Online Booking: Hotel VS OTA
OTA (Online Tourism Agency) and hotels are two very different worlds, the first are much more comfortable online while the second are in the concrete and daily management of their business. Since OTAs act primarily upstream at the time of booking, hotels are under their domination on the market.
OTAs control about two-thirds of all online bookings, up 0.8% from last year. On the other hand, the total share of online hotel bookings has decreased by 0.8% since last year.
In the OTA market, the main brands are Expedia, Booking.com and Priceline, which control respectively 28%, 19% and 16% of the market. The Priceline Group (which includes booking.com) and Expedia estimate that they will cover 94% of online bookings by 2020.
Regarding to the hotel market, the most well-known brands are: Marriott International, Hilton Hotels and IHG which control respectively 26%, 17% and 15.5% of the market.
But why are room reservations going through OTAs?
The strike force of OTAs compared to hotels is due in large part to the difference of investments in marketing or communication. While OTAs invest 30-40% of their income in marketing, hotels spend about 6%. This significant difference explains why customers think that OTAs have lower prices, simply because their marketing is more efficient.
But having said that, hotelkeepers still have some unused assets:
- To begin, 50% of OTA users visit the hotel’s official website before booking, so hotels can use this opportunity to capture OTA visitors and convert them into buyers.
- As can be expected, the majority of travelers (85%) believe that price is the most important factor when choosing a hotel. These combine the lowest price with OTAs.
- In order to be more competitive, hoteliers could reduce some of their operational costs by investing in digital technologies to be more flexible in pricing.
In summary, hoteliers must take advantage of OTAs during the necessary periods like the low seasons and the rest of the time, focus on technology and invest in marketing campaigns so that customers book directly on their website.