs?
- What to consider when choosing an Online Travel Agency (OTA)?
- Tips To Increase Your Bookings Through Online Travel Agents
What is an Online travel agency?
Online Travel Agency (OTAs) is a web-based travel company that lets customers research and instantly book travel products or services via an online platform. OTAs sell a range of travel-related services to other companies or travel providers, thus acting as third parties.
OTAs can provide access to customers at different locations and handle bookings in large volumes which is rather difficult to access through retailers’ marketing efforts alone.
How Do Online Travel Agency (OTAs) work?
• OTAs are able to pull travel deals and booking options from all around the internet and provide the user with many options so they can choose what fits all of their needs. Find the right OTA partnership and optimize it to reach your target audience and generate revenue.
• Next, you can list hotels and properties of all sizes and showcase rooms through the product description, photographs, nearby points of interest, etc. Listings can be thoroughly searched using filters that narrow search such as Wi-fi, pool, spa, etc. and OTA will align travel criteria with the matching properties.
• OTAs provide real-time access to price, demand forecasting, current bookings, etc. to further help the travelers. The booking platform is secure and can be used as the main point of contact to make amendments or cancellations.
How Online Travel Agency (OTA) help to increase revenue?
Adding your hotel on OTAs can significantly improve hotel bookings and increase revenue. Here are a few reasons to have multiple OTAs connections for your hotel –
Increased traffic – One of the major benefits of OTA is that it drives traffic to the hotel’s main reservation website. OTAs act faster than the hotel website and redirect guests to research and book. According to Google, nearly 52% of customers visit the hotel’s main website and view the available rooms, etc. before the final booking.
Increased exposure = more bookings – Hotels can get more exposure by partnering up with OTAs. As your hotel gets more visibility, it leads to increased bookings, also known as, Billboard effect. Many guests prefer to book via an OTA before direct booking. According to a study around the online pre-purchase behavior of guests, about 75% made the reservation through an OTA website before booking directly with a major hotel brand.
Better OTA ranking and reviews – OTAs include reviews and rankings to individual hotels that allow customers to get a good idea about hotel services and eventually give a push for conversion. Increased conversion rate means more revenue for your business.
Target high-value customers – OTAs can target high-value customers through their listing tools and drive profitable growth for hotel brands. Marketing programs of OTAs can help achieve specific business goals and generate more revenue.
Access to analytics, insights, and tools – OTAs provide free access to competitive insights, marketing data, travelers’ preference and more to help your business with overall strategy and pricing. It allows you to compare your performance with your competitors and understand target markets that help to increase ROI.
How do OTAs make money?
Most online travel agencies make money through commissions from their clients for travel bookings and the travel provider they market on their digital platform. OTAs have multiple revenue streams, and the extent of their net profits depends on the type of services they offer – corporate, custom, leisure, and partnership marketing.
Here is a breakdown of the most common ways that OTAs make money.
Commissions: A massive chunk of income of OTAs is made via commissions per booking. The commission rate may range anywhere between 5% and 25% or may go up higher. Fees for serving clients: OTAs also make money through fees that they charge from their clients for a range of services such as travel planning, booking, creating a detailed itinerary, arranging necessary paperwork and transport, and more.
Specialized services or Consultancy: OTAs can earn big bucks by offering consultancy or technical assistance to their clients. Based on their expertise, they may book corporate or group travel services, offer dedicated travel guides during vacation, negotiate with local tour operators on clients’ behalf, and more.
Advertising and Premium listings: Many OTAs earn big bucks directly from travel vendors through advertising or by offering premium listing options on their web platform. An OTA may feature certain hotels and airlines as top results in client searches and then earn a pay-per-click basis.
Why do travelers use OTAs?
The new age travelers prefer booking via OTAs for several reasons. According to a report published in 2020, many travelers use OTAs for the quality of services, safety, and trust. Let us explore five main reasons that make OTAs the preferred option for bookings among travelers –
- Convenience -The modern, savvy traveler relies on OTAs to easily access and a convenient booking process. OTAs are accessible on most devices – web browsers and mobile apps. It is a one-stop-shop for all travel products and services within a single platform, making the booking process easy and hassle-free.
Instead of physically booking hotels, airlines, or car rentals one by one, customers can book everything under one digital platform with easy payment options. Also, customers get booking details in real-time with instant confirmation.
