Who are the OTAs and what impact do they have on the tourism industry?
In the space of just a few years, OTAs have become the most powerful players in the online tourism sector ... and all those working in the sector now have to contend with them.
But what exactly are we talking about when we talk about these Online Travel Agencies, and why have they managed to establish themselves in such a way? And above all, do they represent an opportunity or a constraint for hoteliers, restaurateurs and other car rental agencies?
Tourism professionals, let's take a look at the definition of OTAs and the issues surrounding their rise, so that you can better understand the means at your disposal to embrace the new demands of the market.
OTAs: definition
What is an OTA, or Online Travel Agency?
The acronym OTA (Online Travel Agency) refers to online travel agencies marketing tourism products provided by third parties:
- accommodation
- flights
- car hire
- sporting or cultural activities, etc.
How do they work? OTAs make it easy for travellers to select their services (using filter systems in particular), then book them online with just a few clicks. OTAs derive their revenue from commissions deducted from sales made by third parties (an independent hotel, for example).
☝️ The new term coined to describe these web giants shows that they have been playing a decisive role in their field for some years now. The purchase of tourist services now takes place essentially online, and the majority of customers now pass through these platforms. At the same time, the percentage of people booking directly with hoteliers has fallen.
The list of OTAs
There are many OTAs on the market. The main ones include :
- Booking,
- Expedia,
- Hotels.com,
- Priceline,
- HRS,
- Hostelworld,
- Agoda, etc.
There are also OTAs specialising in particular niches, such as CampingandCO for camping holidays.
💡 Find the full list of OTAs here.
☝️ Is AirBnB considered an OTA? In reality, it all depends on the sources. However, if we refer to the initial promise (offering authentic accommodation in private homes), it is not. But the shift the company has made, with the increasing professionalisation of the services offered on its site, ultimately makes it an OTA like any other.
Why do OTAs dominate the market?
The facts are clear: over the last ten years or so, OTAs in France and around the world have steadily gained a foothold in the tourism market.
This trend has had a particularly strong impact on smaller players, especially independent hotel chains (which already benefit from a large number of OTAs).( hotel chains already had a strong brand image and a well-established customer loyalty policy).
What are the reasons for this growth?
Meeting an emerging need
OTAs naturally flourished in a context of massive Internet development at the end of the 1990s (the OTA Booking was created in 1996). They were able to innovate by taking advantage of a free market and optimising online booking, a sector in which only hotel chains were already present.
In short, a need emerged (to book quickly and easily, and to have a choice), and the OTAs seized this opportunity.
Developing aggressive marketing
The hotel industry is finding it hard to modernise and go digital. This is because the industry is made up of a large number of small independents who are unfamiliar with online distribution and reluctant to invest a lot of money in it.
OTAs, on the other hand, have spent massively on advertising, natural referencing, etc. At the same time, they have never ceased to develop their online presence. At the same time, they have continued to develop their visibility and marketing performance:
- by learning more about the behaviour and needs of Internet users ;
- targeting them with increasingly personalised campaigns;
- using offensive techniques such as stress marketing.
In short, these platforms have understood the benefits of adopting a customer-focused positioning rather than an offer-focused one.
Just 2% of independent hotels and hotels affiliated to voluntary chains have a customer database. This is alarming!
Rachid Gorri du groupe France Réservation
Think customer experience
Finally, it should be noted that OTAs reassure customers. It can be complicated to read reviews of certain hotels, or even to believe in the veracity of those on a site (hasn't the hotelier selected only the best?).
The OTAS review system works very well with consumers, and makes them feel more confident about their choice of a particular establishment. In fact, according to Coach Omnium, 76% of consumers consider OTAS reviews when choosing a service.
OTAs: what are the advantages and disadvantages for tourism businesses?
The advantages
Even if there is growing discontent among professionals, it has to be said that there are advantages to be gained from OTAs.
Better visibility
Online booking platforms offer visibility to hotel managers, not all of whom have the resources or skills needed to tackle web marketing.
