For online hotel bookings, a battle has started between online travel agencies and hotels. Hotel distribution was a complex process in earlier days. Their rooms were sold by the hotels to the wholesalers, who then sell them to agents. The rooms were then bought by the travelers. As there was so much secrecy about who was earning how much, this distribution chain had complexity in every junction. Then the hotel industry got a more transparent way for hotel room distribution. The reason for this is the entrance of the online travel agencies or OTAs. The distribution chain was reduced to only hotels, OTAs and guests because of OTAs. Some hotels around the world were listed by a site named Travelweb.com and then after some time, they started booking the hotels. So it can be said that 1994 is the year in which the OTA model took birth.
Why are they fighting?
This question has a simple answer. The “Merchant Model” and the “Agency Model” are the two business models on which mostly OTAs work. OTAs buy the inventory and then resell it to the travelers in the “Merchant Model”. OTAs get a better control of the inventory by this way but there is always a risk of inventory underbooking. OTAs do not buy the inventory in the “Agency Model”. They charge a commission on inventory booking by keeping the inventory on their site. There is no risk of inventory underbooking from the side of the OTAs. Nowadays, the commission of the OTAs has increased and so has their share in the number of bookings. All these are having an impact on the revenue of the hotels, which is hurting the hotels.
Who is winning?
The direct booking of the hotel rooms is vigorously promoted by the hotels by various marketing campaigns and loyalty programmes. The market trends would have shifted against the OTAs and towards the hotels of these efforts were effective. But that is not the case. So we can say that OTAs emerge as the winner.
Reasons Behind the success of the OTAs
1. Number of properties
A much wider range of options is provided by the OTAs.
2. Variations in the products
In the matter of types of properties, OTAs have a great versatility. To find their desired stay, travelers find this more convenient.
3. Marketing
Marketing campaigns from OTAs are surpassing that of hotels, whether on online platforms or offline platforms. An ad of any of the OTAs will definitely be seen while watching TV, reading a newspaper or exploring the internet.
Conclusion
Hotels are fighting back with the objective of minimizing the distributing cost and increasing the yield. This fight is for the maximum share in online bookings and this is the best part about it. We can expect attractive offers, cheaper room rates and loyalty programmes as hotels and OTAs will do anything to attract travelers.