- Cost-effective -OTAs often provide their customers with exclusive booking offers such as sign-up bonuses, coupons, etc., that tempt customers into booking from them. Also, it is easy to compare different travel providers on OTAs and thoroughly research before finalizing the right option.
- Range of services -OTAs offer travel products and services under one umbrella that leaves their customers spoilt for choice. Customers can search everything from hotels, vacation rentals, flights, car rentals, and adventure packages.
The ease of accessibility of online bookings facilitates customers to get detailed information on services or products they are booking. For instance, before making a hotel booking, customers can check the detailed description of services provided by the hotel along with images, reviews, level of service, etc. that helps in driving the purchase decision. Additionally, customers can search through a plethora of airlines to make a booking as per their budget and the quality of service provided by the airline. In the future, if they wish to make the same booking, it is easy to check the past booking option and refer to it without searching for it all over again.
• Quality -Most travelers rely on OTAs for quality of service or product. OTAs are seen as experts in travel products they sell, and customers have a certain level of expectation from their products regarding quality, security, hygiene, and privacy.
Customers do not shy away from sharing their personal information and entrust OTAs for a high level of security and protection from spammers or breaches.
• Reviews -Travelers often leave reviews after their booking, which lets other potential customers know about their experience and steer them into booking. Positive feedback or reviews play a vital role in travel buying.
What to consider when choosing an Online Travel Agency (OTA)?
Online Travel Agencies vary in offerings, size, type, and industry depending on their travel portfolios and niche interests. Here are the things to consider when choosing the right OTA for your business –
Your target audience and markets: The first and foremost thing to remember while choosing the most suitable OTA for your business is the regions, markets, or customer segments you wish to target. Some OTAs target specific niches or demographics, while others target a particular geographical location. If you want to cater to the corporate travel market, you should partner with an OTA targeting business or corporate clients.
Features of OTA: OTAs come fully equipped with several user-friendly features, including back-end management, inventory management, customer support, payment processing, subscription management, and more. While some OTAs offer a dedicated team to manage different aspects of your business, others provide various useful tools and analytics software to manage customer journeys throughout their entire life cycle. Choose an OTA that offers seamless and smooth integration of these tools, which eliminates the risk of mismanagement in the future.
User experience and accessibility for customers: Your business requires an OTA that offers a seamless experience to your target audience and is loaded with valuable features that interest them. Your customers should be able to browse and make bookings without any hassle easily.
Also, it is essential to check various features of OTAs – including their services, product offerings, and database of travel products. Make sure that their listed products fit best to your business model. If your potential customers look for a guest house or rental, there is no point considering an OTA of a big hotel chain.
Expertise: Look for OTAs that have experience and knowledge along with a solid market presence. Large OTAs usually have a good record of handling businesses and promoting them along the way. Working with a reputed OTA with access to rich tools will help make your entire business process faster and less problematic.
Tips To Increase Your Bookings Through Online Travel Agents
Once you have found the right OTA for your business, it is time to make the most of your time and effort to increase your revenue. Here are some solid, actionable tips to improve your bookings through OTAs –
Know your competition: The competition in today’s travel industry is extremely fierce, so it is essential to know your competition or business rivals before laying out a perfect business strategy. It will help you set clear objectives and well-defined goals to stand out from the rest. To launch your business, advertise your business vigorously on all digital channels using email marketing, social media campaigns, and more to reach a larger audience.
Pricing: Price is one of the most important criteria for customers to drive the purchase decision. Make sure that you employ the right pricing strategy at the right moment using forecasting methods. Use scarcity to your advantage. Offer limited-time discounts or coupons to engage urgency and coax customers into buying.
Reviews and ratings: Many prospective customers read guest reviews before making up their minds to buy from you. Make sure to highlight positive feedback and reviews while resolving the negative reviews to improve continually. It is vital to building a good rapport with your customers to establish yourself as a reliable and trustworthy brand.
Upsell and cross-sell: Customize travel packages with add-ons such as travel insurances, visa assistance, and other value-added services that lure your target audience into buying them in a way that also increases the order value. As per the TripAdvisor survey, Wi-Fi is the most desirable amenity for travelers, followed by free parking and breakfast.
Use OTAs promotional marketing: Take full advantage of OTAs by capitalizing on their promotional opportunities, such as running ad campaigns, travel loyalty programs and strategic placement on the search engine for greater exposure. This will help bring more visitors to your website and help generate good returns on your bookings.