And this visibility extends :
- internationally, since the OTAs take care of translating information about the establishment into several languages;
- on different channels, particularly mobile, with responsive sites.
All parameters that a small independent cannot easily manage.
Easier management
Using OTAs makes it easier to manage bookings: everything is centralised and automated within a single platform. All you need to do is log on from time to time to update your rates and information, for example. Time-saving guaranteed!
Billboard effect
Finally, some studies on the subject have revealed a potential " billboard effect". This means that a presence on an OTA can also generate additional direct bookings.
Basically, Internet users discover the establishment on the online platform and then go directly to the establishment's website to obtain further information and make a reservation.
Disadvantages
High commission rates
The first drawback is the high commission rates charged by OTAs.
For example, they vary between 15% and 17% for Booking, and between 15% and 20% for Expedia.
Loss of customer data
Customer data passing through the OTAs remains in their hands.
As a result, tourism professionals do not have the contact details of Internet users to communicate with them, offer them special deals, etc. - in short, to enhance the customer experience.
Brandjacking
Another stumbling block is brandjacking. This is the process of buying a company's trade name as part of AdWords campaigns.
Although there are now procedures in place to protect against this, the consequences are as follows: Booking and Expedia, for example, appear at the top of the results on Google, even before the official site of the establishment being searched for, even if the Internet user types its name in the search bar.
Difficult management of brand image and e-reputation
On Booking, for example, it is impossible to manage customer comments, even when they are anonymous.
Similarly, because of Booking's affiliation programme, some platforms sell services without the hotelier's knowledge, sometimes even using information that is no longer up to date.
Why and how can we free ourselves from OTAs?
The benefits of direct booking
We have already seen the limits that the OTA system imposes on professionals.
Another fact to emphasise is that the trend towards direct bookings is continuing. In particular, customers appreciate the experience they get, and events such as Covid-19 have shown that that it is sometimes easier to deal with unforeseen events directly with the establishment.
In 2018, direct booking remained the second most popular distribution channel:
Finally, as the table below shows, direct booking remains more profitable for tourism businesses:
☝️ As we have seen, using OTAs has its advantages. But it is advisable for professionals to take advantage of the different channels available to them, by using these platforms while encouraging direct bookings via their own website.
But how do you learn to invest in the direct channel and digital marketing, which have long been neglected in favour of management and operations?
A few tips for investing in the direct channel
- Create your own website. It sounds obvious, but it's the basis. If it is used to manage bookings directly, it must be sufficiently optimised so that potential customers can easily find the establishment on the internet.
- Knowing how to communicate. Optimising a website also involves skilful communication. Eye-catching visuals, an impactful editorial line... the web is used to sell by developing a brand image in line with the target audience.
- Attracting and retaining customers. There are a number of promising strategies for attracting customers, such as running promotions. Since the Macron Act, it has been possible to offer lower rates than on OTAs via your own website.
But the direct channel is also an excellent way of building customer loyalty, thanks to the possibility of using your own customer files.
In short, it's a whole programme for those wishing to emancipate themselves, at least in part, from the OTAs. But even the most novice tourism professionals need not worry. There are solutions available to support them in the digital transformation of their business.
For example, they can call on the services of agencies with expertise in web marketing.
Adopting specialist software, such as Asterio, is also a good solution. This type of tool can help tourism professionals to create a well-constructed website that is referenced to generate more direct bookings, and to manage the commercial side of the business in general. But above all, the software makes it possible to take advantage of customer files in order to implement a real loyalty policy... something that is impossible if you only use OTAs.
The emergence of OTAs in the tourism sector has reshuffled the cards when it comes to selling services online, but the game is not over. While this rise has proved that the web is the preferred channel, customer experience and proximity are still the keys to success in this sector. All the more reason for hoteliers and other service providers to take the image of their establishment online into their own hands! The aim? To make the most of the best of both worlds, to ensure the best possible sales figures at all times.
Article translated from French