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by Geofferey Pagel
What is an OTA?
OTA stands for Online Travel Agency or Online Travel Agent. OTAs are one of the key distribution channels that hotels have at their disposal in order to market and sell their room nights.
For most hotels, online travel agents (OTAs) have become the most important distribution channel. In many ways, they’re a natural evolution of the traditional travel agency model, as platforms like Expedia and Hotels.com offer consumers easy comparisons and booking processes to most hotels listed in any given region.
What are the benefits of OTAs?
A typical OTA charges between 10% and 30% in commission for every room booking passing through it, leading to a dollar-for-dollar seemingly less profitable margin than direct bookings. However, for that investment, hotels benefit in a few crucial ways they would almost certainly otherwise be missing out on:
Combine these benefits, and the revenue benefits of listing your hotel on popular OTAs becomes clear. The OTA’s actually provide a lot of heavy lifting for their fee. Of course, you still need to know just where to place these listings strategically. Consider these top 8 online travel agents when making your decisions.
There are several dozens of OTAs available today, with each one offering a very specialised set of services
A success story of the gig economy over the past few years, Airbnb is unique in that it acts largely as a marketplace for non-conventional travel accommodations and consumer-to-consumer rentals. It has begun to expand into commercial listings after acquiring HotelTonight in 2019, earning it a spot on this list.
Hotels looking to be listed on Airbnb need to prove their unique design characteristics. At acceptance, they become one of seven million listings in more than 200 countries, with access to more than 150 million active users. Commission ranges between 14% and 20% for hotels.
Advantages of Listings on Airbnb
Founded in 2000, TripAdvisor has become one of the largest travel websites in the world. It is largely known for its user reviews, approaching 500 million in total for hotels and restaurants.
That said, the platform’s Instant Booking platform enables its visitors to read reviews and make the call to book a room right on the platform. It charges its 7+ million listings of attractions, hotels, and restaurants an average of 15% commission.
The U.S.-based Expedia group, founded in 1996, actually includes more than 200 travel booking sites that total more than 600 million monthly visits, including some others on its list. Its flagship OTA is Expedia.com, which focuses on hotels, flights, and rental cars.
Expedia.com is home to listings of more than 500,000 properties, spanning more than 60 countries. Commission for rooms booked through the site ranges between 5% and 30% based on property type and dynamic pricing, but averages around 16%.
Founded in 1996, Booking.com was among the first OTAs to emerge in the dotcom boom. As an international company by design, its bookings (accessible in 43 languages) cover more than 200 different countries on every continent.
In total, the platform processes more than 1.5 million hotel nights every day, with decisions driven by its 50 million verified reviews by guests. Fees average about 15% but fluctuate depending on the market segment and property type listed.
As mentioned above, Agoda is part of the Booking Holding that encompasses several other major OTAs. Originally founded in 1998, its largest pool of property listings is in Asia. However, the company has expanded into Europe and America as well, with its website and 2 million listings available in 38 languages.
Much like Expedia in the European and American market, Agoda focuses on low-priced listings and affordability. Commissions for listings average around 16%, with variations depending on the size and type of property.
An American company, Hotels.com has been headquartered in Dallas, Texas since its founding in 1991 as the Hotel Reservations Network. It has been part of the Expedia network of OTAs for almost two decades, benefiting from significant economies of scale on listings as a result.
In total, the platform hosts more than 360,000 listings in more than 19,000 locations, most of them in the Western Hemisphere. Average commission is just above 17%.
In a clear distinction from services like Airbnb, LateRooms focuses only on hotels. Founded in 1999, the company is headquartered in the United Kingdom. It emphasizes last-minute deals for single-night stays, catering to more spontaneous and urgent audiences.
With its more niche focus, LateRooms leads to fewer but faster transactions. More than 200,000 daily users book more than 50,000 rooms every month, including some same-day bookings. Its listings are limited to the U.K.
Based in Cologne, Germany, HRS was actually founded as a standard travel agency in 1972. It pivoted to become an OTA in the early years of the world wide web, and now offers more than 300,000 listings to about one million active users.
HRS offers listings around the globe, but most of its inventory is in Europe. Similarly, while it offers listings for both consumers and business travelers, its emphasis on business (including discounts for professional travel) is clear throughout the website. Expect an average commission of 16% for bookings through HRS.
A relative newcomer to the market Google started showing hotel information in a more useful way with sponsored hotel prices back in 2010. According to Google, their hotel ad partners (participating hotels) received 65% more leads year over year and Google Hotel Ads has now emerged as the most profitable metasearch platform for accommodation providers globally.
Google has an unrivalled advantage when it comes to traffic: an estimated 4.5 billion searches are made per day on Google, accounting for 77% of the world’s total search traffic. Couple that with the fact that Google Hotel Ads has expanded to over 150 countries and you can understand why Google Hotels Ads is such a popular choice for hoteliers.
OTA’s will never be a replacement for your hotel’s own website, which remains a crucial revenue stream. But when approached strategically, OTAs offer a vital part of the distribution chain to increase your bookings, increase awareness, and improve your revenue.
At the same time, not every OTA is created equal. The list above offers a great start to help you find the right homes for your listings, but it’s important to dig deeper again. By finding the platforms that work best for your hotel and audience, you can effectively diversify your marketing and sales efforts, fine-tuning for better business as you go.
Another great idea is to run a fully customizable and integrated online booking engine in parallel with your OTA strategy. Having your own online booking engine, such as Planet's Web Booking Engine, is a simple way to convert your website visitors into hotel guests, simultaneously saving you money on commission fees and providing you with a branded opportunity to upsell to guests before they check-in.